Case Law Details
Cheminova India Limited Vs State of U.P. And 2 Others (Allahabad High Court)
Allahabad High Court heard a writ petition filed by Cheminova India Limited against an order requiring payment of ₹92,28,444 under Section 129(3) of the GST Act, 2017. The petitioner challenged the validity of the order, arguing that the authority lacked jurisdiction based on a 2018 circular issued by the Commissioner of Commercial Tax, Uttar Pradesh. It was contended that under various judicial precedents, authorities under Section 129 could not assess alleged undervaluation of goods. Additionally, the petitioner had offered to provide a bank guarantee for the release of seized goods, which was not accepted. The respondents, however, maintained that the order was based on discrepancies in e-way bill values rather than an independent valuation, asserting that the petitioner had an alternative appellate remedy.
After considering the arguments, the Court ruled that factual issues raised by the petitioner should be addressed by the Appellate Authority under Section 107. It directed that the seized goods be released upon submission of a bond and bank guarantee as per Section 129(1)(c) read with Rule 140 of the GST Rules. Furthermore, the Court provided temporary protection by ordering that if the petitioner’s appeal was dismissed, the bank guarantee would not be invoked for two weeks, allowing time for further legal recourse. The petition was accordingly disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This writ petition has been filed by the petitioner aggrieved of the order dated 04.01.2025 passed by Respondent no.3 whereby, order under Section 129(3) of the Goods and Services Tax Act, 2017 (for short ‘the Act’) has been passed requiring the petitioner to pay a sum of Rs.92,28,444/-.
2. Several submissions have been made by counsel for the petitioner seeking to question the validity of the order on merits including the fact that the authority passing the order, in terms of the Circular No.2018-19/230/1819010 dated 09.05.2018 issued by the Commissioner, Commercial Tax, U.P., had no power to pass the order on the grounds indicated therein i.e. the action of the petitioner is in violation of the provisions of Section 15 of the Further submissions have been made that the various judgments of this Court including Shamhu Saran Agarwal and Company Vs. Additional Commissioner [2024 (2) TMI 187], A.N. Enterprises Vs. Additional Commissioner [2024 (168) Taxman.com 586], and Om Prakash Kuldeep Kumar Vs. Additional Commissioner, Grade-2, [2024 (83) G.S.T.L. 71] have also laid down that the authority exercised power under Section 129 of the Act cannot determine the alleged undervaluation of the goods in question.
Further submissions have been made that though the petitioner offered to give a bank-guarantee for release of the goods detained in terms of provisions of Section 129(1)(c) of the Act, however, the same was not accepted.
3. Learned counsel for the respondents made submission that the plea raised pertaining to the authority lacking jurisdiction in case of undervaluation of goods, has no applicability to the present case inasmuch as the authority has not valued the goods in question. In fact, the order passed is based on the e-way bills of the petitioner himself, wherein there is difference in the value of the same goods, which were transferred from Gujarat to Ghaziabad and from Ghaziabad to Bareilly and therefore, plea raised in this regard cannot be accepted. Submissions have also been made that petitioner has an alternative remedy of filing appeal, wherein all the issues sought to be raised, can be raised by the petitioner and as the petitioner, now in the present petition, seeking to raise factual issues pertaining to discrepancy between the two bills, the same can only be examined by the Appellate
4. Learned counsel for the petitioner submitted that as offered before the Authority, the petitioner is prepared to submit the bank guarantee for the demand raised and approach the Appellate Authority under provisions of Section 107 of the Act. However, a prayer has been made that on decision of the Appellate Authority, the interest of the petitioner may be ordered to be protected for a short while, before remedy against the Appellate Order, in case the same goes against the petitioner, can be availed by the petitioner looking to the huge amount involved in the matter.
5. Having considered the submissions made by the counsel for the parties and on perusal of the record of the case, 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.
6. 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.
7. In those circumstances, we deem it appropriate and therefore, dispose of the present writ petition and direct 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
8. In the peculiar circumstances, it is ordered that in case the appeal filed by the petitioner is dismissed, for a period of two weeks from the date the appeal is dismissed, the bank guarantee provided by the petitioner shall not be invoked by the respondents.
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