2022 (12) TMI 516 - HC - GST

Seeking provisional release of detained goods alongwith vehicle - sections 129 and 130 of the GST Act - HELD THAT - The provisions of section 67 of the GST Act pertains to seizure of the goods whereas section 129 also provides for seizure of goods in transit if goods in transit is in contravention of the provisions of the GST Act - provisions of Sub-section (6) of section 67 and sub-section (2) of section 129 provides for provisional release. The provision for confiscation of goods as per section 130 of the GST Act has to be preceded by seizure of goods because there cannot be confiscation without seizure. In such circumstances, when the goods are in transit and are to be confiscated they are required to be seized for the purpose of invocation of section 130 of the GST Act. Therefore, in such circumstances, provisions of section 67(2) of the GST Act comes into play and seizure of goods under section 129 then becomes seizure under section 67 of the GST Act so as to confiscate the same under section 130 of the GST Act. Once the notice in Form MOV-10 under section 130 for confiscation of goods is issued, the goods in question stand seized under section 67(2) of the GST Act, applicability of section 129 of the GST Act comes to an end. Once the goods are to be treated as seized under section 67(2) of the GST Act, the same would be liable to be provisionally released under section 67(6) of the GST Act by the GST authority either upon execution of bond and furnishing of security in such manner and of such quantum as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. Therefore, as the petitioners are ready to either execute a bond and furnish the security in prescribed manner and/or make payment of applicable tax, interest and penalty, the respondents authorities were not justified in denying the provisional release of the goods and conveyance as it is mandatory for the authority to exercise powers under section 67 (6) of the GST Act for provisional release of the goods and conveyance as there is mandate by word shall provided under section 67(6) of the GST Act. The respondents authorities are required to release the goods on provisional basis in exercise of powers under section 67(6) of the Act once the show cause notice under section 130 of the GST Act for confiscation of the goods and conveyance is issued irrespective of whether goods are seized at the place of the taxable person or during the course of transit as the same would not make any difference for exercise of powers for confiscation of goods under section 130 of the GST Act - the authorities are directed to provisionally release the goods on aforesaid conditions by applying the provisions of section 67(6) of the GST Act subject to adjudication of the show cause notice issued under section 130 in Form MOV 10 after giving an opportunity of hearing to the petitioners in accordance with law.

Summary

Issues Involved:
1. Setting aside the order under Section 129 of the GST Act and the show cause notice under Section 130.
2. Denial of provisional release under Section 67(6)/129(2) of the GST Act.
3. Authority's power to provisionally release goods and conveyance during pending proceedings.
4. Interpretation and application of Sections 67(6), 129, and 130 of the GST Act.

Detailed Analysis:

1. Setting aside the order under Section 129 and the show cause notice under Section 130:
The petitioners sought to set aside the order under Section 129 of the GST Act in Form GST MOV-06 and the show cause notice under Section 130 in Form GST MOV-10. They also requested the release of goods and conveyance detained by the authorities. The court examined whether during the pendency of proceedings, the authority could exercise powers under Section 67(6) and/or Section 129(2) for provisional release of goods.

2. Denial of provisional release under Section 67(6)/129(2):
The petitioners argued that the goods and conveyance were accompanied by valid documents (tax invoice and e-way bill) but were seized due to alleged irregularities in upstream vendors' transactions. Their application for provisional release under Section 67(6) was rejected, as the authority claimed that release was not possible once proceedings under Section 130 were initiated. The petitioners contended that Section 130 does not provide for seizure, and provisional release should be allowed under Section 67(6).

3. Authority's power to provisionally release goods and conveyance during pending proceedings:
The court analyzed the statutory provisions, noting that Section 67(6) allows for provisional release of seized goods upon furnishing security or payment of tax and penalty. Section 129(2) states that provisions of Section 67(6) apply mutatis mutandis to the seizure of goods under Section 129(1). The court found that the contention that no power exists to release seized goods liable for confiscation is contrary to statutory provisions.

4. Interpretation and application of Sections 67(6), 129, and 130:
The court observed that Section 130 provides for confiscation of goods, whether seized at the premises or in transit, and that provisional release is permissible under Section 67(6). The court held that the authority's refusal to provisionally release goods based on their location (in transit vs. premises) was illogical and contrary to the GST Act's provisions. The court emphasized that the use of "shall" in Section 67(6) indicates a mandatory requirement for provisional release if conditions are met.

Conclusion:
The court concluded that the respondent authorities must release the goods provisionally under Section 67(6) once a show cause notice under Section 130 is issued, regardless of whether the goods are seized in transit or at the premises. The court directed the authorities to provisionally release the goods and conveyance upon execution of a bond and payment of tax, interest, and penalty within three weeks. The petitions were disposed of with this direction, and the rule was made absolute to the extent specified.