2025 (1) TMI 1026 - HC - GST

Jurisdiction to pass an order u/s 129(3) of GST Act 2017 - alleged undervaluation of goods - providing bank guarantee for the release of detained goods - HELD THAT - The provisions of Section 129(1)(c) of the Act read with Rule 140 of the Rules provide for an eventuality wherein the seized goods can be released on provisional basis upon execution of a bond for the value of the goods in Form GST MOV-08 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax interest and penalty payable. It is deemed appropriate to dispose of the present writ petition and it is directed that the seized goods of the petitioner would be released on his taking steps in terms of Section 129(1)(c) read with Rule 140 of the Rules and Form GST MOV - 08 i.e. furnishing of the bond and the requisite bank guarantee. The petitioner may approach the Appellate Authority in accordance with provisions of Section 107 of the Act.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the authority under the Goods and Services Tax Act, 2017, had the jurisdiction to pass an order under Section 129(3) concerning the alleged undervaluation of goods.
Whether the petitioner's offer to provide a bank guarantee for the release of detained goods should have been accepted under Section 129(1)(c) of the Act.
Whether the petitioner should pursue the alternative remedy of appeal under Section 107 of the Act.
What interim protection, if any, should be granted to the petitioner pending the outcome of the appeal?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Jurisdiction of Authority under Section 129(3) of the Act

Relevant Legal Framework and Precedents: The petitioner challenged the jurisdiction of the authority to pass the order under Section 129(3) of the Goods and Services Tax Act, 2017, citing precedents such as Shamhu Saran Agarwal and Company Vs. Additional Commissioner, A.N. Enterprises Vs. Additional Commissioner, and Om Prakash Kuldeep Kumar Vs. Additional Commissioner, which held that the authority cannot determine undervaluation of goods.
Court's Interpretation and Reasoning: The court noted that the authority did not engage in valuing the goods but based its order on discrepancies in e-way bills provided by the petitioner.
Key Evidence and Findings: The discrepancy in the value of goods as per e-way bills during transit from Gujarat to Ghaziabad and then to Bareilly was central to the authority's decision.
Application of Law to Facts: The court found that the authority acted within its jurisdiction as it did not perform a valuation but rather relied on the petitioner's own documentation.
Treatment of Competing Arguments: The petitioner's argument about jurisdiction was countered by the respondent, who emphasized that the issue was not about valuation but discrepancies in self-reported values.
Conclusions: The court concluded that the jurisdictional challenge was not applicable as the authority did not assess the value but acted on existing discrepancies.

Issue 2: Acceptance of Bank Guarantee under Section 129(1)(c)

Relevant Legal Framework: Section 129(1)(c) and Rule 140 of the Goods and Services Tax Rules provide for the release of seized goods upon furnishing a bond and a bank guarantee.
Court's Interpretation and Reasoning: The court acknowledged the petitioner's willingness to provide a bank guarantee and directed the release of goods upon compliance with Section 129(1)(c).
Key Evidence and Findings: The petitioner's offer to provide a bank guarantee was not initially accepted by the authority.
Application of Law to Facts: The court applied the provisions allowing provisional release of goods upon furnishing the requisite bond and bank guarantee.
Conclusions: The court ordered the release of the petitioner's goods upon compliance with the statutory requirements.

Issue 3: Alternative Remedy of Appeal under Section 107

Relevant Legal Framework: Section 107 of the Act provides for an appellate mechanism against orders passed under the Act.
Court's Interpretation and Reasoning: The court emphasized that the issues raised, particularly factual discrepancies, should be addressed by the Appellate Authority.
Conclusions: The court directed the petitioner to approach the Appellate Authority for resolution of the issues.

Issue 4: Interim Protection Pending Appeal

Relevant Legal Framework: The court considered the need to protect the petitioner's interests pending the appeal.
Court's Interpretation and Reasoning: The court provided interim relief by ordering that the bank guarantee shall not be invoked for two weeks post-dismissal of the appeal.
Conclusions: The court granted interim protection to the petitioner to safeguard against immediate enforcement actions.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The issues sought to be raised by the petitioner, in the present petition, needs to be examined by the Appellate Authority, inasmuch as certain factual aspects have for the first time been raised in the writ petition, which were not before the Authority, which passed the order impugned."
Core Principles Established: The court reinforced the principle that factual disputes and jurisdictional challenges should be addressed through the appellate process provided under the Act.
Final Determinations on Each Issue: The court directed the release of goods upon compliance with statutory requirements and instructed the petitioner to pursue the appellate remedy, providing interim protection against the invocation of the bank guarantee.

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