2022 (6) TMI 850 - HC - GST

Detention of goods alongwith the vehicle - quantum of security for provisional release of goods - discrepancies in the shipment of the goods and the documents accompanying the consignments - HELD THAT - The statutory provision envisages detention and seizure, if the goods in question are found to have been conveyed in contravention of the provisions of the Act or Rules. Post such detention or seizure, the seized goods 'shall' be released subject to satisfaction of the conditions set out under clauses (a) to (c) of Section 129(1) of the Act. Clauses (a) and (b) deal with the quantification of the penalty, clause (a) in the case of voluntary payment by the assessee and clause (b) in cases where the assessee does not come forward to remit the penalty. In either case, the remittance of the penalty is to be by way of security equivalent to the amount payable under clauses (a) or (b), furnished in the prescribed manner. Let the petitioners furnish bank guarantees for the amounts quantified in terms of the impugned notices dated 01.06.2022, in proper form, upon receipt of which, the goods shall be released forthwith by the Officer - Petition disposed off.

Issues:
1. Detention and seizure of goods for non-compliance.
2. Rejection of objections filed by petitioners.
3. Release of goods subject to statutory conditions.
4. Interpretation of Section 129 of the Central Goods and Service Tax Act, 2017.

Detention and Seizure of Goods for Non-Compliance:
The petitioners conveyed goods under specific vehicles which were intercepted by the respondents. Upon verification, discrepancies were found in the shipment of goods and accompanying documents. Orders of detention proposing penalties were passed due to non-compliances noted. The penalty amounts were specified for each petitioner. The petitioners objected to the proposals in the show cause notice, which were rejected by the assessing authority through impugned notices. The authority's procedure was deemed improper as it effectively passed orders adverse to the petitioners' interests.

Rejection of Objections Filed by Petitioners:
The petitioners had filed objections to the show cause notices, which were subsequently rejected by the assessing authority in the impugned notices dated 01.06.2022. The authority's actions, though styled as notices, were considered as passing orders adverse to the petitioners' interests. Despite objections, the authority proceeded to reject the arguments, leading to the petitioners seeking relief through writ petitions.

Release of Goods Subject to Statutory Conditions:
The impugned notices demanded the petitioners to remit penalty amounts within three days under threat of action under Section 130 of the Act. The petitioners expressed willingness to furnish bank guarantees equivalent to the penalty amounts to obtain the release of goods on a provisional basis and subject to statutory conditions as per Section 129 of the Act. The statutory provision outlined conditions for the release of detained goods, emphasizing payment of applicable tax and penalty or furnishing security equivalent to the penalty amount.

Interpretation of Section 129 of the Central Goods and Service Tax Act, 2017:
Section 129 of the Act addresses the detention, seizure, and release of goods and conveyances in transit for contravention of provisions. It specifies conditions for release, including payment of applicable tax and penalty, or furnishing security equivalent to the penalty amount. The court directed the petitioners to furnish bank guarantees for the penalty amounts quantified in the impugned notices, leading to the immediate release of goods upon compliance. The challenge to the notices was deemed unsuccessful, and the writ petitions were disposed of without costs.

This comprehensive analysis of the judgment highlights the issues of detention and seizure of goods, rejection of objections, release of goods subject to statutory conditions, and the interpretation of Section 129 of the Central Goods and Service Tax Act, 2017, as addressed in the Madras High Court's ruling delivered by Honourable Dr. Justice Anita Sumanth.

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