2023 (6) TMI 942 - HC - GST

Seeking release of seized vehicle alongwith goods - it is alleged that document produced against the goods intercepted i.e. second hand car bearing Registration No. AS06AE2114 appeared to be invalid and incomplete based on the discrepancies - no E-way bill - HELD THAT - The power of inspection, search and seizure can be carried out under Chapter XIV or in case of goods in transit under Section 129. On plain reading of Section 129 can be equated with the alternative dispute redressal mechanism and provides an opportunity to the owner of the goods or any other person to pay amount as specified under Section 129 (1) (a) or (b) or (c) of the said Act. Clause 129 (1) (a) of the Act which provides for payment of penalty equal to 200% of the tax payable on such goods or penalty equal to 50% of the value of the goods, further incorporates provision for determination of quantum of penalty under Section 129 (3), thus under the Scheme of the Act, the procedure for determination of tax and penalty is contained in Chapter XV read with Section 122, 123, 125, 126, 127 and 128 of the Act and a parallel procedure is prescribed under Section 129 of the Act in case of goods which are in transit. In the present case, the respondents have proceeded to determine the tax liability as well as penalty only under the provision of Section 129 of the Act, which is not contemplated or intended. As per Section 129, there is no provision under Section 129 for determination of tax due, which can be done only by taking recourse of the provisions of Section 73 or 74 of the CGST Act as the case may be. Section 129, can be invoked by the respondent with regard to the goods in transit and the goods can be released only in the event the owner of the goods comes forward for payment of penalty as specified in Clause (a) (b) or (c) of Section 29 (1) of the Act. In the present case, the petitioner has challenged the impugned order of penalty passed under Section 129 of the Act of 2017. On considering the submissions made by the respective parties and or perusal of the contents of the writ application, the Court finds the petitioner has challenged the jurisdiction, authority and the action of the respondent no. 2. This Court finds that a pure question of law relating to interpretation of Section 129 of the Act of 2017 as well as the other provisions of the Act are involved and the issue as to whether the valuation of the goods for imposing penalty CESS could be included or the penalty amount can be imposed on the basis of the margin of sale of second-hand car is in question - This Court is of the view that the issues involved in the present writ application required final adjudication after giving an opportunity to file affidavit. This Court also satisfied that the petitioner has made out a prima facie case for interim order as prayed for. There will be an interim order to the extent that the respondent authorities shall release the vehicle of the petitioner in question on payment of the impugned demand in question excluding the CESS amount and for the CESS amount arising of the impugned demand, the petitioner shall furnish a bank guarantee subject to the satisfaction of the respondent authorities. Let the matter appear under the heading hearing on completion of six weeks before the appropriate Circuit Bench.

Summary

Issues involved:
The issues involved in the judgment are the challenge to the order passed under Section 129 (3) of Goods and Service Tax Act, 2017 dated 30th May, 2023 and the prayer for an interim order for the release of the vehicle.

Details of the Judgment:

Challenge to Order Under Section 129 (3):
The petitioner challenged the order under Section 129 (3) of the Act, contending that the penalty amount was determined contrary to the law and without jurisdiction. The petitioner argued that the calculation of the value of the detained car by the respondent was arbitrary and against statutory provisions.

Jurisdiction and Authority of Respondent:
The respondent imposed a penalty on the petitioner under Section 129 of the Act, alleging non-compliance with tax invoice and delivery chalan requirements. The respondent conducted an inquiry, provided an opportunity to the petitioner, and imposed the penalty. The petitioner contended that the order was not maintainable as it was appealable.

Interpretation of Section 129 of the Act:
The Court considered the interpretation of Section 129 of the Act and other relevant provisions. It noted that the issue involved a question of law regarding the valuation of goods for penalty imposition and whether the penalty could be based on the margin of sale of the second-hand car. The Court found that the issues required final adjudication after giving an opportunity to file an affidavit.

Court's Decision and Interim Order:
The Court directed the respondents to file an affidavit-in-opposition within four weeks and allowed the petitioner to reply within two weeks thereafter. An interim order was granted for the release of the vehicle upon payment of the impugned demand excluding the CESS amount. The petitioner was required to furnish a bank guarantee for the CESS amount, renewable every six months. The vehicle was to be released within a week of fulfilling the specified conditions.

Conclusion:
The Court found that the issues raised in the writ application required further examination and granted an interim order for the release of the vehicle subject to specified conditions. The matter was scheduled for a hearing before the appropriate Circuit Bench after six weeks.