Case Law Details
Srinivas Traders Vs Assistant Commissioner of State Tax and Others (Andhra Pradesh High Court)
In a significant ruling, the Andhra Pradesh High Court has clarified the procedural requirements for the seizure and confiscation of goods under the Goods and Services Tax (GST) Act. The judgment in Srinivas Traders Vs Assistant Commissioner of State Tax and Others emphasizes that proceedings under Section 130 of the GST Act (confiscation and penalty) can only be initiated after the due process outlined in Section 129 (detention, seizure, and release of goods and conveyances in transit) has been fully completed.
The case arose from multiple writ petitions filed by Srinivas Traders, whose goods were seized while in transit. The petitioner challenged these seizures primarily on two grounds: the absence of specific and legible reasons for the seizure and the authorities’ failure to adhere to the statutory timelines and sequence of procedures under the GST Act.
Srinivas Traders contended that the seizure memos issued by the authorities were mere printed proformas, with a general reason ticked off without any further elaboration or details. This lack of specific information, the petitioner argued, rendered it impossible to provide a proper explanation or defense.
Furthermore, the petitioner highlighted a critical procedural lapse: Section 129(3) of the GST Act mandates that a notice be issued within seven days of seizure, calling upon the owner of the goods to participate in an inquiry to ascertain the tax payable. Following this notice, the authority is required to complete the valuation and tax determination process within another seven days. In the present instance, the goods were seized on April 17, 2025, but no notice under Section 129 had been issued by the time of the court’s hearing. Instead, the authorities appeared to have directly moved towards initiating proceedings under Section 130, which deals with confiscation. The petitioner asserted that this direct leap to Section 130 without completing the prerequisites of Section 129 was impermissible under the law.
During the proceedings, the learned Government Pleader presented documents, but the High Court noted that these were notices under Section 130, not Section 129. A careful examination of the seizure memos also revealed that they lacked legible or detailed reasons for the seizure, corroborating the petitioner’s claim.
The Court firmly rejected the attempt by the Government Pleader to justify the seizures by producing internal instructions from the authorities. Citing the well-established principle laid down by the Supreme Court in Mohinder Singh Gill & Anr vs. The Chief Election Commissioner (1978), the High Court reiterated that additional reasons cannot be supplemented to an impugned order after it has been passed. This judicial precedent underscores the requirement for administrative actions to be justified by reasons stated at the time of the action, preventing post-facto rationalizations.
In light of these observations, the Andhra Pradesh High Court disposed of the writ petitions with a series of clear directions to the concerned authorities:
1. The authorities responsible for the seizure must issue a notice under Section 129(3) of the GST Act within two days from the date of the judgment.
2. The order ascertaining the value of the goods and any consequent tax payable must be finalized within three days thereafter.
3. This process must be conducted only after providing proper notice and an opportunity to the petitioner to present their case.
4. Following the completion of these steps, the seized goods of Srinivas Traders are to be released in accordance with Section 129(1) of the GST Act.
5. Crucially, the Court mandated that proceedings under Section 130 of the GST Act shall only be initiated after the entire process under Section 129 has been completed.
The High Court also took the opportunity to express its concern regarding the manner in which such confiscations are being carried out. It highlighted the urgent need for the Commissioner of Commercial Taxes to sensitize and, if necessary, conduct coaching classes to train officers on adhering to the law and the prescribed procedural safeguards. A copy of the judgment has been directed to be placed before the Commissioner for necessary action, and the gist of the order is to be communicated to the concerned officers.
This ruling serves as a reminder to tax authorities regarding the strict adherence to procedural fairness and statutory timelines in matters of goods seizure and confiscation under the GST regime.
FULL TEXT OF THE JUDGMENT/ ORDER OF ANDHRA PRADESH HIGH COURT
1. In all these cases, the goods of the petitioner had been seized, while they were in transit. The petitioner assails these seizures on the ground that no reasons have been given for such seizure. The petitioner contends that the authorities, who had conducted seizures, had given a printed proforma and ticked one of the printed reasons, set out therein, given was without giving any further details. It is contended that in the absence of such details, there is no possibility for the petitioner to give his explanation.
2. Apart from this, the petitioner also contends that the authorities were required to issue a notice, under Section 129(3) of G.S.T Act, within seven days of seizure for calling upon the owner of the goods to participate in an enquiry to ascertain the tax payable on such goods. Thereafter, the authority is required, within seven days of issuance of notice, to complete a process for valuation and determination of tax. In the present case, the goods were seized on 17.04.2025 whereas no notice has been issued till date. The petitioner contends that the authority, instead of completing the process under Section 129 had moved on to take up the process under Section 130 and the same is also impermissible.
3. The documents produced, by the learned Government Pleader do not show any notice being issued under Section 129 of G.S.T Act, notices produced by the learned Government Pleader are notices that are to be issued under Section 130 of G.S.T. Act.
4. A perusal of the seizure memo would also show that no legible reasons for seizure have been set out in the said notices.
5. This Court is not willing to look into the instructions produced by the learned Government Pleader, given by the authorities, to justify such seizure. The law in this regard is well settled by the judgment of the Hon’ble Supreme Court in the case of Mohinder Singh Gill & Anr vs. The Chief Election Commissioner,1that additional reasons cannot be supplemented after the impugned order had been passed.
6. In the circumstances, these Writ Petitions are disposed of with the following directions:
i) The concerned authorities, who had seized the goods of the petitioner, shall issue a notice under Section 129(3) of G.S.T Act within two days from today;
ii) The order ascertaining the documents of the goods and consequent tax, if any, payable on such goods shall be fixed within three days thereafter;
iii) This shall be done after notice and opportunity is being given to the petitioner;
iv) The goods of the petitioner would then be released in terms of Section 129(1) of the G.S.T Act;
v) The proceedings under Section 130 of G.S.T Act shall be initiated only after this process has been completed.
7. This is yet another case which requires the Commissioner of Commercial Taxes to sensitize his officers about the manner in which such confiscations are to be carried out. There is every need for the Commissioner of Commercial Taxes, to conduct coaching classes, if necessary, to train his officers to follow the law and the procedural safeguards set out in the law.
8. A copy of this judgment shall be placed before the Commissioner, Commercial Taxes for his action.
9. The gist of the order shall be informed to the concerned officers by the learned Government Pleader.
As a sequel, miscellaneous petitions, if any, shall stand closed. There shall be no order as to costs.
Notes:
1 1978(1) SCC 405
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