As seen recently after implementation of E-Way Bill, effectively from April 1, 2018, multiple cases of seizures of the goods/conveyances in transit by the department by way of Order passed under Section 129(1) of CGST Act, 2017 (“CGST Act”), has raised concerns as to whether the order of seizure of goods under Section 129(1) of CGST Act is appealable or not?
In this regard, various Writs have been filed before different High Courts across the Country and divergent views have been found with respect to the maintainability of the Writ petitions against the Order of seizure of goods.
This GST Charcha deciphers into relevant provisions of GST Law along with legal jurisprudence to determine whether the Order of seizure of goods by the Revenue is appealable or not under the provisions of the CGST Act?
Section 107(1) of the CGST Act states that “any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person”.
But there are certain non-appealable orders enumerated under various clauses of Section 121 of the CGST Act, in respect of which no appeal shall lie against any decision taken or order passed by an officer of central tax if such decision taken or order passed relates to any one or more of the following matters:
(a) an order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer; or
(b) an order pertaining to the seizure or retention of books of account, register and other documents; or
(c) an order sanctioning prosecution under this Act; or
(d) an order passed under Section 80 (i.e. payment of tax and other amount in instalment)
Manifestly, while Section 107 of the CGST Act makes every decision or order passed under the GST Act to be appealable, whereas Section 121 ibid makes an exception thereto and states that certain orders, which are recognized in sub-sections (a) to (d) would not be appealable.
Allahabad High Court:
A writ petition was filed by the assessee before the Hon’ble Allahabad High Court challenging seizure of goods. The Court held that a conjoint reading of both Sections 107 and 121(b) makes it imperative that the seizure of goods in transit or storage is specifically excluded from the purview of appeal and consequently non-appealable.
The petitioner sought a writ of certiorari to quash the seizure order passed by the Revenue for not carrying E-Way bill. In this case, the Hon’ble Allahabad High Court dismissed the writ petition by observing that the petitioner has equally efficacious remedy of filing an appeal against the penalty order under Section 107 of the UPGST Act, 2017. It was left open to the petitioner to take recourse to the statutory remedy available to him under the law.
The Competent Authority had seized the goods of the petitioner under transport as well as vehicle. Further vide seizure order passed under Section 129(3), petitioner was to deposit penalty in excess of 50% of value of goods. It was held by the Hon’ble Court that the assessee has a statutory efficacious alternative remedy of filing an appeal under Section 107 of the UPGST Act, 2017. Thus, the instant writ petition was disposed of with the direction that in case the assessee files an appeal within the next one week, the same shall be heard and decided in accordance with law by the Appellate Authority within a period of one month therefrom.
Calcutta High Court:
The case was whether the assessee had the locus standi to file a writ petition before the High Court against the Order of seizure of goods under Section 129(1) of CGST Act. The assessee relied on the judgment of the Allahabad High Court in R K Overseas case (supra) and pleaded that since the order of seizure has been classified as non-appealable under clause (b) of Section 121 of the Act, hence the need arose to file the writ petition before the High Court challenging the order of seizure of goods.
To this the Court explained that clause (b) of Section 121 is only confined to “seizure of or retention of books of accounts, register and other documents” and not includes seizure of goods within its ambit. The Court further held that the said seizure falls under the purview of Section 107 and appealable before the prescribed appellate authority.
Kerala High Court:
It was held that Section 107 of the CGST Act r/w Section 108 of the CGST Rules allows three months’ time to avail appellate remedy. Hence it would be inequitable if the Department invokes the bank guarantees before the petitioner exhausts appellate remedy & such remedy would become illusory. Hence the Department is restrained from invoking bank guarantee within such three months period.
We are of the opinion that the view taken by the Calcutta High Court and Allahabad High Court in all cases except in R K Overseas case are legal and tenable.
The seizure of the goods by the competent authorities under Section 129(1) of the CGST Act does not make the said order non-appealable as per clause (b) of Section 121 since the provision restricts its ambit to seizure or retention of books of account, register and other documents only and does not specifically includes the goods seized.
Therefore, it can be safely concluded that that the assessee has the locus standi to file a statutory appeal as per the prescribed procedure and not restricted by the clause (b) of Section 121, making it appealable under Section 107 of the CGST Act.
Also, it is a settled proposition of law that Writs cannot be filed before the Courts unless all the appellate remedies have been exhausted by the aggrieved persons except when there is question of law or situation warranting to get immediate relief from the Court.