2022 (9) TMI 314 - HC - GST

Seeking release of consignment - Failure to issue detention order within 7 days from the date of detention / seizure - application of concept of working day and holiday - principles of natural justice - HELD THAT - There are serious flaws in the procedure followed as neither order of detention nor SCN have been issued within time. A combined appreciation of the proviso under Section 129(1) and 129(3) makes it apparent that the order of detention is intended to be issued prior to the issuance of the SCN, which, in terms of Section 129(3), must be issued within 7 days from the date of detention/seizure. That apart, there are other lapses in the procedure as well, such as i) the officer not having obtained written permission in Form GST MOV-03 from his superiors for extension of time for completion of inspection proceedings, ii) service of a copy of order of extension upon the person in charge of conveyance and iii) non-adherence to the requirement for uploading of Part-B of Form GST EWB-03 on the portal - Incidentally, notice has, admittedly, not been issued on 22.08.2022, but only on 24.08.2022. That apart, Section 129(3), read with the proviso thereunder, requires a show cause notice to be issued within 7 days of detention or seizure. Vide an amendment brought to clause 2(e) of Circular dated 13.04.2018 vide Circular No.49/23/2018-GST dated 21.06.2018 in F.No.CBEC/20/16/03/2017-GST, the expression three working days in the April circular has been replaced by the expression three days . In such circumstances, neither the petitioner nor the respondents can have the luxury of reference to a holiday to delay or protract the proceedings. This is precisely what the respondents seek to do in the present case. This is made explicitly clear from the Circular and the amendment brought about on 21.06.2018 and the submission of learned Government Pleader runs directly contrary to the amendment under the Circular and the purpose it evidently seeks to advance. These submissions are thus found to be misconceived and hyper-technical, and are rejected. Since the order of detention is dated 22.08.2022, it is clearly beyond the date provided and in my view, is a serious flaw, one that vitiates the proceedings for interception in full and in entirety. In this context, learned Additional Government Pleader relies upon Section 10 of the General Clauses Act, 1897, as per which, if any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within the prescribed period and if the office or Court were closed on that day or the last day of prescribed period, that act or proceeding shall be considered as done or taken in due time if it done or taken on the next day afterwards when the Court or office were open. The procedure that has been followed by the respondents in this matter is contrary to statutory requirements as well as the instructions issued by the Commissioner - Petition allowed.

Summary

Issues Involved:
1. Legality of the detention of the consignment.
2. Adherence to procedural requirements under the Goods and Services Tax Act, 2017.
3. Validity of the actions taken by the respondents in light of statutory and procedural guidelines.

Issue-wise Detailed Analysis:

1. Legality of the Detention of the Consignment:
The petitioner sought a mandamus directing the respondents to release the consignment of Polystardone XL-10, which was intercepted and detained on 13.08.2022 by the Commercial Taxes Department. The court noted that no formal order of detention had been issued. The interception was based on the officer's presumption that the goods were to be unloaded at an unregistered place, but no reasons or details were provided for this assumption. The court emphasized that without a formal order of detention, the consignment should not have been retained by the authorities, as per the proviso to Section 129(1) of the Goods and Services Tax Act, 2017.

2. Adherence to Procedural Requirements Under the Goods and Services Tax Act, 2017:
The court examined the sequence of events and the forms issued post-interception. It was noted that several procedural lapses occurred:
- Form GST MOV-01 (statement of the driver) and Form GST MOV-02 (order of physical verification) were issued on 13.08.2022.
- No GST EWB-03 Part A report was prepared within 24 hours.
- No written permission in Form GST MOV-03 was obtained for an extension of time beyond three working days for the conclusion of the inspection.
- Form GST MOV-04 (report of physical verification) was issued on 13.08.2022, but no final report in GST EWB-03 Part B was uploaded within three days.
- The order of detention (Form GST MOV-06) and show cause notice under Section 129(3) were issued on 22.08.2022 but dispatched only on 24.08.2022, beyond the prescribed timeline.

3. Validity of the Actions Taken by the Respondents:
The court found that the respondents did not follow the statutory and procedural guidelines properly. The learned Additional Government Pleader's argument that the limitation of seven days could be extended due to holidays was rejected. The court highlighted that the GST Department operates 24/7, and the concept of 'working day' and 'holiday' does not apply in such matters. The failure to issue the order of detention within the prescribed timeline of seven days from the date of detention/seizure was a serious flaw that vitiated the entire proceedings. Additionally, the court rejected the argument that the directions in Form GST MOV-02 could be considered an order of detention, as there is a critical difference between directing the driver to station the vehicle and issuing a formal order of detention.

Conclusion:
The court concluded that the procedure followed by the respondents was contrary to statutory requirements and the instructions issued by the Commissioner. The submissions of the revenue that the Circular has no statutory force and the instructions thereunder are flexible were rejected. The court granted the mandamus as sought by the petitioner and allowed the writ petition, directing the release of the consignment.