1. Rule. Mr. Trupesh Kathiriya, learned Assistant Government Pleader waives service of notice of rule on behalf of the respondents.

2. Having regard to the controversy involved in the matter as well as the urgency of the case, the matter was taken up for final hearing today.

3. By this petition under article 226 of the Constitution of India, the petitioner has challenged the order dated 08.04.2019 passed by the third respondent in exercise of powers under section 130 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”), whereby, the vehicle bearing registration No. DL-01-GC-4470 together with the goods contained therein is ordered to be confiscated and tax, penalty and fine in lieu of confiscation of the goods and conveyance as computed therein have been levied.

4. The facts stated briefly are that the petitioner is engaged in the business of metal and is duly registered under the provisions of the relevant Goods and Services Tax Act. One Ramgarhia Trading Company, which is located at New Delhi and is registered under the relevant Goods and Services Tax Act, placed an order for brass electrical parts through Jay Gujarat Goods Carrier. It is the case of the petitioner that the driver of the truck was carrying invoice, e-way bill and lorry receipt while transporting brass electrical parts from Jamnagar to Delhi. The truck was intercepted by the third respondent – State Tax Officer on 14.01.2019 at 00:30 a.m. at Soyal Toll Gate. The driver of the truck had produced the documents relating to the goods which were being transported; however, the third respondent detained the truck on the ground that the genuineness of the goods in transit (its quantity etc.) and/or tendered documents requires further verification. Accordingly, on 14.01.2019, the third respondent issued an order in Form GST MOV-01 recording the statement of the driver as well as an order for physical verification/inspection of the conveyance and goods and the documents in Form GST MOV-02. Thereafter, by an order dated 14.01.2019, passed under section 129(1) of the CGST Act, the truck as well as the goods contained therein was ordered to be detained. The ground stated in the order of detention as translated into English reads thus: “On a perusal of the details in bilty No.15615, it prima facie being disproportionate, the vehicle has been detained for verification of the same”. It may be noted that the order of physical verification in Form GST MOV-02 and the order under section 129(1) of the CGST Act have been passed on the same day, that is, on 14.01.2019.

4.1 Thereafter, by an order dated 29.01.2019, passed in Form GST MOV-09; the petitioner was called upon to pay the tax and penalty as computed therein. Thereafter, a notice came to be issued in Form GST MOV-10 under section 130 of the CGST Act for confiscation of the conveyance and goods in question on the grounds that on a perusal of the details in bilty No.15615, it prima facie being disproportionate, the same required verification; and that upon primary examination of the dealer online, it is found that in December 2018, he has generated 42 e-way bills wherein IGST of ₹ 3,64,30,800/- is shown, and that it appears that either the dealer has not paid such amount or the purchases are not genuine. Thereafter, by the impugned order dated 08.04.2019, the goods and conveyance are ordered to be confiscated in exercise of powers under section 130 of the CGST Act.

5. Mr. Chetan Pandya, learned advocate for the petitioner assailed the impugned order by submitting that the documents which were required to be carried by the driver were duly produced at the time when the vehicle came to be intercepted. It was submitted that while Form GST MOV-02 was issued stating that physical verification of the goods is required to be carried out, however, no report in Part A of Form GST EWB-03 has been uploaded on the portal nor has any report in Form GST MOV-04 of any physical verification has been furnished to the petitioner. The attention of the court was invited to the Circular No. 41/15/2018-GST dated 13.04.2018, issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing (hereinafter referred to as “the Board”), to point out that the Board has prescribed the procedure which is required to be followed by the proper officer at the time when the goods and conveyance are intercepted. It was pointed out that in terms of the said circular, if upon verification of the documents and on verification of the goods, no discrepancy is found, the conveyance shall be allowed to move further. It was submitted that in the present case, the relevant documents namely the e-way bill and the invoice were duly produced and no discrepancy has been found therein and that though the conveyance was detained for the purpose of inspection of the goods, no inspection appears to have been carried out. It was submitted that in the absence of any discrepancy having been noticed by the proper officer, it was not permissible for the officer to detain the conveyance any longer or to proceed under section 129 or 130 of the CGST Act. It was submitted that, therefore, the entire action of the third respondent in passing the orders under section 129 and section 130 of the CGST Act respectively, is illegal and arbitrary and is not in consonance with the instructions issued by the Board in the circular dated 13.04.2018. It was accordingly urged that the petitioner deserves to be allowed by setting aside the impugned order and directing the third respondent to forthwith release the conveyance along the goods contained therein.

6. On the other hand, Mr. Trupesh Kathiriya, learned Assistant Government Pleader, placed reliance upon the affidavit-in-reply filed on behalf of the respondents, to submit that after the conveyance in question was intercepted, the State Tax Officer had conducted search at the business premises of the petitioner on 21.01.2019 as well as on 22.01.2019 and found that the petitioner did not maintain any stock or books of accounts at his business premises. It was further submitted that the petitioner and the transporter – Jay Gujarat Goods Carrier are working in collusion with each other and that, the petitioner is stated to have purchased the goods which were being transported from parties located at Kolkata, West Bengal; however, upon verification by the GST Department, it was found that such parties are not in existence. It was submitted that, therefore, it appears that the petitioner has purchased the goods from the local market without paying any local tax and is selling the same to the dealers in New Delhi mentioning State tax in the invoice and thereby, claiming input tax credit. It was submitted that the authority under the GST Act had issued DRC-1 under section 74 of the GST Act on 25.04.2019 and the petitioner is facing prosecution for wrongfully availing the benefit of input tax credit and a charge-sheet has been filed against the petitioner on 05.10.2019 for the offence punishable under sections 132(1)(c) as well as 132(1)(d) of the GST Act. It was submitted that in the light of what has been unearthed during the course of investigation, the order of confiscation is justified. It was submitted that the petitioner has no other property except residential premises, the value whereof, is not commensurate with the amount involved in the entire fraud that has been committed by the petitioner in collusion with Jay Gujarat Goods Carrier. It was submitted that, therefore, the respondents are wholly justified in confiscating the conveyance with the goods contained therein and that, the petition being devoid of any merits, deserves to be dismissed.

7. This court has considered the submissions advanced by the learned advocates for the respective parties. In the present case, this court is called upon to examine the validity of the impugned order dated 08.04.2019 passed by the third respondent under section 130 of the CGST Act as well as the order dated 14.1.2019 whereby detention of the conveyance and together with the goods contained therein has been ordered under section 129(1) of the CGST Act.

7.1 The facts have been noted hereinabove. The conveyance in question was transporting the goods being brass electrical parts from Jamnagar to Delhi. The consignor, viz. the petitioner, and the consignee are duly registered under the relevant GST Acts. On 14.01.2019, when the conveyance came to be intercepted, the driver of the conveyance had duly produced the e-way bill as well as the invoice in connection with the goods that were transported. On behalf of the respondents, nothing has been pointed out to show that there was any discrepancy in the e-way bill or the tax invoice. Under the circumstances, in the light of the instructions issued by the Board in the Circular dated 13.04.2018, since, upon verification of the documents no discrepancies were found, the conveyance was required to be allowed to move further. However, in case the third respondent desired to carry out physical verification of conveyance, goods and the documents, it was still permissible for him to detain the conveyance, and accordingly, the third respondent issued an order in Form GST MOV-02 for physical verification/inspection of the conveyance, goods and the documents. The said order passed on the ground that the genuineness of the goods in transit (its quantity etc.) and/or tendered documents requires further verification.

7.2 In terms of the Circular dated 13.04.2018, when the proper officer issues an order for physical verification, he is within twenty four hours of the issuance of Form GST MOV-02, required to prepare a report in Part A of Form GST EWB-03 and upload the same on the common portal. It is further provided that within a period of three working days from the date of issue of the order in Form GST MOV-02, the proper officer shall conclude the inspection proceedings, either by himself or through any other proper officer authorized in this behalf and that, where the circumstances warrant such time to be extended, he shall obtain a written permission in Form GST MOV-03 from the Commissioner or an officer authorized by him for extension of time beyond three working days and a copy of the order of extension is required to be served on the person in charge of the conveyance. The circular further provides that on completion of physical verification/inspection of the conveyance and goods in movement, the proper officer shall prepare a report of such physical verification in Form GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance. The proper officer shall also record, on the common portal, the final report of the inspection in Part B of Form GST EWB-03 within three days of such physical verification/inspection. 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 the common portal within twenty four hours from issuance of Form GST MOV-02 and upon completion of physical verification, he was further required to prepare a report in Form GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance and thereafter record the final report of the inspection in Part B of Form GST EWB-03 within three days of such physical verification. However, in the facts of the present case, no such reports in Part A of Form GST EWB-03, Form GST MOV-04 or Part B of Form EWB-03 have been prepared. Thus, it appears that though the vehicle was detained for the purpose of carrying out inspection, no such inspection was carried out or that upon physical verification no discrepancy was found in the conveyance/goods or documents. Clause (g) of the above referred circular requires that where no discrepancies are found after the inspection of the goods and conveyance, the proper officer shall issue forthwith a release order in Form GST MOV-05 and allow the conveyance to move further. The clause further provides that when the proper officer 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 provisions of subsection (3) of section 129 of the CGST Act, specifying the tax and penalty payable and such notice is required to be served on the person in charge of the conveyance. In the facts of the case, despite the fact that no discrepancy appears to have been found after the inspection of the goods and conveyance, the proper officer has not issued a release order in Form GST MOV-05. Further, despite the fact that Form GST MOV-02 was issued, without verification/inspection of the goods and conveyance, the third respondent has issued an order of detention in Form GST MOV-06 on the same day, that is, on 14.01.2019, on the ground that upon a perusal of the details in bilty No.15615, the same being disproportionate, the vehicle is required to be detained for verification of the same.

7.3 In the affidavit-in-reply, there is not even a whisper regarding any discrepancy having been found in bilty No.15615 after verification, despite the fact that the conveyance has been detained for that purpose. Thus, it appears that, there is no valid ground for detention of the vehicle in question on the part of the respondents. Under the circumstances, the question of calling upon the petitioner to pay the tax, penalty and fine, as computed by the respondent in the order of demand of tax and penalty in Form GST MOV-09 dated 29.01.2019 does not arise.

7.4 Despite the aforesaid position, the third respondent has proceeded further and issued a notice under section 130 of the CGST Act in Form GST MOV 10, and has thereafter, passed an order of confiscation under section 130 of the Act in Form GST MOV-11. The reason for passing such an order has got nothing to do with the reasons for which, the goods and conveyance were initially detained. The reasons for issuance of the notice for confiscation under section 130 of the CGST Act in Form GST MOV-10 are that upon preliminary verification of the dealer online, 42 e-way bills have been generated in December 2018, wherein, IGST has been shown to ₹ 3,64,30,800/- and it appears that, dealers has not paid the same or that the purchases are not genuine. If that be so, nothing prevents the respondents from taking appropriate action against petitioner in accordance with law under the relevant provisions of the CGST Act. However, when the conveyance in question was carrying the goods which were duly accompanied by documents and no discrepancy was found in connection therewith, there was no reason for the third respondent to confiscate the same. The impugned order of confiscation passed by the third respondent under section 130 of the CGST Act, therefore, cannot be sustained.

8. For the forgoing reasons, the petition succeeds and is accordingly, allowed. The order dated 08.04.2019 issued by the third respondent under section 130 of the CGST Act as well as the order of demand of tax and penalty dated 29.01.2019, issued in Form GST MOV-09 are hereby quashed and set aside and the third respondent is directed to forthwith release the conveyance and goods in question.

8.1 It is clarified that the fact that this court has ordered release of the goods and conveyance will not, in any manner, come in the way of the respondents in proceeding against the petitioner in connection with the contravention of any provisions of the GST Acts and the rules framed thereunder which find reference in the affidavit-in-reply filed on behalf of the respondents.

8.2 Rule is made absolute accordingly with no order as to costs. Direct service is permitted.