TMI Blog2022 (12) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... V-10 under section 130 for confiscation of goods is issued, the goods in question stand seized under section 67(2) of the GST Act, applicability of section 129 of the GST Act comes to an end. Once the goods are to be treated as seized under section 67(2) of the GST Act, the same would be liable to be provisionally released under section 67(6) of the GST Act by the GST authority either upon execution of bond and furnishing of security in such manner and of such quantum as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. Therefore, as the petitioners are ready to either execute a bond and furnish the security in prescribed manner and/or make payment of applicable tax, interest and penalty, the respondents authorities were not justified in denying the provisional release of the goods and conveyance as it is mandatory for the authority to exercise powers under section 67 (6) of the GST Act for provisional release of the goods and conveyance as there is mandate by word shall provided under section 67(6) of the GST Act. The respondents authorities are required to release the goods on provisional basis in exercise of powers under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners submitted that it is not in dispute that the goods and conveyance were accompanied by valid documents i.e. tax invoice and e-way bill and even then the goods were seized and notice for confiscation under Section 130 of the GST Act was issued on ground of alleged irregularities in the transactions of upstream vendors. 6. It was submitted that when the writ applicant applied for provisional release of goods under Section 67(6) of the GST Act pending confiscation proceedings, such application was rejected by impugned letter dated 11.10.2021 on the ground that such release is not possible once the proceedings are initiated under Section 130 of the GST Act. 7. Learned advocate Mr. Sheth submitted that Section 130 of the GST Act is a substantive provision providing for the circumstances in which goods shall be liable for confiscation and does not contain any provision for seizure of the goods. 8. Learned advocate Mr. Sheth submitted that there are only two statutory provisions which empower the authorities to seize the goods. While Section 67(2) of the GST Act provides for seizure of goods liable for confiscation, Section 129(1) of the GST Act provides for seizure of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so and if there is a single provision for confiscation of goods, then it absolutely defies logic for the authorities to contend that provisional release is not permissible for goods seized during transit even though the provision under which they are allegedly liable for confiscation remains the same under section 130 of the GST Act. 14. It was submitted that such discriminatory policy based on the place from where goods are seized could never have been contemplated by the legislature and it is in fact contrary to the provisions and scheme of the GST Act. 15. Learned advocate Mr.Sheth further submitted that section 67(6) of the GST Act provides that the goods seized under subsection (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 and therefore, if the taxable person is ready to either execute bond and furnish security in the prescribed manner or make payment of tax, interest and penalty, then it is mandatory for the authority to provisionally release the goods. 16. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authority does not have any discretion to alter such terms. It was submitted that if either of the options are exercised by the taxable person then the authority is bound to provisionally release the goods under Section 67(6) of the GST Act. 21. Learned advocate Mr. Sheth further submitted that once the goods are seized and if the taxable person applies for availing provisional release under Section 67(6), then the authority is required to forthwith allow such provisional release provided the taxable person immediately complies with the conditions for availing such release and the statutory right of obtaining provisional release cannot be frustrated by the authority by not adjudicating the provisional release application and instead proceeding to pass final confiscation order. 22. Learned advocate Mr. Sheth submitted that when the petitioners applied for provisional release under Section 67(6) of the GST Act by letter dated 30.9.2021, the same was rejected by the respondent no.2 by impugned letter dated 11.10.2021 and instead the seized goods along with conveyance ought to have been released provisionally under Section 67(6) of the GST Act either on the basis of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l release would not arise on plain reading of section 68 read with section 129 of the GST Act. 25. It was submitted that since supply of goods in these cases is in contravention of the law and is liable to be confiscated as well as to be considered as offences under sections 122(i)(ii)(vii) and (ix) as mentioned in notice in Form GST MOV 10, proceedings under section 130 have been initiated. 26. It was submitted that entire transaction chain of supply is established with intent to evade the taxes and hence invocation of section 130 of the GST Act was justified. 27. It was submitted that on perusal of the provisions of sections 129 and 130 of the GST Act, there is no mention of provisional release in section 130 and hence the request for provisional release was rightly declined by the authority. It was submitted that in view of the orders passed by this Court, further order under MOV 11 is not passed. 28. Having considered the rival submissions of learned advocates for the respective parties, it would be germane to refer to relevant provisions : 67. Power of inspection, search and seizure (1) Where the proper officer, not below the rank of Joint Commissioner, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. (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. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stores any goods while they are in trasit 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. (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, d) 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 '[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 goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are seized and then released, confiscation is also permissible but if the goods are not seized then there cannot be any confiscation which is applied by the Bombay High Court in case of Commissioner of Customs (Import), Mumbai v. Finesse Creation Inc.(supra) and Punjab and Haryana High Court in case of Commissioner of Customs, Amritsar v. Raja Impex(P). Ltd. (supra). 33. In view of above analysis, once the notice in Form MOV-10 under section 130 for confiscation of goods is issued, the goods in question stand seized under section 67(2) of the GST Act, applicability of section 129 of the GST Act comes to an end. 34. In such circumstances, the respondent authorities are required to exercise powers to release goods and conveyance as provided in sub-section(6) of section 67. It is immaterial whether for the purpose of confiscation, goods are seized at the premises or in transit. Section 130 of the GST Act is the only statutory provision providing for confiscation of goods irrespective of the fact that the goods are lying in the premises of the taxable person or whether the goods are in transit. Therefore, in order to proceed further under section 130 of the GST Act, the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there is mandate by word shall provided under section 67(6) of the GST Act. The word shall ordinarily indicates that the provision is mandatory in nature and therefore, reliance placed by the petitioner in case of State of Haryana v. Raghubir Dayal reported in (1995) 1 Supreme Court Cases 133, Delhi Airtech Services Private Ltd. v. State of U.P. and others reported in (2011) 9 Supreme Court Cases 354 and in case of ALD Automotive Pvt. Ltd. v. Commercial Tax Officer reported in (2019) 12 Supreme Court Cases 225 would be applicable in facts of the case. 37. In view of the foregoing reasons, the respondents authorities are required to release the goods on provisional basis in exercise of powers under section 67(6) of the Act once the show cause notice under section 130 of the GST Act for confiscation of the goods and conveyance is issued irrespective of whether goods are seized at the place of the taxable person or during the course of transit as the same would not make any difference for exercise of powers for confiscation of goods under section 130 of the GST Act. 38. It is also required to be noted that as per the scheme of the GST Act, against the order passed under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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