TMI Blog2021 (12) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter under section 130 of the CGST Act is only to the truck driver and neither to the truck owner nor to the petitioner in its capacity of the owner of the goods. The respondent has unsuccessfully pointed out to the Court as to how there has been representation on the part of the owner of the goods at the stage of passing the order under MOV 11. However, the respondent has not pointed out as to whether any show cause notice was issued to any of these or whether any opportunity of hearing had been availed. Admittedly, there is no show cause notice issued to the owner of the goods, at any juncture. Unlike in the case of SITARAM ROADWAYS (URP) THROUGH PROPRIETOR VASHRAMBHAI ARJANBHAI DANGAR VERSUS STATE OF GUJARAT [ 2019 (10) TMI 665 - GUJARAT HIGH COURT] where there was a show cause notice issued to the petitioner and the date had also been fixed for hearing and where the allegation was of only passing the order without affording the opportunity of hearing and that too by a non-speaking order, in the instant case, what is to be noticed glaringly is a complete absence of any notice and gross violation of principles of natural justice. The petitioner, who is the owner of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 24.08.2021 issued under Section 130 of the CGST/SGST Act issued by Respondent No.3 (Annexure F); iii. Order dated 15.09.2021 (Annexure-A) issued under Section 130 of the CGST Act, 2017/GGST Act, 2017 by Respondent no.2; (b) That this Hon ble Court be pleased to issue a Writ of Mandamus, or a Writ in the nature of Mandamus, or any other appropriate Order or direction directing the Respondents, their servants, agents, or representatives to allow clearance of the goods provisionally detained under Detention Order dated 24.08.2021 (Annexure-E) issued under Section 12991) of the CGST Act, 2017/GGST Act, 2017 by Respondent No.3 after quashing and setting aside the notice dated 24.08.2021 issued under Section 130 of the CGST/GGST Act issued by Respondent No.3 (Annexure F); (c) Pending Notice, admission, and finalizing of this petition, this Hon ble Court may be pleased to direct the Respondents, their subordinates, agents, or their representatives to forthwith release the goods provisionally detained and confiscated in purported exercise of powers under Section 129 and 130 of the CGST Act; (d) That pending the hearing and final disposal of the present petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 021, the petitioner sent a letter in writing requesting to release the goods/conveyance intercepted, and requested not to impose any penalty. It was also urged that on the directions of the buyers, goods were being sent to Jetpur for processing. However, while preparing tax invoice, inadvertently, the name of the supplier of the goods from whom the petitioner had purchased the goods had been mentioned as Consignee instead of the processors at Jetpur, but in the E-way bill, the correct place of delivery was mentioned i.e. Jetpur, Gujarat. 3.7 By not paying heed to the request, respondent No.3 detained the truck along with the goods and order of detention in Form GST MOV-06 was issued on 24.08.2021, Thereafter, the order was passed on the same day, which was served upon the driver of the truck and not upon the petitioner. 3.8 After the order of 24.08.2020, respondent No.3 also passed an order under section 129(1) of the GGST Act. 3.9 Notice for confiscation of the goods/conveyance for levy of penalty was served upon the truck driver, although copy was marked to the petitioner and other parties. Not even the copy of the show cause notice was issued to the petitioner. Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for a valid invoice, bill of supply or delivery challan. In absence of that requirement having not been met, the order has been passed. It is further the say of the respondent that it is wrong to say that no opportunity of hearing was given. One Mr. Anish Goyel had visited the office of the respondent for the purpose of representing the case of the petitioner and Email sent by the petitioner on 28.08.2021 has been taken note of. He also relied on Rule 46 of the GGST Act, which, under the heading of Rule 46 Tax Invoice provides that subject to Rule 54, a tax invoice, issued by a registered person, shall contain particulars specified thereunder, which were missing. 9 According to the respondent, mere payment of tax and penalty would not suffice. Redemption fine is imposed when there is discrepancy and as the order has been passed after issuance of the notice under the MOV 10, the representation has been made, duly signed by the proprietor of the petitioner, on 23.08.2021. 10 It is further the say of the respondent that sections 129 and 130 both are independent provisions. Therefore, the authority has rightly acted upon by issuing the show cause notice under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner of the goods at the stage of passing the order under MOV 11. However, the respondent has not pointed out as to whether any show cause notice was issued to any of these or whether any opportunity of hearing had been availed. Admittedly, there is no show cause notice issued to the owner of the goods, at any juncture. It is also not in dispute that the petitioner has already paid the amount of ₹ 2,28,038/- by way of tax and penalty. However, the amount of redemption fine, equivalent to the value of the goods, which have been confiscated is to the tune of ₹ 22,80,362/- as imposed by the respondent authority has obviously not been paid. 18 Without further delving into the merits of the matter, apt will be to refer to the decision of this Court in the case of Sitaram Roadways (URP) (supra). It was a case where the competent authority intercepted conveyance of assessee transporter carrying goods and detained the same. As the person in charge of the conveyance was not in a position to produce the mandatory documents in the nature of invoice and E-way bill, the order was passed in Form GST MOV02 by the competent authority and directed the person in-charge of the conveyan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 of the Act straightway. If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act. Any opinion of the authority to be formed is not subject to objective test. The language of Section 130 of the Act leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act or proceed for the purpose of confiscation at the very threshold. But, at the same time, there must be material based on which alone the authority could form its opinion in good faith that it has become necessary to call upon the owner of the goods as well as the owner of the conveyance to show-cause as to why the goods and the conveyance should not be confiscated under Section 130 of the Act. The notice for the purpose of confiscation must disclose the materials, upon which, the belief is formed. It could be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howed willingness to pay the tax and penalty for the purpose of securing release of the vehicle in question, the second respondent has proceeded to pass the impugned order without hearing the petitioner on the question of confiscation of the goods and conveyance. 9. As can be seen from the impugned order, it is in the format provided therefor, viz. in FORM GST MOV-11. In paragraph 1 of the impugned order all the blanks have been filled up which indicate the registration number of the conveyance and the time, place and date and by whom the conveyance came to be intercepted. Paragraphs 3 and 4 thereof do not contain any details in the blank spaces meant to be filled in. One of the significant paragraphs in the statutory form is paragraph 5, which reads thus: The person in charge has not filed any objections/the objections filed were not acceptable for the reasons stated below: a) b) . Thus, in terms of the statutory format provided for passing an order under section 130 of the CGST Act, the officer adjudging is required to provide the reasons for confiscating the goods and conveyance. Reference may also be made to paragraph 6 of the statutory form, which reads thus: 6. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or contravenes any provisions of the Act and the rules made thereunder with the intent to evade payment of tax respectively. Insofar as clauses (ii) and (iii) are concerned, the very fact that the person does not account for the goods on which he is liable to pay tax under the Act; or supplies any goods which are liable to tax under the Act without having applied for registration, would be sufficient for ordering confiscation of the goods. Therefore, while making an order of confiscation under section 130 of the CGST Act, the officer adjudging it will have to state as to which clause of sub-section (1) of section 130 of the CGST Act is attracted in the facts of the said case. If it is the case of the officer adjudging it that the case falls under clauses (i) or (iv) of sub-section (1) of section 130 of the CGST Act, then for the purpose of making an order of confiscation, he will have to come to the conclusion that the goods were supplied or received in contravention of the provisions of the Act or the rules made thereunder with the intent to evade payment of tax. In other words, the officer adjudging the case, while making an order of confiscation under clauses (i) or (iv) of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssengers 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. Thus, sub-section (2) of section 130 of the CGST Act provides that the fine leviable shall not exceed the market value of the goods, less the tax chargeable thereon. It is, therefore, clear that the fine provided under the first proviso to sub-section (2) of section 130 of the CGST Act is the maximum fine leviable. Consequently, the proper officer adjudging the case is required to examine the seriousness of the contravention and impose fine accordingly. It is not as if in every case the proper officer should levy the maximum fine. The order of confiscation should, therefore, reflect due application of mind on the part of the proper officer to the quantum of fine imposed by him. 15. A perusal of the impugned order reveals that the proper officer has levied more than the maximum fine leviable in terms of the first proviso to sub-section (2) of section 130 of the CGST Act, inasmuch as, he has levied fine equal to the market value of the goods without deducting the tax chargeable thereon. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -stamp reasons is not to be equated with a valid decision-making (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor.) (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg See Ruiz Torija v. Spain, (1994) 19 EHRR 553 and Anya v. University of Oxford, 2001 EWCA Civ 405 (CA), wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, adequate and intelligent reasons must be given for judicial decisions . (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of due process . 17. In CCT v. Shukla Bros.,(2010) 4 SCC 785, the Supreme Court held thus: 14. The pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial system, reasons at least sufficient to indicate an application of mind to the matter before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. 20. Thus, the Supreme Court has consistently held that a quasi-judicial authority must record reasons in support of its conclusions and that reasons are an indispensable component of a decision making process. In CCT v. Shukla Bros (supra) the Supreme Court has held that giving reasons in support of the conclusions arrived at is an ingredient of the principles of natural justice. 21. Viewed in the light of the principles enunciated in the decisions referred to hereinabove, the impugned order is in breach of the principles of natural justice on two counts: firstly, that though the matter was kept for hearing on 28.08.2019, the second respondent passed the impugned order on 24.08.2019 without affording any opportunity of hearing to the petitioner; and secondly, because the impugned order is a totally non-speaking order which does not reflect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway. (iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act. (v) Even if the goods or the conveyance is released upon payment of the tax and penalty under Section 129 of the Act, later, if the authorities find something incriminating against the owner of the goods in the course of the inquiry, if any, then it would be permissible to them to initiate the confiscation proceedings under Section 130 of the Act. (vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act. (vii) Sections 129 and 130 respectively of the Act are mutually exclusive and independent of each other. If the amount of tax and penalty, as determined under Section 129 of the Act for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of summary like proceedings. Therefore, the said provisions operate in different spheres. (xi) The comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not correct. Section 110(1) of the Customs Act is not comparable to Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/ seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. (xii) The provisions of Sections 110(2) and 124 of the Customs Act do not contemplate that the goods which are seized are to be released in a specific time limit, much less, within a period of six months. Apropos this, the said sections merely cast a duty on the department to issue a show cause notice within a period of six months from the date of seizure of goods, but the same does not contemplate as to in how much time, the same has to be adjudicated upon. Therefore, the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of redemption fine in lieu of confiscation can be passed. (xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation. 21 Adverting to the facts of the instant case, unlike in the case of Sitaram Roadways (URP) (supra) where there was a show cause notice issued to the petitioner and the date had also been fixed for hearing and where the allegation was of only passing the order without affording the opportunity of hearing and that too by a non-speaking order, in the instant case, what is to be noticed glaringly is a complete absence of any notice and gross violation of principles of natural justice. The petitioner, who is the owner of the goods has not been afforded the opportunity at all as no service of show cause notice is also made to the petitioner and the opportunity was only afforded to the driver. Surprisingly, expressed show cause notice was only to the driver and to none else. This Court notices tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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