Case Law Details

Case Name : A.P. Refinery Pvt. Ltd Vs State of Uttarakhand And Others (Uttarakhand High Court)
Appeal Number : Writ Petition (M/S) No. 1014 of 2021
Date of Judgement/Order : 10/09/2021
Related Assessment Year :

A.P. Refinery Pvt. Ltd Vs State of Uttarakhand And Others (Uttarakhand High Court)

Conclusion: The Court ordered the release of Vehicle, mango kernel oil, mahua oil, rice bran oil confiscated under section 130 of CGST Act, 2017 as mere suspicion was not sufficient to invoke the provision of the confiscation.

Held: In the present case, assessee-company was transporting Rice Bran Oil from its factory located in Punjab to a dealer , namely M/s S in the State of Uttarakhand. It was transporting the said consignment of Rice Bran Oil through three trucks bearing Registration Nos. In order to transport the consignment, assessee raised three e-Invoices. According to assessee, the moment the e-Invoices were generated on the portal of the department, the transaction immediately got reflected, and accounted for with the department. Moreover, assessee generated e-Way bills from the e-Way portal of the department. These e-Way bills contained cross-references to the e-Invoices which were to expire on 30.03.2021. Since the e-Way bills had expired within three days, the Assistant Commissioner (GST-State), issued three separate orders for physical verification/inspection of the consignment. Upon physical verification, the description on the e-Invoices was found to be matching with the physical goods verified in the vehicle, namely fixed vegetable oils of vegetable grade i.e. mango kernel oil, mahua oil, and rice bran oil. Despite the fact that there was no discrepancy, still the officers ordered the detention of the goods, and of the trucks for further proceedings. According to the department, the show-cause notices were issued ostensibly on the ground that “the e-Way Bills had expired”. It was held that mere suspicion was not sufficient to invoke the provision of the confiscation. Moreover, assessee should be given an opportunity of being heard according to the intent of the Legislature before passing the confiscation order as mentioned in sub-section (4) of Section 130. However, the department had completely failed to show that assessee was indeed, given an opportunity of being heard before the passing the orders of the confiscation in Form GST MOV-11. The confiscation orders passed under Section 130 in Form GST MOV-11, were not found to be passed in accordance with law. Therefore, the impugned orders were liable to be quashed and set aside.

FULL TEXT OF THE JUDGMENT/ORDER OF UTTARAKHAND HIGH COURT

Since both these writ petitions arise from similar set of facts, raise identical legal issues, and seek similar reliefs, the petitions are being decided by this common judgment. The Writ Petition (M/S) No.1014 of 2021 will be leading case.

2. The petitioner, M/s A.P. Refinery Pvt. Ltd., has prayed for the following reliefs before this Court:-

Firstly, it has challenged the constitutional validity of Section 129 of the Central Goods and Services Tax Act/State Goods and Services Tax Act (“CGST/SGST Act” for short), read with Rule 140 of the CGST/SGST Rules.

Secondly, it has also sought a declaration that Section 129 of the CGST Act does not mandate the deposit of tax again, once the tax is already paid.

Thirdly, it has challenged the show-cause notice dated 01.04.2021, passed by the respondent-department under Section 129(3) of the CGST/SGST Act.

Fourthly, it has challenged the legality of different orders, dated NIL, passed by the respondent no. 3 under Section 129(3) of the CGST/SGST Act.

Fifthly, it has challenged the order dated, 01.04.2021, passed by respondent no. 3, for detaining the trucks owned by the petitioner.

Sixthly,  it  has challenged the rectification/withdrawal orders dated, 23.04.2021, passed by the respondent no. 3 under Rule 142(7) of the CGST/SGST Rules.

Seventhly, it has challenged the order dated 17.04.2021, issued by the respondent No.3 under Section 130 of the CGST/SGST Act. It has also challenged the number of orders, all dated 23.04.2021, issued in Forms GST DRC-07, under Se+ction 130 of the CGST/SGST Act passed by the respondent No.3.

3. Briefly, the facts of the case are that the petitioner, M/s A.P. Refinery Pvt. Ltd, is engaged in the supply of Rice Bran Oil (Grade-II). It is registered with the GST Department, having GSTIN No. 03AAFCA1352B1ZX. It is registered both under the CGST Act, 2017, and under the Punjab Goods and Services Tax Act, 2017.

4. In the present case, the petitioner was transporting Rice Bran Oil from its factory located in Jagraon, Punjab to a dealer, namely M/s Sheel Chand Agroils Pvt. Ltd, located in Lalpur, District Udham Singh Nagar in the State of Uttarakhand. It was transporting the said consignment of Rice Bran Oil through three trucks bearing Registration Nos. HR-45-B-5099, HR-55-M-9073 and RJ-02-GA-9949. In order to transport the consignment, the petitioner raised three e-Invoices bearing numbers 5926/20­21, 5934/20-21 and 5930/20-21. According to the petitioner, the moment the e-Invoices were generated on the portal of the respondent-department, the transaction immediately got reflected, and accounted for with the respondent-department. Moreover, the petitioner generated e-Way bills from the e-Way portal of the respondent-department. These e-Way bills contained cross-references to the e-Invoices. These e-Way bills were to expire on 30.03.2021. The truck-wise and invoice-wise details of the e-Way bills are as under :-

Sl. No. Truck No. e-Invoice No. e-Way Bill No.
1. HR45B5099 5926/20-21 301303351142
2. HR55M9073 5934/20-21 381303425665
3. RJ02GA9949 5930/20-21 351303410279

5. According to the petitioner, the Rice Bran Oil was loaded on the trucks on 27.03.2021. The drivers were given copies of the e-Way bills, the e-Invoices, the bilty for the purpose of transporting the said consignment to District Udham Singh Nagar, in Uttarakhand. The trucks left the petitioner’s place on 27.03.2021. However, as 29.03.2021 was the festival of Holi, the drivers of the three trucks decided to wait in Ambala on 28.03.2021, lest the hooligans on the road intercept the trucks, or damage the consignment in the garb of celebrating Holi.

6. On the next day of Holi, i.e. on 30.03.2021, the trucks’ drivers resumed their journey for District Udham Singh Nagar.  On 31.03.2021, around 05:00 A.M., the officers of the Assistant Commissioner (GST-State) of Udham Singh Nagar district intercepted the three trucks. The drivers produced the e-Invoices, the e-Way bills, the bilty, the registration certificates, and the driver’s license. The drivers’ statements were recorded on 01.04.2021 in Form GST MOV-01.

7. Since the e-Way bills had expired within three days, the respondent no. 3, the Assistant Commissioner (GST-State), issued three separate orders, all dated 01.04.2021, for physical verification/inspection of the consignment. Upon physical verification, the description on the e-Invoices was found to be matching with the physical goods verified in the vehicle, namely fixed vegetable oils of vegetable grade i.e. mango kernel oil, mahua oil and rice bran oil. Even the quantity of the goods recorded in the e-Invoices matched with the physically verified quantity.

8. Furthermore, the officers of respondent no. 3 passed orders of detention under Section 129(1) of the CGST/SGST Act 2017, and under Section 20 of the Integrated Goods and Services Tax Act, 2017 (“IGST Act, 2017” for short). Despite the fact that there was no discrepancy, which was discovered during the physical verification of the trucks, still the officers of respondent no. 3 ordered the detention of the goods, and of the trucks for further proceedings. Therefore, the trucks were directed to be moved to MSO, Rudrapur.

9. Moreover, on 01.04.2021, the officers of respondent no. 3 issued a summary of show-cause notice under Rule 142(1)(a) in Form GST DRC-01. According to respondent no. 3, the show-cause notices were issued ostensibly on the ground that “the e-Way Bills had expired”. Immediately, on 08.04.2021, the petitioner’s representatives submitted a detailed reply to the said show-cause notice. The said reply was submitted in the office of the respondent no. 3 around 04:00 P.M. However, the office of the respondent no. 3 refused to accept the same. Therefore, the said reply was sent by the petitioner’s counsel, Mr. Basant Kumar Kanodia to the Assistant Commissioner, Mr. Deepak, and to the Inspection Officer, Mr. Ashwani Singh Karanwal, on their WhatsApp mobile number. In the said reply, the petitioner clearly requested the respondent to issue MOV-08 for the purpose of submitting security to release the trucks.

10. Surprisingly, instead of accepting the reply dated 08.04.2021, on the very same day, the respondent no. 3 issued a set of three separate notices, wherein it claimed that the petitioner had not submitted any reply to the show-cause notice dated 01.04.2021. The respondent no. 3 further asserted that the petitioner neither paid the tax, nor the penalty proposed in the show-cause notice dated 01.04.2021.

11. Moreover, on 08.04.2021, the Officers of the respondent no. 3 issued another set of supplementary notices, wherein they raised the issues with regard to classification of the oil being transported by the petitioner, and with regard to its description on the e-Invoices issued by the petitioner.

12. Surprisingly, the officers of respondent no. 3 again issued orders for physical verification and inspection all dated 31.03.2021. This was, indeed, surprising as this was the second time that Form GST MOV-02 was issued. The first Form GST MOV-02 had already been prepared on 01.04.2021. Therefore, why a back-dated order was being prepared on 31.03.2021 remains a mystery.

13. The petitioner replied to these above mentioned notices on 09.04.2021. It clearly pointed out that it had tried to submit the written submissions, to the show-cause notice dated 01.04.2021, on 08.04.2021 by hand in the office. However, the same was not accepted by the office. The petitioner also requested that it be allowed to submit the security and bond in Form GST MOV-08 for release of the conveyance.

14. Furthermore, on 09.04.2021, the petitioner submitted a detailed reply to the supplementary notices issued by respondent no. 3. The petitioner categorically requested the respondent no. 3 to take the said reply into consideration, and to release the trucks and the goods detained by them. However, despite these replies, the respondent no. 3 did not give an opportunity of hearing to the petitioner. Instead by three separate orders, all dated NIL, the three trucks belonging to the petitioner were detained by respondent no. 3 under Section 129(3) of the CGST/SGST Act. In the said orders, according to the petitioner, the respondents have entered into the issue of classification of the Rice Bran Oil, although such an issue could not be raised at this stage by the department.

15. After passing the impugned orders dated NIL, the respondent-department carried out a correction in the said order, and amended Page No. 4 of the said order.

16. Since the petitioner was aggrieved by the said orders dated NIL, on 05.04.2021 it submitted a representation before the respondents. Despite the submission of the said representation, on 15.04.2021, the respondent no. 3 again issued notices to the petitioner, wherein it claimed that “till date there is no response from the petitioner”. The respondent no. 3 further informed the petitioner that in case anything were to happen to the goods, the entire responsibility shall be that of the petitioner. It further informed the petitioner that after 16.04.2021, Section 130 of the CGST/SGST Act would automatically be invoked, as the petitioner had failed to comply with the impugned orders dated NIL.

17. In response to the show-cause notice dated 15.04.2021, the petitioner immediately informed the respondent no. 3 that it had already filed a reply to the earlier notices. It also brought it to the notice of respondent no. 3 that it is willing to submit surety. But, notwithstanding this reply submitted by the petitioner, on 17.04.2021, the respondent-department issued notices under Section 130 of the CGST/SGST Act.

18. According to the petitioner, it had already deposited the tax leviable on the consignment on 20.04.2021. However, inspite of the petitioner having deposited the tax, respondent no. 3 sent a reminder letter on 21.04.2021 to the petitioner directing him to respond to the notice issued in Form GST MOV-10.

19. In response to the notice dated 21.04.2021, the petitioner immediately submitted its reply on 22.04.2021. In the reply, it clearly pointed out that it had already deposited the Integrated Goods and Services Tax; it submitted copies of the returns in this regard before the respondent no. 3. It also pointed out that although the proceedings may not be in accordance with law, but nonetheless it is ready to deposit the bank guarantee for the penalty amount quantified by respondent no. 3. Further it requested the respondent no. 3 to release the goods and the trucks.

20. However, despite the reply submitted by the petitioner, inspite of the request made by the petitioner on 23.04.2021, the respondent no. 3 passed its order under Section 130 of the CGST/SGST Act, whereby it imposed tax, penalty and fine in lieu of confiscation of goods, and fine in lieu of confiscation of vehicles.  On 23.04.2021, the respondent no. 3 has also issued summary of rectification/withdrawal orders dated 23.04.2021 in Form GST DRC-08 under Rule 142(7) of the CGST/SGST Rules. By these rectification orders, the respondent no. 3 has rectified the demand raised in the impugned original orders, all dated NIL, passed under Section 129 of the CGST/SGST Act. According to the petitioner, these orders dated 23.04.2021 were passed without giving an opportunity of hearing to the petitioner. Hence, the present writ petition.

21. Heard Mr. Puneet Agarwal, the learned counsel for the petitioner, Mr. Mohit Maulekhi, the learned Brief Holder for the State, the respondent nos.1 to 3 and Mr. V.K. Kapruwan, the learned Standing Counsel for the Union of India, the respondent no.4 and perused the record.

22. During the arguments, Mr. Puneet Agarwal, the learned counsel for the petitioner, confined himself to two points: firstly, he has challenged the constitutional validity of Section 129 of the Central Goods and Services Tax Act, 2017 as well as the same Section i.e. Section 129 of the Uttarakhand Goods and Services Tax Act, 2017 and Rule 140 of the CGST Rules, 2017 on the grounds that these provisions are arbitrary, unreasonable and violative of Article 14, 19 (1) (g) and Article 300 A of the Constitution of India. Secondly, that the petitioner was not given an opportunity of being heard before passing the orders dated 23.04.2021 by the respondent no.3 under Section 130 in Form GST MOV-11.

23. Per contra, Mr. Mohit Maulekhi, the learned counsel for the State and Mr. V.K. Kapruwan, the learned counsel for the Union of India, rebutted the said submissions of the learned counsel of the petitioner and submitted that the said provisions are not arbitrary, unreasonable and violative of Article 14, 19 (1) (g) and Article 300 A of the Constitution of India. Mr. Mohit Maulekhi, the learned Brief Holder for the State, further submitted that the petitioner has alternative and efficacious remedy under Section 107 of the CGST Act/SGST Act, therefore, the writ petitions are not maintainable.

24. Section 129 of the CGST Act as well as Section 129 of the SGST Act deal with detention, seizure and release of goods and conveyances in transit; Rule 140 of the CGST Rules, 2017 provides for bond and security for release of seized goods.

25. In order to decide the said question, it is necessary to refer the provisions of Section 129 and Rule 140, which read as under:-

129. Detention, seizure and release of goods and conveyances in transit.

(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,-

(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;

(b) On payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;

(c) Upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

(2) The provisions of sub-section (6) of Section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.

(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).

(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub­section (3) shall be deemed to be concluded.

(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of Section 130.

Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.”

Rule “140.- Bond and security for release of seized goods.- (1) The seized goods may be released on a provisional basis upon execution of a bond for the value of the goods in FORM GST INS-04 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable.

Explanation. For the purposes of the rules under the provisions of this Chapter, the “applicable tax” shall include central tax and State tax or Central tax and the Union territory tax, as the case may be and the cess, if any, payable under the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017).

(2)  In case the person to whom the goods were released provisionally fails to produce the goods at the appointed date and place indicated by the proper officer, the security shall be encashed and adjusted against the tax, interest and penalty and fine, if any, payable in respect of such goods.”

26. In exercise of the powers conferred by Article 246 A of the Constitution of India, the Parliament had enacted the CGST Act and the State of Uttarakhand had enacted corresponding SGST Act. Article 246 A was incorporated by the Constitution (One Hundred and First Amendment) Act, 2016 (for short, “the Amendment Act, 2016”). Article 246 A is reproduced as below:-

“246-A. Special Provision with respect to goods and services tax. (1) Notwithstanding anything contained in Article 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.

(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

Explanation.- The provisions of this article, shall, in respect of goods and services tax referred to in clause

(5) of Article 279-A, take effect from the date of recommended by the Goods and Services Tax Council.”

27. The expressions “goods and services tax” are defined under Article 366 (12-A) of the Constitution of India as incorporated by the Amendment Act, 2016, which reads as follow:-

“(12-A) “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption.”

28. The expression “supply” is defined under Section 7 of the CGST Act, 2017, which reads as follow:-

7. Scope of Supply.- (1) For the purposes of this Act, the expression “supply” includes-

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business, and

(c) the activities specified in Schedule I, made or agreed to be made without a consideration.

(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub­section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.

(2) Notwithstanding anything contained in sub-section

(1)-

(a) activities or transactions specified in Schedule III; or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council,

shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to the provisions of sub-section (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as-

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.”

29. A combined reading of Article 246 A with Article 366 (12-A) would suggest that the Parliament has exclusive power under Article 246 A (2) to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce, and subject to Article 246 A (2), the Legislature of a State has power to make laws with respect to goods and services tax imposed by the State, and the power to legislate, as given to the Parliament and the State Legislature, is where there is a “supply of goods and services”.

30. The constitutional validity of an Act can be challenged only on two grounds viz. (i) lack of legislative competence; and (ii) violation of any of the fundamental rights, guaranteed in Part III of the Constitution or of any other constitutional provisions. In State of A.P. vs. McDowell and Co., (1996) 3 SCC 709, the Hon’ble Supreme Court has held that except the above two grounds, there is no third ground on the basis of which the law made by the competent legislature can be invalidated and that the ground of invalidation must necessarily fall within the four corners of the aforementioned two grounds. In Goa Glass Fiber Ltd. Vs. State of Goa, (2010) 6 SCC 499, the Hon’ble Supreme Court held that a statute can be held unconstitutional only on limited grounds viz. legislative incompetence and on the ground that it violates any of the fundamental rights or constitutional rights.

31. An Act enacted by the Parliament or the State Legislature cannot be declared unconstitutional lightly. In construing an enactment of a Legislature, the Court must presume that the enactment is intra-virus to the Constitution and the Legislature knows its limits and that it is only legislating for those, who are actually within its jurisdiction. The burden of proof is upon the shoulders of the incumbent who challenges the constitutional validity of an Act.

32. In the present matter, Mr. Puneet Agarwal, the learned counsel for the petitioner, submitted that Article 14 of the Constitution forbids class legislation; Article 19 (1) (g) guarantees that all citizens shall have the right to practice any profession, or to carry on any occupation, trade or business and Article 300 A provides that no person shall be deprived of his property save by authority of law. According to the learned counsel for the petitioner, the provisions-in-question are violative of Article 14, 19 (1) (g) and Article 300 A of the Constitution of India.

33. The equal protection of laws guaranteed by Article 14 does not mean that all laws must be general in character. In fact, identical treatment in unequal circumstances would amount to inequality. Article 14 prohibits class-legislation, but it does not forbid reasonable classification. It does not forbid reasonable classification of persons, objects and transactions by the legislature for the purpose of achieving specific ends. In Budhan Chowdhry vs. State of Bihar, 1955 (1) SCR 1045, the Hon’ble Supreme Court has held that Article 14 prohibits class-legislation and not reasonable classification for the purpose of legislation. Therefore, a reasonable classification is only not permitted but is necessary if society is to progress. The true meaning and scope of Article 14 have been explained in a number of cases by the Hon’ble Supreme Court (Kedar Nath Bajoria vs. State of West Bengal, AIR 1953 SC 404, Ram Krishna Dalmia vs. Shri Justice S.R. Tendolkar, AIR 1958 SC 538, Maneka Gandhi vs. Union of India, AIR 1978 SC 597, Air India vs. Nergesh Meerza and others, AIR 1981 SC 1829, R.K. Garg vs. Union of India, AIR 1981 SC 2138, Motor General Traders and another vs. State of Andhra Pradesh and others, (1984) 1 SCC 222, All India Sainik Schools Employees Association vs. Defence Minister-cum-Chairman Board of Governors, Sainik School, 1989 SCC Supp. (1) 205, Builders Association of India vs. Union of India and others, (1989) 2 SCC 645, Direct Recruit Class II Engineering Officers Association vs. State of Maharashtra and others, (1990) 2 SCC 715, Prem Chand Somchand Shah and another vs. Union of India and another, (1991) 2 SCC 48, Secretary, Finance Department and others Vs. West Bengal Registration Service Association and others, 1993 SCC Supp. (1) 153).

34. The classification under Article 14 must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group; and, the differentia must have a rational relation on the object sought to be achieved by the Act. What is necessary is that there must be a nexus between the basis of classification and the object of the Act which makes the classification.

35. In Ram Krishna Dalmia (supra), the Hon’ble Supreme Court laid down the propositions governing a valid classification, which are as follows:-

(1) A law may be constitutional even though it relates to a single individual if on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by itself.

(2) There is always presumption in favour of the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of constitutional principles.

(3) The presumption may be rebutted in certain cases by showing that on the fact of the statute, there is no classification at all and no difference peculiar to any individual or class and not applicable to any other individual or class, and yet the law hits only a particular individual or class.

(4) It must be presumed that the Legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discrimination are based on adequate grounds.

(5) In order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of report, the history of the times and may assume every state of facts which can be conceived existing at the time of the legislation.

(6) The Legislature is free to recognize degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest.

(7) While good faith and knowledge of the existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to be hostile or discriminating legislation.

(8) The classification may be made on different basis, e.g., geographical or according to objects or occupations or the like.

(9) The classification made by a legislature need not be scientifically perfect or logically complete. Mathematical nicety and perfect equality are not required. Equality before the law does not require mathematical equality of all persons in all circumstances. Equal treatment does not mean identical treatment. Similarity, not identity, of treatment is enough.

(10) There can be discrimination both in the substantive as well as the procedural law. Article 14 applies to both.

36. The object and purpose for enactment of CGST Act was to make a provision for levy and collection of tax on inter-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto.

37. The object and purpose for enactment of SGST Act was to make a provision for levy and collection of tax on inter-State supply of goods or services or both by the State of Uttarakhand and for matters connected therewith or incidental thereto.

38. In view of the said objects and purposes for enacting of the enactments-in-question, the classification satisfies the test as laid down in the above propositions. The learned counsel for the petitioner could not able to show that there is no reasonable basis for a classification or such classification is discriminatory.

39. Article 19 (1) (g) of the Constitution guarantees that all citizens shall have the right to practice any profession, or to carry on any occupation, trade or business. However, these rights are not unqualified. It can be restricted and regulated by authority of law. Article 300 A provides that no person shall be deprived of his property save by authority of law. “By Authority of Law” means by or under a law made by the competent Legislature.

40. Under clause (6) of Article 19 of the Constitution, the State is authorized to impose reasonable restrictions on the right to carry on a trade, profession or business. The said conditions are:-

(i) reasonable restrictions, and;

(ii) in the interest of general public.

41. In Ramji Lal vs. I.T.O., AIR 1951 SC 97, the Hon’ble Supreme Court held that the exercise of none of the fundamental rights guaranteed by Article 19 (1) can claim absolute immunity from taxation. The fundamental right of citizen to practice any profession or carry on any trade or business is not wholly free from the taxing power of the Parliament or the State. No citizen has any right to carry on his trade or business without paying taxes lawfully levied by the Parliament or the State. In State of West Bengal vs. Subodh Gopal Bose, AIR 1954 SC 92, the Hon’ble Supreme Court held that taxation is an independent power of the State and there is no fundamental right to be immune from taxation. In Kailash Nath vs. State of U.P., AIR 1957 SC 790, the Hon’ble Supreme Court held that a tax law otherwise valid creates no unreasonable restriction. In the facts and circumstances of the instant matter, the learned counsel for the petitioner could not able to show that the provisions of the enactments-in-question are unreasonable or the object of these enactments are to destroy a fundamental right/ constitutional right.

42. The petitioner is a registered dealer under the CGST Act, 2017/ Punjab GST Act, 2017 and is carrying on business of manufacture and sale of “Rice Bran Oil (Grade 2)”. The petitioner generated e-way bill no.301303351142 for vehicle Registration No.HR45B5099, e-way bill no.351303410279 for vehicle No.RJ02GA9949 and e-way bill no.381303425665 for vehicle Registration No.HR55M9073 at 6:41 p.m., at 9:37 p.m., and at 11:36 p.m., respectively on 27.03.2021 (vehicles in Writ Petition (M/S) No.1014 of 2021). The validity of the said e-way bills were scheduled to expire at mid-night on 30.03.2021. The petitioner generated e-way bill no.321303576361 for vehicle Registration No.RJ02GA5824 at 10:52 p.m. on 28.03.2021 (vehicle in Writ Petition (M/S) No.1015 of 2021). The validity of the said e-way bill was scheduled to expire on 31.03.2021.

43. At around 05:00 a.m. on 31.03.2021, the said vehicles were intercepted by the State Tax Officer at Rudrapur, District Udham Singh Nagar for verification of conveyance, goods (Rice Bran Oil) and documents. The State Tax Officer found that the validity of the e-way bills accompanying each of the said vehicles had expired. The drivers of the said vehicles produced e-invoice, e-way bills, bilty, driving licence and registration certificate in respect of their vehicles and goods loaded thereon.

44. Mr. Mohit Maulekhi, the learned Brief Holder for the State, submitted that after proceedings of inspection of goods in movement under Section 68 of the CGST Act/ SGST Act, Form GST MOV-01 and Form GST MOV-02 were issued on 01.04.2021. After physical verification of the goods and the documents, Form GST MOV-04 and detention order in the nature of MOV-06 were issued on 01.04.2021. On the same day, i.e. 01.04.2021, Form GST MOV-07 was issued, wherein the nature of offence and the tax and penalty due under Section 129 were enumerated and communicated to the petitioner and seven days time period was provided to the petitioner to submit his reply. Upon failure of the petitioner to deposit tax and penalty specified in the Form GST MOV-07, the petitioner was informed that proceedings under Section 130 of the GST Act, 2017 would be initiated after expiry of due date i.e. fourteen days from the date of issue of the Form MOV-06. Thereafter the proceedings under Section 130 was initiated and Form GST MOV-10 was issued on 17.04.2021, providing therein a time of seven days to the petitioner to prefer reply to the same. After expiry of the seven days time period, provided to the petitioner in MOV-10 notices, orders under Section 130 in the Form of MOV-11 were issued on 23.04.2021, directing the petitioner to deposit tax, penalty, fine on goods and on conveyance as provided under Section 130 (2).

45. At this stage, the provisions of Section 130 is reproduced hereunder:-

“130. Confiscation of goods or conveyances and levy of penalty – (1) Notwithstanding anything contained in this Act, if any person—

(i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

(ii) does not account for any goods on which he is liable to pay tax under this Act; or

(iii) supplies any goods liable to tax under this Act without having applied for registration; or

(iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

(v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,

then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.

(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 amount of penalty leviable under sub-section (1) of section 129:

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.

(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.

(4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.

(5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.

(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.

(7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.”

46. According to the CGST Act/ SGST Act and CGST Rules, for the purposes of verification of the e-way bill, interception and inspection of the conveyance and/or goods, the proper officer under Rule 138 B of the CGST Rules shall be the officer who has been assigned the function under sub-section (3) of Section 68 and where the person in-charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in-charge of the conveyance in Form GST MOV-01. In addition, the proper officer shall issue an order for physical verification/inspection of the conveyance, goods and documents in Form GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of goods. Within twenty four hours of the issuance of Form GST MOV-02, the proper officer shall prepare a report in Part A of Form GST EWB-03 and upload the same on the common portal. On completion of the physical verification/inspection of the conveyance and the goods in movement, a report of such physical verification shall be prepared by the proper officer in Form GST MOV-04 and a copy of the said report shall be served to the person in charge of the conveyance and goods. Where the proper officer is of the opinion that the goods and conveyance need to be detained under Section 129, he shall issue an order of detention in Form GST MOV-06 and a notice in Form GST MOV-07 in accordance with the provision of sub-section (3) of Section 129, specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance. Where any objections are filed against the proposed amount of tax and penalty payable, the proper officer shall consider such objections and thereafter, pass a speaking order in Form GST MOV-09. In case, the proposed tax and penalty are not paid within seven days from the date of the issue of the order of detention in Form GST MOV-06, action under Section 130 shall be initiated by serving a notice in Form GST MOV-10. But, no order for confiscation of goods and conveyance, or for imposing of penalty, shall be issued without giving the person an opportunity of being heard. An order of confiscation of goods shall be passed in Form GST MOV-11.

47. Mr. Puneet Agarwal, the learned counsel appearing for the petitioner, submitted that despite the reply submitted by the petitioner and inspite of the request made by the petitioner on 23.04.2021, the petitioner was not given an opportunity of being heard before passing the orders under Section 130 in Form GST MOV-11 on 23.04.2021. Mr. Mohit Maulekhi, the learned Brief Holder for the State, submitted that upon expiry of seven days period provided to the petitioner in Form GST MOV-10 notices, orders were passed under Section 130 in the Form GST MOV-11 on 23.04.2021.

48. A statute is an edict of the Legislature. The first and primary rule of interpretation of a statute is that the intention of the Legislature must be found in the words used by the Legislature itself. Therefore, the statute should be read as it is, without distorting or twisting its language.

49. Section 130 talks about confiscation of goods or conveyances and levy of penalty. Before invoking the provisions of Section 130 for confiscation, there should be a very strong base to proceed for confiscation. Mere suspicion is not sufficient to invoke the provision of the confiscation. Moreover, the petitioner should be given an opportunity of being heard according to the intent of the Legislature before passing the confiscation order as mentioned in sub-section (4) of Section 130. However, the respondents have completely failed to show that the petitioner was indeed, given an opportunity of being heard before the passing the orders of the confiscation in Form GST MOV-11. The confiscation orders dated 23.04.2021, passed under Section 130 in Form GST MOV-11, are not found to be passed in accordance with law. Therefore, the said impugned orders dated 23.04.2021 are liable to be quashed and set aside.

50. The last submission of Mr. Mohit Maulekhi, the learned Brief Holder for the State, is that the petitioner has alternative and efficacious remedy before the appellate authority under Section 107 of the Act of the CGST Act/SGST Act, therefore, the writ petitions are not maintainable.

51. Section 107 of the CGST Act/SGST Act is reproduced hereunder:-

“107. Appeals to Appellate Authority- (1) 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.

(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.

(3) Where, in pursuance of an order under sub­-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.

(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

(5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed.

(6) No appeal shall be filed under sub-section (1), unless the appellant has paid—

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed.

(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.

(8) The Appellate Authority shall give an opportunity to the appellant of being heard.

(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:

Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.

(10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

(11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order:

Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:

Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74.

(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.

(13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed:

Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.

(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority.

(15) A copy of the order passed by the Appellate Authority shall also be sent to the jurisdictional Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of State tax or Commissioner of Union Territory Tax or an authority designated by him in this behalf.

(16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties.”

52. In Writ Petition (S) (Criminal) No.(S) 272 of 2020, Devendra Dwivedi vs. Union of India, the petitioner had challenged the constitutional validity of certain provisions of the CGST Act. The Hon’ble Supreme Court on 07.01.2021 dismissed the writ petition after holding, “The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue”.

53. In view of the above detailed discussion, both the writ petitions are allowed partly. Consequently, we quash and set aside the impugned orders dated 23.04.2021, passed by the respondent no.3 under Section 130 in Form GST MOV-11, and the respondents are directed to release the vehicles and goods in question, which have been detained since 31.03.2021, upon execution of a bond for the value of the goods in Form GST INS-04 and furnishing of a security in form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable, by the petitioner. The release of the vehicles and goods are subject to the final outcome of the confiscation proceedings.

54. It is clarified that after giving an opportunity of being heard to the petitioner, the respondents may proceed further in accordance with law.

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