2023 (1) TMI 1128 - HC - GST

Confiscation of goods u/s 130 - Levy of penalty - goods in question were supported by valid documents - whether warrant exists for initiation, continuation and conclusion of proceedings under Section 130 of the CGST/SGST Acts or not? - HELD THAT - The undisputed facts of the case are that the 2nd petitioner was carrying certain gold ornaments in a train from Thrissur to Alleppy. He was initially intercepted by the officials attached to the Railway Protection Force and the 2nd petitioner was able to only shown certain documents on his mobile phone, which according to the petitioners, suggest that the gold ornaments were being carried in a valid manner and in accordance with all the requirements of the CGST/SGST Acts and the Rules made thereunder. The contention of the learned counsel appearing for the petitioners that the 2 nd petitioner had forgotten to hand over about 100 gms of gold, which was being carried in his pocket, cannot be accepted, at least at this stage. The fact that there was discrepancy in the quantity in the documents stated to have been produced and the quantity recovered from the 2nd petitioner itself, is sufficient for the Department to suspect the evasion of tax. There are nothing found on merits regarding the order of adjudication issued by the 2nd respondent under Section 130 of the CGST/SGST Acts for the reason that it would not be proper to do so, considering the fact that the petitioners have appellate remedies against Ext.P18 order. There was no malice or ill-will or lack of jurisdiction in initiating proceedings under Section 130 of the CGST/SGST Acts - petition dismissed.

Summary

Issues:
1. Jurisdiction of proceedings under Section 130 of the CGST/SGST Acts.
2. Compliance with GST laws in transportation of gold.
3. Discrepancy in the quantity of gold recovered and documents produced.
4. Allegation of tax evasion.
5. Validity of initiating proceedings under Section 130 of the CGST/SGST Acts.

Jurisdiction of proceedings under Section 130 of the CGST/SGST Acts:
The petitioners argued that there was no warrant for initiating proceedings under Section 130 of the CGST/SGST Acts as the goods were supported by valid documents. The learned Senior Government Pleader contended that the discrepancy in the quantity of gold recovered and the documents produced was sufficient to prove tax evasion, justifying the initiation of proceedings. The court held that the discrepancy raised suspicion of tax evasion, and while refraining from deciding on the merits of the order, concluded that there was no malice or lack of jurisdiction in initiating proceedings under Section 130.

Compliance with GST laws in transportation of gold:
The petitioners claimed that the gold was being transported in compliance with GST laws, supported by documents. However, the discrepancy in the quantity of gold raised doubts about the compliance. The court noted that the documents produced did not match the actual quantity recovered, leading to suspicion of tax evasion.

Discrepancy in the quantity of gold recovered and documents produced:
A discrepancy was found between the quantity of gold mentioned in the documents produced by the petitioners and the actual quantity recovered. The petitioners attributed this to the 2nd petitioner forgetting to hand over 100 gms of gold carried in his pocket. The court rejected this explanation, considering the discrepancy as a basis for suspecting tax evasion.

Allegation of tax evasion:
The government argued that the discrepancy in the quantity of gold recovered indicated an attempt to evade tax, justifying the proceedings under Section 130 of the CGST/SGST Acts. The petitioners contended that there was no evidence of wilful tax evasion. The court found the discrepancy sufficient to raise suspicion of tax evasion, supporting the initiation of proceedings.

Validity of initiating proceedings under Section 130 of the CGST/SGST Acts:
The court dismissed the writ petition challenging the order under Section 130 of the CGST/SGST Acts, allowing the petitioners to appeal. It clarified that the dismissal did not validate the order on its merits and that the petitioners could present their contentions in the appellate process. The court extended the period for filing an appeal, emphasizing the petitioners' right to appeal without being bound by the judgment.