2023 (5) TMI 644 - HC - GST

Release of detained goods alongwith vehicle - wrongful passing of input tax credit by supplier, from whom the petitioner has purchased the goods - Requirement to comply with mandatory pre-deposit - HELD THAT - Once the order is stayed, the respondents can release the goods subject to such other safeguards that may be imposed by the appellate authorities under the respective Acts - The very purpose of fixing the mandatory pre-deposit is to do away with the procedure of granting stay after hearing, which was delaying the disposal of the appeal earlier. The provisions are inspired from amended Section 35F of the Central Excise Act, 1944 and Section 129E of the Customs Act, 1962 in 2014 as the cases were not getting disposed - It is for this reason, mandatory pre-deposit was made so that the interest of the revenue can be safeguarded as the appeal would take longer time for final disposal. Although the Officer who detained the goods has become functus officio , once there is a mandatory pre-deposit, the order has no force and all further recovery proceedings will be subject to the final outcome of the appeal. There can be a direction to the petitioner to deposit the maximum penalty of 200% of the tax to safeguard the interest of the revenue - petitioner is directed to pre-deposit 200% of the maximum penalty after adjusting the amount already deposited. In the alternative, the petitioner can be directed to furnish Bank Guarantee in terms of Section 129(c) of the respective GST enactments and the Rules made thereunder. Petition disposed off.

Summary

Issues:
The issues involved in the judgment are detention of goods due to alleged wrongful passing of Input Tax Credit, imposition of penalty equivalent to 100% value of detained goods, and the requirement of pre-deposit for release of goods pending appeal.

Detention of Goods:
The petitioner transported goods with accompanying E-Way Bill but faced detention based on an order alleging wrongful passing of Input Tax Credit by the supplier. Petitioner contended that the movement of goods complied with GST enactments and rules.

Imposition of Penalty:
The respondents imposed a penalty equal to 100% of the value of the detained goods, while the petitioner had paid 25% of the disputed penalty and initiated a statutory appeal under Section 107 of the CGST Act. The court noted that the maximum penalty could be 200% of the tax amount payable.

Pre-Deposit for Release of Goods:
The court referred to the need for a mandatory pre-deposit under Section 107(6) of the CGST Act before goods can be released. The petitioner was directed to pre-deposit 200% of the maximum penalty or provide a Bank Guarantee under Section 129(c) of the GST enactments. The court emphasized the balance between revenue interests and the petitioner's rights in releasing the goods upon compliance.

Conclusion:
The court disposed of the writ petition with directions for the petitioner to make the necessary pre-deposit or furnish a Bank Guarantee for the release of goods. The judgment aimed to safeguard revenue interests while ensuring a fair process for the petitioner, emphasizing compliance with GST enactments and rules.