Shree Enterprises Vs CTO (Karnataka High Court)
Facts- Petitioners have challenged the order of confiscation as illegal, seeking all consequential reliefs. Petitioners are claiming to be the consignee and transporter of the goods in question. It is their contention that the Respondent has detained the goods and vehicle illegally for more than a month in violation of the procedure prescribed by the Government of India through Circulars and confiscated the goods and vehicle without there being any order of confiscation or there being arrears of tax and penalty.
The Hon’ble Karnataka High Court held as under
It is not in dispute that the notice under Section 129(1)(b) of CGST/KGST Act, 2017 was issued by the respondent on 2.01.2019, to which objections were filed by the petitioners. In such circumstances, it was incumbent on the part of the Respondent to consider the said objections and pass a speaking order quantifying the tax and penalty and thereafter to release the goods subject to payment of tax and penalty or to confiscate the goods. However, the respondent considering the objections filed by the petitioners proceeded to pass the impugned order of confiscation of goods and conveyance under Section 130(1)(ii) r/w 122(1)(ii) and (iv) of the CGST Act, whereby penalty and fine payable by the petitioner is quantified. Reference made by the Revenue counsel to Section 160 of the CGST Act to treat the said impugned order as an order of penalty cannot be countenanced for the reason that it is not mere wrong quotation of provisions of law in passing the order impugned but the procedure prescribed is disturbed.
It is well settled law that unless the tax and penalty are quantified, no confiscation order could be passed. It is necessary to provide an opportunity to the owner of the goods or person incharge of the goods vehicle to make payment of tax and penalty subsequent to the objections filed, if any.
Without providing such an opportunity, proceeding to pass confiscation order directly would not be construed as any mistake, defect or omission to come within the ambit of Section 160 of the CGST Act. It is a fundamental flaw which goes to the root of the matter and the said lacuna cannot be cured by referring to Section 160 of the CGST Act when the Circular/instructions issued by Government of India clarifies the procedure to be followed by the proper officer while dealing with these matters. Passing of the penalty order being sine qua non in the proceedings initiated by the respondent under Section 129(1)(b) of the Act and the same being missing, the impugned confiscation order cannot be held to be justifiable.
GST regime being in the initial stages, Court deems it appropriate to quash the order impugned and restore the notice issued by the respondent under Section 129(1)(b) of the Act. Respondent shall consider the objections/reply filed by the petitioners and pass appropriate orders in accordance with law in an expedite manner (preferably within seven days) after quantifying the tax and penalty for the purpose of Section 129 of the Act – On quantification of penalty, goods and conveyance shall be released to the petitioners subject to payment of the penalty quantified.
FULL TEXT OF THE HIGH COURT JUDGEMENT / ORDER IS AS FOLLOWS:
Petitioners have challenged the order of confiscation issued by the respondent in Form GST VIG- 10 under Section 130(1), (2) and 122 (1)(ii) and (iv) of the Central Goods and Service Tax Act, 2017 (for short ‘CGST Act’) dated 29.01.2019 as illegal, seeking all consequential reliefs.
2. The petitioners are claiming to be the consignee and transporter of the goods in question. It is the contention of the petitioners that the respondent has detained the goods and vehicle illegally for more than a month, in violation of the procedure prescribed by the Government of India through Circulars and confiscated the goods and vehicle without there being any order of confiscation or there being arrears of tax and penalty.
3. The petitioners submit that one M/s Manish Enterprises sold 230 bags of Areca nut consisting of 16,100 kgs to petitioner No.1. The said transaction suffered IGST. Respondent intercepted the vehicle carrying the said goods on 4.12.2018 at 10.30 p.m. at Chennagiri near Tarala Balu Circle. Despite the driver, in-charge of the vehicle produced the tax invoices and e-way bill to the respondent, the respondent suspected the genuineness of the said documents and initiated an enquiry. It is the grievance of the petitioners that the respondent came to an unilateral presumption that the consignor is indulging in issuing tax invoices fraudulently without causing any movement of goods in violation of Section 122(1) of KGST Act which was unwarranted. Respondent passed a confiscation order after issuing the penalty notice without considering the objections filed by the petitioners and there being no penalty order passed. Hence, petitioners seek for setting aside the order impugned being ex-facie illegal.
4. Learned HCGP appearing for the revenue would submit that the contents of the impugned order indicates the quantification of the penalty and fine payable under Section 130(1) or 130(2) of CGST Act. It is a bonafide mistake committed in quoting a wrong provision of law. Indeed the said penalty and fine quantified relates to the penalty liable to be paid by the petitioners under Section 129 of CGST Act. Reference is made to Section 160 of CGST Act to contend that no assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings done in pursuance of any of the provisions of CGST Act shall be invalid or deemed to be invalid merely by reasons of any mistakes, defects or omissions therein, if said assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings are in substance and effect, in conformity with or according to intents, purposes and requirements of the Act or any existing law. Any mistake committed in the order would not be invalid in terms of Section 160 of the CGST Act.
5. It is also submitted that on enquiry, it was noticed that the consignor was indulged in bill trading activities. Issuing tax invoices without there being any supply of goods is an offence falling under Section 122 (ii) of the CGST/KGST Act, 2017. Construing the confiscation order as the penalty order, the writ petitions require to be dismissed.
6. I have carefully considered the submissions of the learned counsel for the parties and perused the material on record.
7. It is apt to refer to relevant provisions of the CGST Act, which reads thus:
“Section 129 – Detention, seizure and release of goods and conveyances in transit:
Statutory provision
(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,–
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