Goods and conveyance detained will be released upon payment of penalty and furnishing of a bank guarantee

Ravi Trading Co. Vs Deputy Commissioner of State Tax (Gujarat High Court)

The Hon’ble Gujarat High Court in Ravi Trading Co. v. Deputy Commissioner of State Tax [SCA no. 6407 of 2023 dated May 4, 2023] directed the Revenue Authority to release goods on conditions that the assessee deposits a certain amount of penalty towards tax in lieu of confiscation of conveyance and furnish bank guarantee in lieu of confiscation of goods.

Facts:

The Revenue Department (“the Respondent”) seized the goods of Ravi Trading Co. (“the Petitioner”) while they were being transported in a conveyance with registration number MH-50-2399. The goods were seized under Section 129 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). Additionally, the Respondent issued an order dated April 09, 2023, GST MOV-11, under Section 130 of the CGST Act.

Issue:

Whether goods can be released by furnishing a bank guarantee and conveyance by paying the required penalty?

Held:

The Hon’ble Gujarat High Court in SCA no. 6407 of 2023 held as under:

• Directed that, the goods of the Petitioner as well as vehicle bearing registration MH-50-2399, will be released subject to the following conditions,
  • The Petitioner must pay a penalty of INR 93,750 to the authorities as the tax remains unassessed.
  • The Petitioner should provide a Bank Guarantee of INR 19,68,750 as a fine in lieu of confiscating the goods.
  • Additionally, the Petitioner must deposit INR 93,750 as a fine instead of confiscating the conveyance.
• Held that, the goods and the vehicle both shall be released by the authority. Further, non-compliance with any of the aforementioned conditions by the Petitioner, shall render the interim relief granted earlier being revoked.

Further, the Hon’ble Gujarat High Court tagged the present Petition with Special Civil Application No. 8353 of 2022.

Relevant Provisions:

Section 129 (3) of the CGST Act:

“Detention, seizure and release of goods and conveyances in transit

(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).”

Section 130 (2) of the CGST Act:

“Confiscation of goods or conveyances and levy of penalty

(2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit:

Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:

Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty equal to hundred per cent. of the tax payable on such goods:

Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.”

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

The petition comes up on board upon Note for Speaking-to-Minutes dated 1.5.2023 filed by learned advocate for the petitioner.

2. It was pointed out in the Note that by inadvertence in para No.6.1 clause (ii), the group of words ‘Bank Guarantee of amounting to Rs.19,68,750/-’ ought to have been ‘Bond of amounting to Rs.19,68,750/-’.

3. In that view, the order shall be corrected by substituting the group of words “Bond of amounting to Rs.19,68,750/-’ in para 6.1 clause (ii).

4. The order shall be reissued duly corrected.

5. The Note for Speaking-to-Minutes is allowed.

(N.V.ANJARIA, J)

(D. M. DESAI,J)

Heard learned advocate Mr.Avinash Poddar for the petitioner and learned Assistant Government Pleader Ms. Shruti Dhruve for the respondents in respect of admission of petition and grant of interim relief or otherwise.

2. What is prayed in this petition is to set aside order dated 09.04.2023 (Form GST MOV-11) passed invoking the powers under section 130 of the Central Goods and Services Tax Act, 2017.  Further prayer advanced, which is also the interim prayer is for release of the goods and conveyance having registration No. MH-50-2399.

3. When the goods were in transit, they were intercepted by the GST authorities. The goods as well as conveyance were seized in exercise of powers under section 129 of the Act. Thereafter, order GST MOV-11 under section 130 of the Act came to be passed against the petitioner.

4. It is the contention of the petitioner that when the goods were in transit, the authorities intercepted the goods and confiscated them. In other words, authorities sought to derive their powers for taking possession of the goods of the petitioner which were in transit under Section 129 of the Act. It was submitted that the said Section begins with non obstante clause and it is a provision independent of Section 130. In that context, it was submitted that exercise of powers under Section 129 and thereafter switching over to Section 130 and passing order thereunder without availing the petitioner the benefits of release of the goods under Section 129, could be said to be without jurisdiction.

4.1 Learned advocate for the petitioner further submitted that Special Civil Application No.8353 of 2022 and other matters have been entertained by this court involving the same point and interim relief of release of the goods and conveyance has also been granted on condition.

5. Rule, returnable on 21.06.2023.

6. Learned advocate prays for interim relief by relying on the order passed in Special Civil Application No. 8353 of 2022 as well as order passed in Special civil Application No. 5525 of 2023 dated 06.04.2023, which were orders passed in similar set of facts.

6.1 In the facts and circumstances of the case, by way of interim relief, it is directed that the goods of the petitioner as well as vehicle bearing registration MH-50-2399, shall be released provided the petitioner complies with the following conditions,

(i) The petitioner shall deposit with the competent authority of the respondents, total amount of penalty of Rs.93,750/-, the tax is not assessed by the authorities.

(ii) Towards fine in lieu of confiscation of goods, the petitioner shall furnish Bank Guarantee of which is Rs. 19,68,750/-.

(iii) The petitioner shall further deposit the amount of Rs.93,750/- towards fine in lieu of confiscation of conveyance.

7. Upon compliance of the aforesaid conditions, the goods and the vehicle both shall be released by the authorities. Non compliance of any of the aforesaid conditions, shall render the interim relief granted herein above, liable to be vacated.

Direct service is permitted.

The petition shall be listed with Special Civil Application No.8353 of 2022.

(Author can be reached at info@a2ztaxcorp.com)