Confiscated goods and vehicles can be released by depositing 25% of the amount mentioned in the Order in cash and furnishing a bank guarantee for the balance

[CA Bimal Jain]

The Hon’ble Punjab and Haryana High Court in the case of M/S. KANCHAN SUPPLIER THROUGH ITS PROPRIETOR VERSUS STATE OF PUNJAB AND OTHERS - 2024 (2) TMI 417 - PUNJAB AND HARYANA HIGH COURT held that the Assessee has the right to appeal against the Order. Further, the vehicle and the goods confiscated shall be released upon furnishing 25% of the amount mentioned in the Impugned Order, and the outstanding balance shall be secured by furnishing a bank guarantee.

Facts:

M/s. Kanchan Supplier (“the Petitioner”) was a proprietorship concern situated in the State of Uttar Pradesh. They were issued a Notice in FORM GST MOV-02 dated December 26, 2023 (“the Impugned Notice-1”) and FORM GSTR MOV-10 dated January 02, 2024 (“the Impugned Notice-2”) without jurisdiction. The Impugned Notices were issued because it was found that the Petitioner's supply chain had been verified to be ingenuine, and the purchases had been made at an earlier point in time. The said persons did not pay any tax, and it was found that bogus transactions were made to defraud the government exchequer.

The Petitioner did not appear before the Bench on January 16, 2024. After that, the matter was decided on the next date, and an Order was passed on January 18, 2024, under the FORM MOV-11 (“the Impugned Order”) to confiscate the goods and the vehicle. Further, penalty and fine were imposed under the Sections 130(1) and 130(2) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). The liability of penalty and fine was assessed at Rs. 5,33,004/- against the value of goods of Rs. 9,87,044/-.

Hence, aggrieved by the Impugned Order, the Petitioner has filed the present writ petition.

Issue:

Whether goods and vehicles can be released by depositing 25% of the amount mentioned in the Order in cash and furnishing a bank guarantee for the balance?

Held:

The Hon’ble Punjab and Haryana High Court in M/S. KANCHAN SUPPLIER THROUGH ITS PROPRIETOR VERSUS STATE OF PUNJAB AND OTHERS - 2024 (2) TMI 417 - PUNJAB AND HARYANA HIGH COURT held as under:

• Relied on, the case of the THE STATE OF PUNJAB VERSUS M/S SHIV ENTERPRISES & ORS. - 2023 (1) TMI 842 - SUPREME COURT wherein the Hon’ble Apex Court set aside an order passed by the High Court on the ground that it was premature for the High Court to quash the show cause notice issued under Section 130 of the CGST Act by invoking Article 226 of Constitution of India.  
• Held that the vehicle and the goods shall be released upon furnishing 25% of the amount mentioned in the Impugned Order, and the outstanding balance shall be secured by furnishing a bank guarantee. Further, the contention raised that the consignee, being local as such, would furnish the surety bonds is not liable to be accepted since the consignee is not before the bench and they cannot direct the said person to furnish any surety bonds. Hence, the writ petition was disposed of with the liberty to challenge the Impugned Order.

Our Comments:

Section 130 of the CGST Act talks about “Confiscation of goods or conveyances and levy of penalty”. According to Section 130 (2) of the CGST Act, whenever confiscation of any goods or conveyance is authorized by the CGST Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit, provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable and the aggregate of such fine and penalty leviable shall not be less than the penalty equal to hundred per cent of the tax payable on such goods. If any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given the option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.

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