Case Law Details
Quadri and Company Vs Commercial Tax Officer (Karnataka High Court)
Conclusion: Department was directed to release the confiscated Areca Nut on condition specified as it were confiscated due to non-submission of E waybill. The bench modified the conditions imposed by the Single Judge.
Held: Assessee-company filed a petition for setting aside the interim orders passed in the writ petitions which the order was purportedly passed relying upon the re-appreciation of transaction value by the Assistant Commissioner of Taxes [Enforcement]. Assessee had also sought a direction from the Commissioner of commercial taxes to pass fresh orders as to the legality and validity of restatement and reappraisal of the transaction value. Assessee had also sought direction for the release of the consignment and conveyance on payment of (i) 20% of deposit of penalty imposed; (ii) secure balance of consignment value as per tax invoice by a bank guarantee leaving the question of validity restatement and reappraisal of transaction value to be agitated in statutory appeal. The main grievance of assessee was that the condition imposed for release of goods by the learned Single Judge was onerous and ought to be modified. Assessee had raised an invoice on the consignee for the supply of areca nuts and had handed over the goods to the transporter, who had hired conveyance to transport the goods. The said conveyance was intercepted by the Assistant Commissioner of Commercial Taxes (Enforcement). Physical verification was conducted and an impugned order of detention under section 129 came to be passed detaining the conveyance and the goods. The report of the value by CAMPCO was to the effect that goods were undervalued. Without the proceedings under section 129 having concluded, it was asserted that a confiscation notice came to be issued followed by a confiscation order. Assessee further has contended that the proceedings under section 129 of the Act having been initiated could not have been abandoned midway and proceedings for confiscation under section 130 of the Act be proceeded with. It was held that the concern of the State that the valuation of assessee being defective and actual valuation being much higher could not be ignored though the aspect of valuation was also a matter for adjudication. However, it would be appropriate to put assessee on terms by ensuring that the valuation of the goods as determined by the revenue was realizable if the validity of the proceedings under section 130 of the Act were upheld. Assessee were to make good the 25% deposit provided for in appeal proceedings as regards the order impugned in the writ proceedings. It was made clear that the deposit- made in the earlier appeals by assessee could be adjusted. Assessee were to make good tax and penalty as per the orders impugned before Single Judge by securing the same by way of bank guarantee. Assessee were to furnish a bank guarantee insofar as the value of goods as per his invoice. Assessee were to furnish a personal bond of the Proprietor representing assessee to the extent of the differential value of the goods as per the invoice of assessee vis-a-vis the valuation by CAMPCO made on behalf of the State.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
With the consent of the parties all the appeals are taken up together and disposed off by a common judgment.
1. The present appeals have been filed seeking for setting aside of the interim orders dated 25.09.2023, passed in the writ petitions which order was purportedly passed relying upon re-appreciation of transaction value by the Assistant Commissioner of Taxes [Enforcement). The appellant has also sought for a direction to commissioner of commercial taxes to pass fresh orders as to the legality and validity of restatement and reappraisal of transaction value. Appellant has also sought for the direction for the release of consignment and conveyance on payment of –
(i) 20% of deposit of penalty imposed; (ii) secure balance of consignment value as per tax invoice by a bank guarantee leaving the question of validity restatement and reappraisal of transaction value to be agitated in statutory appeal.
2. Parties are referred to as per their rank in writ
3. Upon hearing counsel for the appellants Sri.Bharat Raichandani, learned Advocate for Sri.Gangadhar S. Hosakeri and Sri.D.M.Malli, Advocates for appellants, it comes out that the main grievance of the petitioner is that the condition imposed for release of goods by the learned Single Judge is onerous and ought to be modified.
4. Before adverting to the impugned order, the brief facts that are made out are that the petitioner had raised an invoice on the consignee for supply of areca nut and had handed over the goods to the transporter, who had hired conveyance to transport the goods.
5. The said conveyance was intercepted by the Assistant Commissioner of Commercial Taxes (Enforcement). -Physitarvei-ifitati–ori Was conducted and initially impugned order of detention under section 129 of the GST Act, came to be passed detaining the conveyance and the goods.
6. It is further made out from the records that the report of the value by CAMPCO was to the effect that goods were undervalued.
7. Without the proceedings under section 129 of the Act having concluded, it is asserted that confiscation notice came to be issued followed by a confiscation order.
8. The said order was challenged by filing an appeal under section 107 of the Act and certain payments were made and upon dismissal of such appeal, further appeal was preferred and order in appeal under section 1) of KGST Act came to be passed, which order was challenged in the Writ proceedings.
9. The learned Single Judge on 25.09.2023, passed an order as follows:-
“Heard the learned counsel for the petitioner and learned HCGP for the respondents. This court in identical case has granted an interim order directing the respondent-authorities to release the goods confiscated subject to the petitioner depositing disputed tax amount and also furnishing bond.
This court has also taken cognizance of the modification made by the Division Bench of this court in W.A.No.100472/2023. The Division Bench though concurred with the interim order granted by this court, however, has imposed additional condition on the petitioner in the said case to furnish security by way of immovable property to the value of Rs.95,23,150/-. By way of interim relief, it is directed that concerned authority/respondent No.1 shall release the goods confiscated pursuant to order dated 09.01.2023 passed in Form GST MOV-11, subject to the following conditions:
i) The petitioner shall deposit 20% of the amount i.e., Rs.9,34,524.80.
ii) The petitioner shall furnish bond to the tune of Rs.46,72,624/-.
iii)Petitioner shall also furnish security by way of immovable property to the value of 46,72,624/-.
iv) It is made clear that on receipt of 20% of the demand and bonds, the concerned authority shall release the goods within a period of two “
10. The said order was modified insofar as time limit for compliance by order dated 10.10.2023, whereby, time limit of one week was granted, failing which the interim order granted on 25.09.2023 would stand automatically
11. It is the order dated 25.09.2023, imposing conditions that has been challenged.
12. The counsel for the petitioner has contended that the proceedings under section 129 of the Act having been initiated could not have been abandoned midway and proceedings for confiscation under section 130 of the Act be proceeded with. It is further contended that the conditions imposed are onerous and the question of imposing conditions on the basis of value of goods does not arise.
13. Though various other contentions have been raised, it may not be appropriate to address regarding such contentions on merits being conscious of pendency of adjudication regarding the order of confiscation under section 130 of the Act.
14. Learned Additional Advocate General appearing for the revenue, on the other hand contends that there is a dear intention of evasion of tax as e-way bill was not being carried. Reliance was also placed on the order of the Apex Court in State of Uttar Pradesh and Other v. K Pan Fragrance and Others Private Limited=, contending that the learned Single Judge at the first instance ought not to have permitted the release of confiscated goods as release could be permitted only in terms of the statutory provisions, i.e., Rule 140 of GST Rules and that the bank guarantee is required to be furnished for the entirety of the value of goods.
15. Heard both sides.
16. At the outset, it must be noted that the petitioner has challenged the imposition of conditions for release of goods in the impugned order,
17. The revenue not having challenged the interim order dated 25.09.2023, permitting release of goods, cannot now contend that the order of release could not have been passed on the conditions that were imposed and that the conditions should have been imposed regarding furnishing of bank guarantee for the entirety of the value of goods.
18. Accepting any argument by the revenue which places the petitioner worse off than the interim order pasSed on 09.2023 by the learned Single Judge, would not arise and accordingly, contentions of the State regarding the correctness of the interim order of release or regarding the insufficiency’ of imposition of conditions cannot be entertained.
19. The question relating to validity of the order under section 130 of the Act is a matter still pending adjudication before the learned Single Judge. Though the counsel for the petitioner has submitted that imposition of condition should be restricted to tax and penalty cannot be linked to the value of goods, such contention cannot be accepted. The proceedings under Section 130 of the Act relate to confiscation of goods and if such proceedings are upheld then the property would vest with the revenue and the revenue would be entitled to sell the property and appropriate the proceeds.
20. The concern of the State that the valuation of the petitioner being defective and actual valuation being much higher cannot be ignored though the aspect of valuation is also a matter for adjudication. However, it would be appropriate to put the petitioner on terms by ensuring that the valuation of the goods as determined by the revenue is realizable if the validity of the proceedings under section 130 of the Act are upheld.
21. It must also be noted that the order passed in -W.-A.No.100472/2023, wherein, the Co-ordinate Bench had directed furnishing of security of immovable property was passed on the concession of the assessee.
22. In light of the above the following order could be passed modifying the interim order dated 25.09.2023 passed by the learned Single Judge:-
a) The appellants to make good the 25% deposit provided for in appeal proceedings as regards the order impugned in the writ proceedings. It is made clear that deposit- made in the earlier appeals by the appellant could be adjusted.
b) The appellants to make good tax and penalty as per the orders impugned before the learned Single Judge by securing the same by way of bank guarantee.
c) The appellants to furnish bank guarantee insofar as the value of goods as per his invoice.
d) The appellants to furnish personal bond of the Proprietor representing the appellants to the extent of differential value of the goods as per the invoice of the appellants vis-à-vis the valuation by CAMPCO made on behalf of the State.
e) The Proprietor of the appellants shall furnish personal affidavit described in the appeal memo in all matters recording the compliance of the direction at (a) to (d).
For compliance of the aforesaid direction four weeks time is granted.
23. It is made clear that in the event there is any default of the undertaking, they would be exposing themselves to contempt of court proceedings apart from other proceedings.
24. The observations and findings made in this order are in the peculiar facts of the present appeal and cannot be treated as a precedent for other matters and that findings and observations made herein are only for the purpose of disposing of the present appeals and are not deemed to be finding on facts and law. All contentions of the parties urged in these appeals are kept open.
25. Accordingly, the appeals are disposed off in terms of the above modifying the orders of the learned Single Judge dated 25.09.2023
Notes :
1. 2020 (5) SCC 811
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