2025 (1) TMI 1515 - HC - GST

Challenge to confiscation notice issued by the respondent dated 02.08.2024 under Section 130 of the Tamil Nadu Goods and Service Tax Act 2017 - HELD THAT - After considering all the reasons and material evidences the Officials have come to the conclusion that the goods were transported only with the intention of evading the payment of tax under the pretext that the gold jewelleries were carried to showcase the same to its customers by misusing the provisions of Rules 138 and Rule 55 of the CGST Rules. In the impugned notice also the Officials have clearly stated all the aforesaid aspects - Under these circumstances it is a bounded duty of the petitioner to file an appropriate reply and satisfy the respondent on the aspects of the various opinion formed against the petitioner as indicated in the impugned confiscation notice. As far as the over-riding effect of Section 129 of TNGST Act over Section 130 of the of TNGST Act due to the non-obstante clause is concerned it would be applicable with regard to the detention and seizure of goods and not for the confiscation i.e. the non-obstante clause available in Section 129 would be applicable only for the seizure. In other words if there is any provision contained in the Act with regard to the seizure in any other manner Section 129 will supersede over the same. Therefore as far as confiscation is concerned the said non- obstante clause available in Section 129 will not supersede the provisions of Section 130 since Section 129 only talks about the seizure of the goods and not about confiscation. Thus both these Sections are independent in nature. In the judgment of Synergy Fertichem 2019 (12) TMI 1213 - GUJARAT HIGH COURT it has been held that any opinion of the authority to be formed is not subject to objective test. The purpose of invoking Section 130 of the Act at the very threshold the authorities need to make out a very strong case. Merely on suspicion the authorities may not be justified in invoking Section 130 of the Act straightway. In this case the officials had formed clear cut prima facie opinion to make out a very strong case in their favour for issuing notice under Section 130 of the TNGST Act. Conclusion - The authorities had sufficient prima facie evidence to issue the confiscation notice and that the petitioner failed to provide adequate documentation to refute the allegations. The Court clarifies that Section 129 and Section 130 of the TNGST Act operate independently with Section 129 dealing with seizure and Section 130 with confiscation. Petition dismissed.

Summary

The present writ petition challenges the confiscation notice issued under Section 130 of the Tamil Nadu Goods and Service Tax Act, 2017 (TNGST Act). The petitioner, a company involved in the jewellery business, transported gold ornaments from Mumbai to Tamil Nadu for display at exhibitions and to potential re-sellers. The petitioner appointed an agent in Coimbatore to manage logistics and procure orders. The gold ornaments were sent with returnable delivery challans, and the petitioner claims the intention was solely for display purposes, not for sale.

The petitioner argues that under Rule 138(4) of the CGST Rules, 2017, an e-way bill is not required if goods are transported for exhibition purposes. Rule 55 allows goods to be transported with a delivery challan without an e-way bill when no sale is involved. The petitioner contends that the goods were seized by local police while being transported back to Chennai, and the confiscation notice was issued on several grounds, including unauthorized movement by the agent, lack of valid insurance, and suspicion of tax evasion.

The petitioner further argues that the confiscation notice under Section 130 was issued without prima facie evidence of sale or supply, which is required to invoke this section. They assert that the goods were solely for display and not for sale, and thus the notice was wrongly issued. The petitioner relies on precedents from the Gujarat High Court to support their contention that the authorities must have strong evidence before invoking Section 130.

The respondent, represented by the Additional Government Pleader, argues that the goods were transported with the intention to evade tax. They admit that no e-way bill is needed for non-sale purposes but point out discrepancies in the delivery challans, such as missing item-wise details and receiver's signatures. The respondent suspects that the goods were intended for sale under the guise of showcasing for an exhibition.

The respondent highlights several suspicious activities and inconsistencies found during inspections at the petitioner's premises, such as missing stock, empty lockers, contradictory statements from staff, and issues with CCTV footage. These findings led the authorities to conclude that the goods were transported for sale, justifying the issuance of the confiscation notice under Section 130.

The Court, after considering the submissions, finds no merit in the petitioner's arguments. It concludes that the authorities had sufficient prima facie evidence to issue the confiscation notice and that the petitioner failed to provide adequate documentation to refute the allegations. The Court clarifies that Section 129 and Section 130 of the TNGST Act operate independently, with Section 129 dealing with seizure and Section 130 with confiscation.

The Court dismisses the writ petition, granting the petitioner the liberty to file a detailed reply to the confiscation notice within 15 days. The respondent is directed to consider the reply and make a decision independently, ensuring a personal hearing is provided to the petitioner. The Court emphasizes that its observations should not influence the respondent's decision-making process.