9911796707
TMI Blog2025 (1) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... to in this judgment will be as obtaining in W.P.(C) No.40450 of 2023. 2. The principal place of business of the petitioner is at Gujarat. The petitioner obtained registration under the GST Act in Kerala and is preparing to start business at Thrissur. According to the petitioner, as part of business, the petitioner deputes Marketing Executives as carriers to exhibit its goods to dealers in different States. Only if the dealers approve the exhibited goods, the petitioner supplies the required ornaments, along with tax invoice. In the case of diamond gold jewellery unlike gold jewellery, the petitioner has also to obtain a certificate from the laboratory certifying the purity of the precious stones. Only upon receipt of the laboratory certificate, the petitioner proceeds to sell the approved diamond gold jewellery along with the certificate and tax invoice. In order to transport the sample ornaments for approval of dealers, the petitioner issues delivery challans in the name of its Marketing Executives in accordance with Rule 55 (1) (c) of the Central/State Goods and Services Tax Rules, 2017 (GST Rules, 2017). 3. While so, the petitioner issued Exts. P2 and P2(a) delivery challans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents are proposing to initiate proceedings under Section 138 (sic 130) of the Act, I do not find any valid grounds of prima facie case to pass an interim order directing the respondents to release the gold seized from the petitioner as per Ext. P4 order pending disposal of the writ petition. Nonetheless, it will be up to the respondents to finalise proceedings pursuant to Ext. P4 as expeditiously as possible." 4. Immediately after the issuance of interim order on 20.06.2023, on the very same day, Ext. P5 show cause notice was issued by the 1st respondent Intelligence Officer under Section 130 of the SGST Act. The petitioner sent Exts. P6 and P7 letters to the 1st respondent requesting for release of the goods seized, along with duly executed bond for the value of the goods and a challan evidencing payment of the amount equivalent to the penalty quantified in the show cause notice in lieu of bank guarantee. The 1st respondent, by Ext. P8 communication dated 13.07.2023, rejected the request stating that Section 130 of the SGST Act does not provide for provisional release of goods seized. The petitioner states that Ext.P8 was issued without providing the petitioner an opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finalise the adjudication proceedings. 7. A counter affidavit has been filed on behalf of the 1st respondent contending that the writ petition is premature and no writ petition under Article 226 of the Constitution would lie against a show cause notice issued under Section 130 of the GST Act. It is stated that the request for provisional release of the goods was made by the petitioner only on 05.07.2023 i.e., after the commencement of confiscation proceedings on 20.06.2023 by issuing show cause notice. It is further stated that Section 130 does not contemplate provisional release of goods which are proposed to be confiscated and the 1st respondent has no authority to release the goods pending adjudication and until the culmination of adjudication, the party from whom the goods were seized cannot claim release of such goods and that legal proceedings cannot be whittled down on grounds of expediency. Accordingly, it is contended that the petitioner has no legal right to claim provisional release of the goods pending adjudication under Section 130. It is further stated that the petitioner has participated in the adjudication and availed its right to cross examine on 12.01.2024 and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisional release under Section 67 (6) is available even after the initiation of Section 130 proceedings. It is further contended that if the goods are not provisionally released pending adjudication, it will lie with the department unused for several years till all the appeal remedies are exhausted. 10. Sri. Mohammed Rafiq would rely on the decision of the Hon'ble Supreme Court in State of Punjab v. Shiv Enterprises and Others [(2023) 109 GSTR 100 : 2023 SCC OnLine SC 271] to contend that the writ petition filed against Ext.P5 show cause notice under Section 130 of the GST Act is not maintainable. Relying on the decision of the Hon'ble Supreme Court in Union of India v. Lexus Exports (P) Ltd. [(1997) 10 SCC 232], Sri. Rafiq would contend that the proceedings of confiscation are proceedings in rem and until the culmination of the adjudication, the party from whom the goods were seized cannot claim release of such goods and that legal proceedings cannot be whittled down on grounds of expediency. Sri. Rafiq also submits that the decision in Balakrishnan (supra) cannot be relied upon since the writ appeal arising from the said case has been subsequently withdrawn leaving open the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfiscation 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." 12. The primary contention of the petitioner is that the petitioner is entitled to provisional release of the goods under Section 67 (6) of the GST Act pending adjudication of the notice under Section 130. The question as to whether interim release of goods can be ordered pending adjudication of notice under Section 130 of the GST Act c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on differently, by referring to other sections of the same enactment. Absence of the words provisional release or absence of reference to section 67 (6) of the Act is not determinative when section 130 (2) of the Act itself is manifest of such a release. 27. The two different stages in which the goods can be released-during adjudication and post-adjudication are obviously created with a purpose. The purpose of the two-stage release is that, if the owner of the goods, even before being deprived of his title to the goods or conveyance, is ready to pay the fine stipulated by the officer, then without further wrangles, if the goods and or conveyance can be released to the said owner, the same avoids unnecessary procedural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130 (7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily. Thus, in view of the above deliberations, I am of the firm view that section 130 (2) of the Act applies before the order of confiscation is issued. 28. The decision relied upon by the learned Senior Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the GST Act, as also the provisions of the Customs Act that was referred to by Sri. Mohammed Rafiq, the learned Special Government Pleader for the State, suggest that the ultimate object of the statutory provisions dealing with confiscation of goods is only to secure the value of the goods that are liable for confiscation, and not to absolutely seize/confiscate goods that are admittedly not in the nature of prohibited goods. We, therefore, feel that no prejudice would be caused to the revenue at this stage if the goods are released to the dealer against the amounts directed to be collected in the order dated 7.9.2021. The legal issue regarding the legality of an order, permitting a provisional release of goods liable for confiscation, can be decided at the time of final disposal of the writ petition. I am, therefore, of the view that the petitioner is entitled to an order directing the release of goods pending adjudication of Ext.P9 notice. As a result, it is directed that pending adjudication of Ext.P9 notice, the goods and conveyance detained in terms of Expt.P9 order shall be released to the petitioner on the petitioner depositing a sum of Rs. 1,00,000/- (Rupees On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30, appeal is provided under section 107 of the GST Act and therefore, the provisional release of the goods by executing bond and or recovery of the tax, penalty and interest payable by tax payer or person interested in release of such goods would be subjected to further proceedings as provided under the provisions of the GST Act. The intention of the legislature cannot be to keep the goods and conveyance unused till the adjudication and further appeal is decided by the competent authority under the provisions of the GST Act. The respondents authorities are accordingly directed to provisionally release the goods and conveyance in question in all these petitions on execution of bond of value of goods and on payment of tax, interest and penalty and fine in lieu of confiscation of the conveyance by the petitioners within a period of three weeks from the date of receipt of a copy of this order." 14. As rightly held by the High Court of Gujarat, the intention of the legislature cannot be to keep the goods and conveyance unused till the final adjudication exhausting the hierarchy of remedies. Further, as per Section 130 (2) of the GST Act, whenever confiscation of any goods or conveyanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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