ORDER

PER : HONOURABLE MS. JUSTICE SONIA GOKANI

1. By way of this petition, the petitioner seeks to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India seeking to quash and set aside the notice issued in Form GST MOV-10 dated 15.11.2022 under Section 130 of the Central/Gujarat/Integrated Goods and Services Tax Act, 2017 (“GST Act” hereinafter) as well as the notice order of detention in Form GST MOV-06 dated 15.11.2022 under Section 129 of the Act. The appropriate directions are being sought against the respondent authorities for immediate release of the Truck bearing registration No. GJ-10-TX-7383 along with the goods contained therein seized under the GST Act.

2. The petitioner is Limited Liability Partnership (LLP) Firm filing this petition through one of the partners who is a citizen of this Country. Respondent no.1 is a Commissioner of State Tax and exercises jurisdiction under the provisions of GST Act within the State of Gujarat.

2.1. The petitioner is engaged in trading of ceramics and scrap and is registered person under the GST Act. The petitioner got the order for supply of iron and steel waste from JP Steels and Iron, Kharasiya, Chhattisgarh. The Tax Invoice No. 035 dated 08.11.2022 had been generated by the petitioner for the value of the goods and the same was given to the transporter. The task of transferring of the goods was given to one M/s. S.K. Logistics. The e-way bill for the conveyance for the tax invoice was generated. The e-way generated by the petitioner was automatically given a system generated number being 6314 8458 9460. The e-way bill also had the reference to tax invoice generated by the petitioner and the transport company was entrusted with the task of moving the consignment. The e-way bill as well as the tax invoice mentioned the details of the truck through which the goods were transported being the Registration No. GJ-10-TX- 7383. It is the say of the petitioner that the driver produced all the relevant documents to explain the veracity of transaction and the conveyance was carrying 35,530 kgs. of the scrap iron.

2.2. The vehicle transporting the goods was intercepted on 09.11.2022 at Songadh, Surat. After recording the statement of the driver in MOV-01, the order for inspection of the goods and vehicle was passed in MOV-02 on 09.11.2022. The physical verification was carried out on 15.11.2022 where no discrepancy was found. It is averred by the petitioner that the order of detention under Section 129(1) of the Act passed in Form GST MOV-06 on 15.11.2022 was quite surprising although the driver had produced all the papers before the respondent no.2.

2.3. A show cause notice in Form GST MOV-10 had been issued for confiscation under Section 130 of the GST Act without following the procedure as stipulated under Section 129 of the GST Act. The notice specifies that the petitioner is operating from an apartment and the movements of goods of suppliers of the petitioner could not be traced in RFID. The petitioner was called to clarify the discrepancies, however, without waiting for the petitioner’s response to the show cause notice, the impugned show cause notice under Section 130 of the Act had been issued.

2.4. The petitioner filed reply dated 28.11.2022 urging that the assessment proceedings either under Section 73 or 74 of GST Act are required to be completed and therefore, Section 130 (GST Act) notice is not to be invoked under such circumstances. The petitioner is a bonafide dealer and the goods were duly accompanied by the invoice, transport receipt and the e-way bill and there was no intention to evade the taxes.

2.5. It is averred by the petitioner that Section 129(1) of the GST Act provides for release of the goods detained/ seized under that Section on payment of applicable tax and penalty. Non-release of the goods seized/detained despite the petitioner having made such payment of the tax and penalty is without jurisdiction. The issuance of the notice under Section 130 in purported exercise of the powers under Section 130 of the GST Act, according to the petitioner, is without following the due procedure under Section 129 of the GST Act.

2.6. It is further averred that the amendment is brought in the Section 130 of the Act vide Finance Act, 2021 enforced vide Notification No. 39/2021-Central Tax dated 21.12.2021 which has done away with non-obstante clause of Section 130 and thereby, making Section 129 a special provision relating to detention and seizure of the goods in transit. Hence, the mandate of Section 129 would have to be followed in entirety before invoking Section 130. It is, therefore, the say of the petitioner that all the allegations are against the supplier and none of the conditions as mentioned under Section 130 is attracted in case of the petitioner and hence, the respondent has no powers to detain or seize the goods and without seizure, confiscation is not possible.

2.7. Without prejudice to the applicability of circular after the amendment enforced from 01.02.2022, it is urged that when the proper officer issues an order for physical verification, within 24 hours of issuance of Form GST MOV- 02, he is required to prepare a report in Part-A of Form GST EWB-03 and upload the same on the common portal. Within three working days from the issuance of the order in From GST MOV-02, he shall conclude the inspection proceeding either himself or through a proper officer authorized on his behalf. He shall obtain a written permission, if more time is warranted from the Commissioner or an officer authorized for extension of the time beyond three working days. The circular also provides that on completion of the physical verification of the conveyance and goods in movement, the proper officer is to prepare a report in FORM GST MOV-04 and serve a copy to the person in charge of the goods and conveyance. The final report of inspection in Part-B of GST EWB-03 is to be recorded by the proper officer within three days of the physical verification. Thus, when the conveyance was detained for the purpose of inspection, it was incumbent upon the third respondent to prepare a report in Form GST EWB-03 and upload the same on common portal within 24 hours from issuance of Form GST MOV-02 and upon completion of the physical verification, he was further required to prepare a report in From GST MOV-04. The service of copy of the said report to the person in charge of the goods and conveyance and recording the final report of inspection in Form GST EWB-03 within three days of physical verification was a must. No such reports are prepared nor uploaded.

2.8. Further reliance is placed on Clause-(g) of the aforementioned circular to urge that if there are no discrepancies found after the inspection of the goods and conveyance, the proper officer shall issue forthwith the release order in Form GST MOV-05 and allow the conveyance to move further. The proper officer, however, is of the opinion that the goods and conveyance need to be detained under Section 129 of the CGST Act, he shall issue an order of detention in Form GST MOV-06 and a notice in Form GST MOV-07 in accordance with the provision of sub-section (3) of Section 129 specifying the tax and penalty payable and such notice is to be served on the person in-charge of the conveyance.

2.9. It is therefore urged that, without following the due procedure the respondent no.2 has issued the order of detention in Form GST MOV-06 and Form GST MOV-10 on the same day on the ground that the transaction appear to be sham and bogus. According to the petitioner, when the conveyance in question was carrying the goods which were duly accompanied by the documents and there was no discrepancies, there is no question of confiscation. Invocation of Section 130 at the very threshold shall need to be looked into. Accordingly, the following prayers are sought:-

“(A) Your Lordships may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other writ, orders or directions to quash and set aside the impugned notice in FORM GST MOV-10 dated 15.11.2022 (at Annexure-E) as well as impugned order of detention in FORM GST MOV-6 15.11.2022 (at Annexure-D);

(B) Your Lordships may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other writ, orders or directions to respondent authorities to forthwith release truck no. GJ-10-TX- 7383 along with the goods contained therein by quashing and setting aside the detention notices and orders;

(C) Your Lordships may be pleased to grant exparte, ad interim order in favour of the petitioner herein in terms of prayer clause ‘A’ and ‘B’ hereinabove;

(D) Pass any such other and/or further orders that may be thought just and proper, in the facts and circumstances of the present case.”

3. On an advance notice given to the office of learned Government Pleader, learned Assistant Government Pleader Ms. Pooja Ashar has appeared.

4. This Court at the threshold heard learned advocate Mr. Hiren Trivedi assisted by learned advocate Mr. Parth Pandya and learned AGP Ms. Pooja Ashar.

5. It is agreed that till this Court decides the matter finally, the interim relief in terms of deposit of fine in lieu of confiscation of vehicle being Rs. 2,50,062/- with penalty of Rs. 5,00,124/- under Section 129(1a) which includes 200% of the tax amount and bond value against the release of the goods to the tune of Rs. 13,89,224/- as per GST MOV-10 shall be furnished by the petitioner. On this being complied with, no coercive steps or further order under Section 130 shall be passed.

6. Hence, the following interim order:-

By way of interim relief, it is directed that the respondents shall release the goods and conveyance of the petitioner, confiscated and detained pursuant to the detention order passed in Form GST MOV-06 and Form GST MOV-10 dated 15.11.2022, subject to the following conditions –

(i) The petitioner deposits the amount of fine of Rs. 2,50,062/- (Rupees Two Lakh Fifty Thousand Sixty-Two).

(ii) The petitioner deposits the amount of penalty to the tune of Rs. 5,00,124/- (Rupees Five Lakh One Hundred Twenty- Four).

(iii) The petitioner furnishes bond to the tune of Rs.13,89,224/- (Rupees Thirteen Lakh Eighty-Nine Thousand Two Hundred Twenty-Four) towards the value of goods.

Upon compliance of the above conditions by the petitioner, the goods and conveyance of the petitioner be released by the authorities.

7. Since the core issue challenged under this petition is also challenged in Special Civil Application No. 11235 of 2022, which is under consideration before this Court, the present petition is therefore tagged with the aforementioned matter coming up on 08.02.2023.