2024 (5) TMI 652 - HC - GST

Validity of reduction of fine and penalty - Jurisdiction of appellate authority - Confiscation of Gold ornaments u/s 130 - Transportation of Gold without proper documents - penalty - restriction on right to appeal - HELD THAT - In Wootton v. Central Land Board it is said that the court / appellate authority may allow such appeal where the appeals lies only on the question of law if it appears that the adjudicating authority s decision would produces manifest injustice or is plainly wrong. Even otherwise if there is manifest self misdirection and so on so forth or erroneous exercise of discretion it would enable the appellate authority to interfere with the decision whether the discretion is vested in the adjudicating authority as such. Any erroneous exercise of discretion is always considered to be an error in point of law. Where the right of appeal is unrestricted the appellate authority or the court should not interfere with the adjudicating authority decision as it is based on its own observance of the material / evidence before it. However where the appellate authority is equally empowered to exercise the discretion under the appellate provision the appellate authority is entitled to evaluate the material / evidence to come to a different conclusion or order than the adjudicating authority - In the judgment impugned in the present case the appellate authority having considered the facts and circumstances of the case as well as the evidence as exercised the discretion under Section 107 (11) in modifying the order of penalty / fine to four times of the tax payable. Whether the discretion exercised by the appellate authority under Section 107 (11) of the CGST /SGST Act is arbitrary unreasonable based on irrelevant consideration or there is some other legal error? - HELD THAT - If the order of the appellate authority is based on relevant consideration and is not manifestly injust improper or unreasonable this court would have very little scope for interference in the discretion exercised by the appellate authority in modifying the order passed by the adjudicating authority - The judgment of the Supreme court in the case of Gunwant Lal Godawat 2009 (6) TMI 660 - RAJASTHAN HIGH COURT was rendered on interpreting the provisions of Gold Control Act 1968 and does not have any bearing on the facts of the present case where the question of the powers of the appellate authority under Section 107 (11) of the CGST / SGST Act. The confiscation of goods or vehicle is a coercive steps. It is an aggravated form of sanction to deter the persons from avoiding taxes. However the provisions are to be strictly interpreted as it is interferes with the right to property as envisaged under Article 300 A the Constitution of India - Section 130 is an independent provision empowering confiscation in cases of intention to avoid tax. In a given case the same breach or contravention of the provision of the Act or Rules can lead to detention of seizure of the goods under Section 129 and confiscation under Section 130(1) of the Act. In Anandeshwar Traders 2021 (1) TMI 1091 - ALLAHABAD HIGH COURT it has been held that the appellate authority cannot affirm order on fresh reasons outside the impugned order. The further enquiry cannot be made for this purpose. The appellate authority is empowered to make further enquiry after deciding that the impugned order is erroneous such enquiry must be to decide the issue in appeal. From the reading of sub-section (11) it is evident that the appellate authority has ample power to decide the issue afresh and make enquiry to decide the issue in appeal - Section 107 (11) has wider amplitude than the normal appellate provisions against an order of Court/ Tribunal. Section 107 should be given liberal interpretation and not restricted one as it has been contended by Sri. Mohammed Rafiq. The impugned order passed by the appellate authority do not suffer from any unreasonableness neither based on any irrelevant consideration nor there is any other legal infirmity which require this court to interfere with the orders impugned in the present writ petitions - petition dismissed.

Summary

Issues Involved:
1. Legality of confiscation of gold ornaments under Section 130 of the CGST/SGST Act.
2. Quantum of penalty and fine in lieu of confiscation.

Summary of Judgment:

1. Legality of Confiscation:
The respondent transported gold ornaments without valid documents, violating Section 31 of the CGST/SGST Act and Rules 46, 55, and 55A, with the intent to evade tax. The State Tax Officer confiscated the gold under Section 130, rejecting the respondent's claim of having soft copies of bills. The appellate authority upheld the confiscation as valid, confirming the respondent's violation of the Act.

2. Quantum of Penalty and Fine:
The State Tax Officer imposed a fine equal to the market value of the seized gold. The appellate authority reduced the fine to Rs. 4,03,672/- from Rs. 33,63,954/-, considering the respondent's status as a registered person maintaining proper books of accounts and filing returns. The appellate authority's discretion under Section 107 (11) of the CGST/SGST Act was justified, as it evaluated the facts and evidence to modify the penalty.

Legal Reasoning:
The court emphasized that the appellate authority has wide powers under Section 107 (11) to confirm, modify, or annul the adjudicating authority's decision. The discretion exercised by the appellate authority was neither arbitrary nor unreasonable. The appellate authority's decision was based on relevant considerations and did not suffer from any legal infirmity. The court dismissed the writ petitions, upholding the appellate authority's order.

Conclusion:
The High Court dismissed the writ petitions, affirming the appellate authority's reduction of the fine and penalty, and upheld the legality of the confiscation under Section 130 of the CGST/SGST Act.