The petitioner in W.P.(C) 32848/2019 is the appellant herein, challenging the judgment of the Single Judge, dated 4th December, 2019. The respondents herein are the respondents in the writ petition.

2. Ext.P5 order of detention of transport, issued under Section 129(1) of the Central Goods and Services Tax Act, 2019(‘CGST Act’, for short) as well as Ext.P7 notice issued under Section 129(3) of the CGST Act, were under challenge in the writ petition. The reason for detention mentioned in Ext.P5 was that, “on verification of documents accompanied, it is noticed that the consignor and consignee are two different entity with different GSTINs. They have made stock transfer between them on support of delivery challan and e-way bill which is against the provisions of Kerala GST/CGST Act and Rules made thereunder.”

3. In Ext.P5 notice it is mentioned that, as per the accompanied e-way bill and the delivery challan the type of transaction mentioned is ‘outward exhibition/fair’ on the premises of another dealer. As per the delivery challan the consignment is noted as stock transfer to another dealer with different GSTIN. According to the officer who detained the goods the transaction in question is against provisions of the KGST Act and the Rules made thereunder. Ext.P7 notice was issued under sub-section (3) of Section 129 demanding payment of a total amount of ₹ 2,42,288/- being the tax and penalty involved in the transaction.

4. Challenge raised against Ext.P5 and P7 was mainly based on a contention that the transaction in question is not a supply of goods attracting liability of any tax and that it is a permissible transaction contemplated under provisions of the CGST Act. It was specifically contended that, under Rule 55 of the Central Goods and Services Tax Rules 2017(CG & ST Rules, for short), an invoice need not be generated wherever there is transportation of goods for any reasons other than by way of supply. But the learned Single Judge found that, the appellant could not be able to establish that the transaction between the parties was not a sale and that the ownership of the goods was not transferred to the consignee. It was found that the definition of supply contained in Section 7 of the Act is not confined to transactions of sale alone, but includes transfer for other purposes also. Hence it is found that the detention cannot be termed as unjustified. However, the appellant was permitted to get the goods released on furnishing Bank Guarantee for the amounts mentioned under Ext.P7 notice. The 1st respondent was directed to refer the matter for adjudication in terms of the KSGST Act and the Rules made thereunder. It is aggrieved by the said findings and direction that the above writ appeal is filed.

5. Going by the scheme of Sections 129 and 130 of the CGST Act, it is evident that, when a person is found to be transporting any goods or storing any goods while they are in transit in contravention of provisions of the said Act or the Rules made thereunder, the documents relating to such goods and the conveyance are liable to be detained on issuing an order of detention as contemplated under the proviso to S.129(1). Such a detention need to be succeeded by issuance of a notice as contemplated under sub-section (3), specifying the tax and penalty payable. Thereafter the officer detaining the transit and the documents has to pass an order for payment of the tax and penalty as specified under any of the sub-sections (a) to (c) Section 129 (1). Sub-section (4) of S.129 provides that, before determining the tax and penalty under sub-section (3), an opportunity of hearing need to be afforded to the person concerned. In the case at hand, after passing the order as contemplated under the proviso to sub-section (1), Ext.P7 notice was issued directing the petitioner to show cause as to why the tax and penalty proposed should not be made payable. An opportunity of personal hearing was also afforded on 26.11.2019. It is at that stage the petitioner had approached this court challenging Exts.P5 and P7 notices.

6. Learned counsel for the petitioner/appellant contended that the detention itself is without jurisdiction and authority. We are not persuaded to accept such a contention, because the officer had mentioned sufficient reason in Ext.P5 for detention of the transport. Whether those reasons mentioned in Ext.P5 will amount to a transit made in contravention of the provisions of the CGST Act or the Rules, is a matter which need to be adjudicated by the 1st respondent before passing an order for payment of tax and penalty as contemplated under Section (3) of Section 129. Therefore we are not persuaded to accept the contention that the detention itself was without jurisdiction or authority. On the other hand, it is for the petitioner to establish before the 1st respondent, based on Ext.P7 show cause notice, that the transit in question was not attracting contravention of the provisions of the Act or the Rules made thereunder.

7. Therefore we are of the opinion that it will suffice if the appellant is given an opportunity to participate in the adjudication process, if necessary after filing objections with supporting documents to Ext.P7 notice. It is submitted that, since the appellant had challenged the notices in the writ petition they have not submitted explanation to the show cause notice. They have also not appeared for the personal hearing on 26.11.2019. We are of the opinion that a further opportunity can be afforded in this regard. We are also persuaded to observe that, in the adjudication process to be done by the 1st respondent, none of the observations contained in the judgment impugned herein shall be taken note of. On the other hand, the said authority shall conduct an independent adjudication and shall take a decision on the basis of the contentions which will be raised before the said authority.

8. Under the above mentioned circumstances the writ appeal is hereby disposed of on following terms;

(1) The order directing release of the transit, on furnishing Bank Guarantee is not interfered with.

(2) The appellant will file objections to Ext.P7 show cause notice and shall appear for personal hearing before the 1st respondent on any day which will be intimated to the appellant by the 1st respondent.

(3) The 1st respondent shall pass an order as contemplated under sub-section (3) of 129, only on taking into consideration of the objections if any raised by the petitioner to the extent that the transit was not in contravention of the provisions of the Act and the Rules.

(4) The Bank Guarantee if any furnished for release of the transit shall not be encashed until the expiry of a period of 10 days from the date on which the order if any passed by the 1st respondent is communicated to the appellant.