2023 (11) TMI 1155 - HC - GST

Validity of seizure order as well as penalty order - variation in the description of good actually found with that mentioned in the documents - requirement to examine the documents accompanying the goods at the time of seizure - HELD THAT - The finding that the parties had under valued the goods or there was any intention to avoid payment of correct amount as tax may justify seizure and penalty but cannot be made ground to not treat the petitioner as owner of the goods. The respondents ought to have examined the documents accompanying the goods at the time of seizure in terms of their own Circular dated 31.12.2018 in determining the said issue. The order to the extent it seeks to reject the prayer for release of goods in favour of the petitioner, cannot be sustained. It is accordingly quashed to the said extent only. The second respondent is directed to reconsider the issue relating to release of goods in favour of the petitioner keeping in mind the Circular dated 31.12.2018 and the fact that invoice and e-way bill were found accompanying, the consignment of seized goods - Petition disposed off.

Summary

Issues involved:
The petitioner challenged a seizure order and penalty order under the Central Goods and Services Tax Act, 2017, and sought to stop auction proceedings of the seized goods.

Summary:

Issue 1: Seizure and Penalty Orders
The second respondent seized a consignment of Areca Nuts from a truck and declined to release the goods to the petitioner, levying a penalty under Section 129(1)(a) of the Act. The respondent found a variation in the description of goods, leading to doubts about ownership.

Issue 2: Ownership of Seized Goods
The petitioner argued that documents clearly identified them as the consignee, and physical verification matched the goods with the invoice. The petitioner cited a departmental Circular stating that the consignee should be treated as the owner when accompanying documents are present.

Issue 3: Legal Interpretation
The Revenue contended that the petitioner fell under Clause (b) of Section 129(1) of the Act, supported by a previous judgment. However, it was acknowledged that the documents identified the petitioner as the consignee.

Issue 4: Comparison with Previous Case
A previous case involving a non-existent firm was distinguished from the current situation where the petitioner's firm existed, albeit with a cancelled registration. The court emphasized that the intention to avoid tax did not negate the petitioner's ownership rights as per the Circular.

Judgment:
The court quashed the order rejecting the release of goods to the petitioner, directing a reconsideration based on the Circular and document examination. The petitioner was advised to pursue further remedies through the appeal process.