GST Seizure Notice Can Be Served on driver transporting goods: Orissa HC

RSL Overseas LLP Vs State of Odisha and others (Orissa High Court)

In RSL Overseas LLP vs. State of Odisha and Others, the Orissa High Court addressed a challenge raised by the petitioner against the seizure of goods and the subsequent penalty notice issued under the Odisha Goods and Services Tax (GST) Act, 2017. The petitioner, who had dispatched goods to a consignee in Chhattisgarh, contended that the notice of seizure, dated 14th August 2024, was issued beyond the statutory seven-day limit from the seizure date of 7th August 2024. The petitioner argued that the seven-day period should be calculated from the seizure date, making the notice invalid. Additionally, the petitioner claimed that since the owner of the goods had informed the authorities, the notice should have been served on them instead of the driver, who was not an employee of the petitioner.

The court examined both grounds of challenge, first interpreting the statutory provisions under Section 129 of the Odisha GST Act. The court found that the notice issued on 14th August 2024 was within the prescribed seven-day period, as the statutory language allowed for reckoning from the day following the seizure, making the notice timely. Regarding the second point, the court held that the driver, being the person transporting the goods, was the correct recipient of the notice as per the law. The petitioner’s claim that serving the notice to the driver obstructed its legal recourse was not upheld, as the court noted that the petitioner could still seek remedies through the GST portal and legal proceedings.

FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT

1. Mr. Ghosh, learned advocate appears on behalf of petitioner and submits, his client dispatched goods to the consignee upon them having been purchased. E-Way bill was generated on 6^th August, 2024 to enable the goods being transported from his client to the buyer in West Bengal, whose instruction was to ship to the consignee in Chhattisgarh. The goods vehicle was seized on 7^th August, 2024. Notice in Form GST Mov-07 dated 14^th August, 2024 was served on driver of the vehicle. On that date itself his client had informed the authority of being owner of the goods.

2. He submits, there are two grounds of challenge to subsequently issued order of demand of penalty dated 21^st August, 2024, that too upon the driver. Firstly, mandate in section 129 in Odisha Goods and Services Tax Act, 2017 is for the notice to be issued within seven days of detention or seizure. It was not so done. Commencing from seizure dated 7th August, 2024, notice dated 14^th August, 2024 was one day out of time.

3. He relies on view taken by learned single Judge in the High Court of Judicature at Madras in W.P. no. 27140 of 2023 on judgment dated 14^th September, 2023 (TVL. V.V. Iron and Steels v. State Tax Officer). He relies on paragraph 12 in Centax Law Publications report. The paragraph is reproduced below.

“12. Section 129(3) of the TNGST Act, 2017 has not used the expression “within seven days from the date of detention or seizure”. The language in Section 129(3) of the TNGST Act, 2017 is clear. Notice specifying payment of penalty has to be issued within seven days of detention or seizure of goods. Issuance of notice within seven days has to be calculated from the date on which seizure was to be effected and not from the following date. Thus, the last date for issuance of the impugned notice would have expired on 6-9-2023. However, the impugned notice has been dispatched through e­mail only on the following date i.e., on 7-9-2023 after the expiry of limitation.”

4. Mr. Ghosh’s second ground is that when his client had informed the authority of being owner of the goods and person responsible therefor, noticing and thereafter serving demand notice on the driver was clear act on part of the authority to deny his client recourse in law to remedy.

5. Mishra, learned advocate, Standing Counsel appears on behalf of revenue and opposes the writ petition. He draws attention to sub-section (1) in section 129 to submit, the driver is the proper person to be served notice and demand. Furthermore, the notice issued and served on 14^th August, 2024 was within seven days of the seizure made on 7^th August, 2024. On the seizure made, identification particulars attaching to the seizure were created and is available for petitioner to take things further, if aggrieved, in accordance with law. Mr. Ghosh in reply submits, since the notice and demand issued are against the driver, his client cannot access the portal other than through the driver. This makes it impossible for his client to obtain recourse to law because the driver is engaged in driving vehicle for transport of goods. He is not his client’s employee. Mr. Mishra disputes the submission.

6. We deal with the second point first. Sub-section (1) in section 129 commences with non-obstante clause, to include any person transporting goods or storing them while in transit. Proviso under the sub-section says no such goods or conveyance shall be detained or seized without serving an order of detentions or seizure on the person transporting the goods. We are clear in our mind that the provision includes the driver.

7. So far as first ground of challenge is concerned, it requires adjudication by interpretation of sub-section (3) in section 129. While first part of the provision provides for period of within 7 days of detention or seizure, second part of it provides for period of seven days from date of service of notice. On behalf of petitioner distinction is sought to be drawn between use of different phrases in said two parts of the provision. Mr. Ghosh submits, period ‘of’ 7 days would necessarily be reckoning for commencement from the date of detention or seizure, while period ‘from’ 7 days would require reckoning for commencement from the next day.

8. We looked up Chambers dictionary 12^th edition for meaning of word ‘of’. The meanings given include ‘with respect to’. Hence, we can interpret first part of the provision as within 7 days with respect to detention or seizure.

9. In V.V. Iron and Steels (supra) the learned single Judge found facts to be that interception was on 30^th August, 2023. In reproduced above paragraph-12 there was calculation made to say that time for issuance of the notice would have expired on 6^th September, 2023. Further facts in that case was, the notice was issued on 7^th September, 2023. Reckoning by the learned Judge that time would expire on 6th September, 2023 was taking commencement of period of seven days for issuance of notice within the period of interception as on 31^st August, 2023. Interception was on 30^th August, 2023. It falls in line with reckoning of periods as in law, to be from the date following. In this case the seizure was on 7^th August, 2024. Notice dated 14^th August, 2024 issued to the driver thus, in our view, was within 7 days of the seizure.

10. Petitioner in also having informed the authority on 14^th August, 2024 that it is the owner of the goods, responsible therefor and ought to be noticed has by conduct sought to extend the period for issuance of the notice. As such the conduct militates against petitioner’s contention on reckoning of the time.

11. On difficulties said as may be faced by petitioner in seeking recourse of law for remedy, Mr. Mishra points out from disclosure Form GST DRC-01 dated 14^th August, 2024, mentioned therein is case ID as well as distinctive numerical and alphabetical ID mentioned in address given in the Form. In event petitioner seeks recourse of law to obtain remedy and is obstructed thereby, otherwise remedy in seeking interference is always available.

12. No interference is called for. The writ petition is disposed of.