Goods seized cannot be released by invoking writ jurisdiction if no application filed for release of goods under GST

[CA Bimal Jain]

The Hon’ble Calcutta High Court in the case of M/S. KANAK TIMBER HOUSE & ANR. VERSUS ASSISTANT COMMISSIONER OF SALES TAX & ORS. - 2024 (3) TMI 680 - CALCUTTA HIGH COURT disposed of the writ petition, thereby holding that, a person cannot seek the release of the goods by way of filing writ petition and is required to file application under sub-section (6) of Section 67 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

Facts:

Search and Seizure proceedings were conducted by the Revenue Department (“the Respondent”) at Kanak Timber House (“the Petitioner”) registered place of business. Thereafter, prohibitory order dated March 25, 2023 (“the Impugned Order”) was issued under sub-section (2) of Section 67 of the CGST Act. Further, a show cause notice under Section 122 of the CGST Act was issued for which reply was filed by the Petitioner. Also, the Petitioner requested the Respondent to release the stock of timber which was seized and covered under the Impugned Order.

Aggrieved by the Impugned Order passed, the Petitioner filed a writ petition before the Hon’ble High Court.

Issue:

Whether the Petitioner is required to file application under sub-section (6) of Section 67 of CGST Act for release of goods seized?

Held:

The Hon’ble Calcutta High Court in M/S. KANAK TIMBER HOUSE & ANR. VERSUS ASSISTANT COMMISSIONER OF SALES TAX & ORS. - 2024 (3) TMI 680 - CALCUTTA HIGH COURT held as under:

• Relying upon the judgment of the Hon’ble Supreme Court in the case of THE STATE OF UTTAR PRADESH & ORS. VERSUS M/S KAY PAN FRAGRANCE PVT. LTD. [2019 (12) TMI 95 - SUPREME COURT] observed that, the Assessee in order to seek release of the goods seized is required to invoke the provisions of GST Act.
• Relying upon the judgement of the Hon’ble Delhi High Court in the case of BEST CROP SCIENCE PVT. LTD. VERSUS SUPERINTENDENT, CGST, DELHI WEST AND ORS. - 2023 (9) TMI 996 - DELHI HIGH COURT noted that, the prohibitory order cannot be valid for infinite  period of time.
• Opined that, the goods seized cannot be released till the time the Petitioner has not filed the application under sub-section (6) of Section 67 of the CGST Act.
• Held that, the Court is not inclined to interfere as no application has been filed by the Petitioner with the Respondents for release of goods.

Relevant Provision:

Sub-section (6) of Section 67 of the CGST Act:

            Section 67: Power of Inspection, search and seizure

(6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.

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