2024 (6) TMI 232 - HC - GST

Detention of goods alongwith vehicle - procedure of detention under Section 129 of CGST Act, 2017 not followed - Section 130 of CGST Act, 2017 invoked directly and the confiscation of the goods ordered - auction of confiscated goods - HELD THAT - When it is the case of the petitioner that he bona fidely purchased the goods from an unregistered dealer for valuable consideration under authenticated documents, it is his duty to establish the same. As he claims to have purchased the iron scrap from an unregistered dealer at Nellore, owes a responsibility to prove the genuineness of the sale transaction. As rightly argued, the authorities can initiate proceedings under Section 129 of CGST Act, 2017 against the petitioner and conduct enquiry by giving opportunity to establish their case. Section 129 of CGST Act, 2017 speaks about the detention, seizure, and release of goods and conveyances in transit, whereas, Section 130 of CGST Act, 2017 deals with the confiscation of goods and levy of tax, penalty and fine thereof. The harmonious reading of Sections 129 and 130 of CGST Act, 2017, keeping in mind the object and purpose, would construe that they are independent of each other. Section 130 of CGST Act, 2017 is not dependent to Section 129 of CGST Act, 2017. They are mutually exclusive. This Writ Petition is disposed of giving liberty to the Respondent Nos. 1 and 2 to initiate proceedings against the Petitioner under Section 129 of CGST/APGST Act, 2017 within two weeks from the date of receipt of a copy of this order and conduct enquiry by giving an opportunity of hearing to the Petitioner and pass appropriate orders in accordance with governing law and rules. In view of the same, the auction notice impugned in the writ petition is set aside.

Summary

Issues involved: Detention of goods without following due process of law u/s 129 of CGST Act, 2017 and auctioning confiscated goods u/s 79 of CGST Act, 2017 during appeal pendency.

Summary:
The petitioner filed a Writ Petition seeking a writ of Mandamus to challenge the detention of goods and a vehicle without following due process of law as per Section 129 of CGST Act, 2017, and the auctioning of confiscated goods under Section 79 of CGST Act, 2017 during the pendency of an appeal. The Respondent Authorities directly invoked Section 130 of CGST Act, 2017 for confiscation without following the procedure of detention under Section 129. The petitioner claimed to have purchased goods from an unregistered dealer with valid documents but faced confiscation proceedings. The Court noted the violation of principles of natural justice in the impugned order and emphasized the need for the petitioner to establish the genuineness of the transaction. Sections 129 and 130 of CGST Act, 2017 were discussed as independent provisions. The Court disposed of the petition, allowing the authorities to initiate proceedings u/s 129 of CGST/APGST Act, 2017, conduct an enquiry, and release the detained goods and vehicle upon certain conditions, setting aside the auction notice.

In the judgment, it was highlighted that the Respondent Authorities did not follow the proper procedure of detention under Section 129 of CGST Act, 2017, and directly resorted to confiscation under Section 130. The Court acknowledged the petitioner's claim of purchasing goods from an unregistered dealer with valid documents but emphasized the need for the petitioner to prove the genuineness of the transaction. The Court emphasized the importance of following principles of natural justice in such proceedings and noted the need for a harmonious reading of Sections 129 and 130 of CGST Act, 2017 as independent provisions. The judgment allowed the authorities to initiate proceedings under Section 129 of CGST/APGST Act, 2017, conduct an enquiry, and release the detained goods and vehicle upon specified conditions, while setting aside the impugned auction notice.