The Hon'ble High Court of Jharkhand in [ Veer Enterprises v. Union of India WP (T) NO. 6746 OF 2023 April 3, 2024 ] dismissed a writ petition filed by Veer Enterprises, a sole proprietorship firm, challenging an order of confiscation of goods (dried areca nuts) and the conveyance (vehicle) under Section 130 of the CGST Act. The court held that due to disputed facts regarding the nature of the transaction and the existence of the recipient firm, M/s Patil Trading Company, it would not exercise its discretionary powers under Article 226 of the Constitution to entertain the writ petition. The court also recalled its earlier interim order granting an opportunity to the petitioner to release the confiscated goods and conveyance.
Facts of the Case:
(The Petitioner) Veer Enterprises, a sole proprietorship firm engaged in the purchase and sale of betel nuts and dried areca nuts, filed the present writ petition challenging an order dated November 15, 2023, passed in Form GST MOV-11 under Section 130 of the Central Goods and Services Tax Act, 2017 (CGST Act). The order pertained to the confiscation of goods (dried areca nuts) and the conveyance (vehicle) in which the goods were being transported.
The Petitioner had sold 17,780 kg of dried areca nuts, valued at Rs. 28,37,688/-, to M/s Patil Trading Company, which had a GSTIN registration under GST. The Petitioner had produced tax invoices and an e-way bill generated on November 1, 2023, reflecting the names of (the Petitioner) and M/s Patil Trading Company. On November 2, 2023, the vehicle carrying the goods was detained at Barhi at 10:00 PM by (the Respondent) authorities, who did not release the vehicle despite the driver producing the e-way bill and invoices.
A notice dated November 8, 2023, in Form GST MOV-10 was issued to (the Petitioner), who submitted a response through email on November 14, 2023. However, (the Respondent) passed an order on November 15, 2023, in Form GST MOV-11 under Section 130 of the CGST Act, confiscating the goods and the vehicle. (The Petitioner) contended that the proceedings under Section 129 (detention of goods and conveyance) could not be automatically converted into a proceeding for confiscation of goods under Section 130, and hence, the confiscation order was bad in law.
The court had granted an interim order dated February 9, 2024, providing an opportunity to (the Petitioner) to release the confiscated goods by depositing the required amount of tax, penalty, and fine within a reasonable time. However, (the Petitioner) did not avail of this opportunity even after the expiry of about one and a half months and instead made an oral request to modify the condition of furnishing a bank guarantee by permitting them to submit a bond for the total value of the confiscated goods.
Held by the Court:
The Hon'ble High Court of Jharkhand, in the WP (T) NO. 6746 OF 2023 held as under:
Observed that (the Petitioner) did not avail of the interim order dated February 9, 2024, which granted an opportunity to release the confiscated goods by depositing the required amount within a reasonable time.
Noted that even after the expiry of about one and a half months, (the Petitioner) did not avail of the said opportunity and instead made an oral request to modify the condition of furnishing a bank guarantee by permitting them to submit a bond for the total value of the confiscated goods.
Held that there were serious disputed questions of fact regarding the nature of the purchase and sale of the confiscated goods and the finding of the statutory authority that the recipient firm (M/s Patil Trading Company) was a non-existent firm.
Further held that it would not exercise its discretionary powers under Article 226 of the Constitution to entertain the writ petition filed by (the Petitioner) challenging the order of confiscation passed under Section 130 of the CGST Act.
Consequently, the court dismissed the writ petition, observing that the writ court exercises its powers under Article 226 in furtherance of public good, and its powers, though plenary in nature, are discretionary.
The court also recalled its interim order dated February 9, 2024, and noted that the interlocutory application I.A. No. 2827 of 2024 had been rendered infructuous.
Relevant Sections:
"Section 130, read with Section 129, of the Central Goods and Services Tax Act, 2017"
Section 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,-
1[(a) on payment of penalty equal to two 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 penalty;
(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, 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 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.
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3[(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).]
(4) 4[No 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 sub-section (3) shall be deemed to be concluded.
5[(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):
Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less:
Provided further 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 fifteen days may be reduced by the proper officer.]
Section 130. Confiscation of goods or conveyances and levy of penalty.-
(1) 1[Where] 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 2[penalty equal to hundred per cent. of the tax payable on such goods]
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.
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(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.
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