2023 (10) TMI 102 - HC - GST

Seeking release of seized goods - imposing of security as well as penalty for release - intent to evade tax - documents shown by the driver of truck relating to the consignment and both the parties were not verified by the competent officer - HELD THAT - The petitioner has brought on record the various documents which shows that the purchaser was registered dealer and its registration is continuing / functioning. Further the returns have been filed and the electronic credit ledger also shows that the business is being undertaken by the purchaser i.e. M/s Shlok Brothers, Delhi. Once from the material brought on record, it shows that the business were being undertaken by the parties, the appellate as well as assessing authority were not justified in imposing/demanding the security as well as levying penalty under Section 129 (3) of the Act. The appellate authority has rebutted the documents on the ground that it is an afterthought. Once the material have been brought on record copy of which has also been filed as Annexure no. 9, the registration certificate of the purchaser in which at page no. 58 and 59 shows that registration of the purchasing firm is valid and the firm is functional - Once the purchaser is shown as functional / active the authorities ought not to have pass the impugned order confirming the seizure order dated 11.11.2020. The impugned orders dated 21.1.2022 passed by Additional Commissioner, Grade -2 (Appeal) Commercial Tax, Judicial Division Basti, respondent no. 1 and the order dated 11.11.2020 passed by Assistant Commissioner, Commercial Tax, Mobile Squad, Basti, respondent no.2 are hereby quashed - Petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the legality of the detention and seizure of goods, compliance with GST regulations, and the imposition of penalties under Section 129 (3) of the Act.

Detention and Seizure of Goods:
The petitioner, a proprietorship firm registered under the Assam Goods and Services Tax Act, sold goods to a firm in Delhi. The goods were intercepted during transit and subsequently seized on the grounds of alleged tax evasion. The petitioner contended that the goods were accompanied by genuine documents and that the purchaser was a registered firm regularly filing returns. The court noted that the documents provided by the petitioner demonstrated the purchaser's registration and ongoing business activities. Despite this, the goods were seized, and penalties were imposed. The court found that the authorities did not consider the material on record properly and quashed the orders of detention and seizure.

Compliance with GST Regulations:
The petitioner argued that the goods were transported with proper documentation and that the purchaser was actively engaged in business, as evidenced by returns filed and electronic credit ledger entries. The respondent, however, claimed that the purchaser was not conducting any business at the time of detention. The court reviewed the documents provided, including the purchaser's registration certificate and electronic credit ledger, which indicated ongoing business activities. The court held that the authorities were unjustified in imposing penalties and demanding security under Section 129 (3) of the Act, considering the evidence of the purchaser's business operations.

Imposition of Penalties:
The appellate authority had upheld the seizure order without adequately considering the evidence of the purchaser's business activities. The court found that the documents submitted by the petitioner proved the purchaser's registration and business operations, contradicting the basis for the seizure and penalties. Consequently, the court quashed the impugned orders and allowed the writ petition with all consequential benefits.

Separate Judgement:
No separate judgment was delivered by the judges in this case.