2022 (8) TMI 393 - HC - GST

Right to file an appeal - whether a person who opts to make payment in terms of Clause (a) of Sub-Section (1) of Section 129 of the CGST Act / SGST Act to get goods/conveyance/documents detained or seized in proceedings under Section 129 released is deprived of his right to file an appeal against the proceedings - HELD THAT - A reading of sub-section (3) of Section 129 of the CGST/SGST Acts, the provisions of Rule 142 referred to above and the provisions of the circular, cumulatively, compel me to hold that whether or not a person opts to make payment under section 129(1)(a) or to provide security under Section 129(1)(c), the responsibility of the officer to pass an order under sub-section (3) of Section 129 and to upload a summary of the order/demand in Form MOV 7 continues. The provisions of sub-section (5) or Section 129 which were pointed out by the learned Senior Government Pleader only contemplate that the procedure for detention on seizure of goods or documents or conveyances come to an end and it is always open to the person who suffers proceedings under 129 of the CGST/SGST Acts to challenge those proceedings if he feels that the demand has been illegally raised on him. This can be the only reasonable interpretation that can be placed on the provisions referred to above. Any other interpretation would clearly violate Article 265 of the Constitution of India. The fact that the culmination of proceedings in respect of a person who seeks to make payment of Tax and Penalty under Section 129(1)(a) does not result in the generation of a summary of an order under Form DRC-07 cannot result in the right of the person to file an appeal under Section 107 being deprived. The fact that the system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand does not mean that the intention of the legislature was different. Petition allowed.

Summary

Issues:
Whether a person who opts to make payment in terms of Clause (a) of Sub-Section (1) of Section 129 of the Central Goods & Services Tax Act / State Goods & Services Tax Act is deprived of the right to file an appeal against the proceedings.

Analysis:

Issue 1: Right to File Appeal
The main issue in this case was whether a person who opts to make payment under Section 129(1)(a) of the CGST/SGST Acts is deprived of the right to file an appeal against the proceedings. The petitioners argued that they should not be deprived of this right, while the State contended that all proceedings are concluded upon payment under Section 129(1)(a) as per sub-section (5) of Section 129.

Detailed Analysis:
The judgment highlighted that the provisions of Section 129 of the CGST/SGST Acts deal with the detention, seizure, and release of goods, conveyance, and documents. It emphasized that whether a person chooses to make payment under Section 129(1)(a) or provide security under Section 129(1)(c), the officer detaining or seizing goods must issue a notice specifying the tax and penalty payable. The judgment referred to Rule 142(5) of the CGST/SGST Rules, which mandates the uploading of a summary of the order in Form DRC-07 for various sections, including Section 129. The circular No.41/15/2018-GST dated 13.04.2018 also outlined the procedure for releasing goods upon payment of tax and penalty under Section 129(1)(a).

The judgment concluded that the responsibility of the officer to pass an order under sub-section (3) of Section 129 and upload a summary of the order/demand in Form DRC-07 continues regardless of whether payment is made under Section 129(1)(a) or security is provided under Section 129(1)(c). It emphasized that the right to challenge proceedings under Section 129 before the Appellate Authority under Section 107 remains intact for the person subject to such proceedings. The judgment clarified that the system's failure to generate a demand or allow an appeal without a demand does not alter the legislative intent to provide the right to file an appeal under Section 107 for aggrieved parties.

In conclusion, the writ petitions were allowed, granting the petitioners the right to file an appeal under Section 107 of the CGST/SGST Acts. The judgment directed the concerned respondents to take necessary actions within one month and recommended the issuance of a circular by the Commissioner of the State Goods & Services Tax Department to prevent similar issues in the future.