9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 1512 - HC - GSTInterplay between Section 129 and 130 of the CGST Act - Taking action under Section 130 of the CGST Act only on initiation of action under Section 129 of the CGST Act - action taken under Section 130 of the CGST Act, without a prior invocation of Section 129 of the Act would render the proceedings under Section 130 of the CGST Act invalid or not - non affixture of DIN Number on the order of confiscation - invalid order or not - violation of principles of natural justice. HELD THAT - The question of the interplay between Section 129 and 130 of the CGST Act was considered, by a Division Bench of the High Court of Gujarat and Ahmadabad, in a case of Synergy Fertichem Pvt. Ltd Vs. State of Gujarat 2019 (12) TMI 1213 - GUJARAT HIGH COURT . This judgment was followed by the High Court of Gujarat in the case of Siddhbali Stone Gallery Vs. State of Gujarat 2020 (3) TMI 697 - GUJARAT HIGH COURT - In Synergy Fertichem Pvt. Ltd Vs. State of Gujarat, the Division Bench of the Hon ble High Court of Gujarat was considering a similar question of whether proceedings under Section 130 of the CGST Act can be initiated without any prior proceedings under Section 129 of the CGST Act. Section 129 applies only when goods are being transported. The provisions of Section 129 would not apply in relation to a situation where the goods are not in transit. The language of Section 129(1) specifically states that detention or seizure of goods can be carried out while the goods are in transit, in contravention of the Provisions of the Act or the Rules made there under. In the case of Section 130 confiscation of goods or conveyances and levy of penalty can be done subject to any of the five conditions enumerated in Section 130 (1) being available. In the present case, the conveyances and goods were stopped and detained on 27.04.2024. Thereafter, a statement was taken from the driver of the conveyances, in FORM GST MOV-01 on 27.04.2024. After recording the statement, the 2nd respondent issued FORM GST MOV-10 dated 01.05.2024, invoking the provisions of Section 130 of the CGST Act. In this notice, the discrepancies which were noticed by the 2nd respondent, were set out, and it was stated that these discrepancies lead to a prima facie conclusion that the transport of goods was done with an intention to evade tax. It is a settled principle of law that a show cause notice would have to set out the entire case against the noticee and noticee should be given an opportunity to rebut the same. In that process, the noticee can always ask for the material on the basis of which the show cause notice has been issued - In the present case, the order of confiscation contains various details which were not placed before the petitioners in the show cause notices of 01.05.2024. The 2nd respondent did not choose to respond to the request of the petitioners for supply of the material on the basis of which the show cause notice has been issued would also amount further violation of the principles of natural justice. The confiscation orders are set aside and the matters are remanded back to the 2nd respondent for proper adjudication following principles of natural justice - petition allowed by way of remand.
Issues Involved:
1. Whether action can be taken under Section 130 of the CGST Act only after action had been initiated under Section 129 of the CGST Act? 2. Whether action taken under Section 130 of the CGST Act, without a prior invocation of Section 129 of the Act, would render the proceedings under Section 130 of the CGST Act invalid? 3. Whether non-affixture of a Document Identification Number (DIN) on the order of confiscation would render the said order invalid? Issue-wise Detailed Analysis: 1. Invocation of Section 130 of the CGST Act after Section 129: The court examined the interplay between Sections 129 and 130 of the CGST Act. Section 129 pertains to the detention, seizure, and release of goods and conveyances in transit when there is a contravention of the provisions of the Act. Section 130 deals with the confiscation of goods or conveyances and the levy of penalties when there is an intent to evade tax. The court noted that the provisions of Section 129 apply only when goods are in transit, whereas Section 130 can be invoked directly if there is a prima facie intention to evade tax. The court referenced the judgment of the High Court of Gujarat in Synergy Fertichem Pvt. Ltd. Vs. State of Gujarat, which clarified that the authorities must first determine the nature of the contravention and whether there was an intent to evade tax before invoking Section 130. 2. Validity of Proceedings under Section 130 without Prior Invocation of Section 129: The court acknowledged that while the authorities can directly invoke Section 130 without prior proceedings under Section 129, such action must be based on specific reasons recorded in writing, establishing a prima facie intention to evade tax. In the present case, the authorities issued a notice under Section 130 after detaining the goods and conveyances, citing discrepancies that suggested an intent to evade tax. However, the court found that the show-cause notice did not provide sufficient details or reasons for invoking Section 130 directly. The court emphasized that a show-cause notice must set out the entire case against the noticee, allowing them an opportunity to rebut the same. The failure to provide the necessary details and respond to the petitioners' request for the inquiry report constituted a violation of the principles of natural justice. 3. Non-affixture of DIN on the Order of Confiscation: The court examined the requirement of affixing a DIN on orders or communications from tax authorities, as mandated by the Central Board of Indirect Taxes and Customs circular dated 23.12.2019. The circular does not distinguish between orders communicated directly to dealers and those uploaded on the portal. The absence of a DIN on the confiscation order dated 25.05.2024 rendered the proceedings invalid. Conclusion: The court allowed the writ petitions, setting aside the confiscation orders dated 25.05.2024 and remanding the matters back to the 2nd respondent for proper adjudication, following the principles of natural justice. The court emphasized the need for detailed reasons in show-cause notices and the inclusion of a DIN on all orders or communications from tax authorities. There were no orders as to costs, and any pending miscellaneous petitions were closed.
|
