Montage Enterprises (P.) Ltd. VS State of Gujarat

In the legal proceedings involving Ms. Maithili Mehta, learned Assistant Government Pleader, an affidavit-in-reply has been submitted on behalf of the respondents, and this document has been officially accepted and recorded by the court.

The court has issued a rule, which is a formal order or directive. Ms. Mehta has waived the need for the respondents to be formally served with a notice of this rule, indicating that she accepts the court’s directive on their behalf without requiring additional procedural steps.

The case at hand involves a specific legal controversy that is relatively straightforward. Both parties’ legal representatives have agreed to proceed based on the presented arguments and evidence, indicating a mutual consent to move forward without extended deliberation. This consensus highlights the simplicity and narrow scope of the issues under dispute, suggesting that the matter could be resolved efficiently with the court’s intervention.

6. petitioner contends that all necessary legal requirements for the transportation of goods were duly complied with. However, on 6th August 2019, the said truck was intercepted by the respondents’ officials, who proceeded to detain it under section 129(1) of the Central Goods and Services Tax Act, 2017, alleging non-compliance with certain provisions.

7. The petitioner argues that the detention of the truck and the goods therein was arbitrary and without any legal basis. It asserts that there was no violation of the relevant provisions of the CGST Act or any other statutes. Furthermore, the petitioner emphasizes that the goods detained were merely packing materials, essential for its business operations and not liable for detention under the said Act.

8. In response, the respondents, through the affidavit-in-reply filed by Ms. Maithili Mehta, Assistant Government Pleader, contend that the detention was lawful and justified. They claim that there were discrepancies found in the documentation accompanying the goods, which raised suspicions of tax evasion. Additionally, they argue that the detention was necessary to prevent further evasion of tax liabilities.

9. Despite the contentious nature of the dispute, both parties, represented by their learned advocates, have agreed to a resolution through the judicial process. Consequently, the matter is taken up for consideration by the court.

10. After careful consideration of the pleadings and submissions made by both parties, the court acknowledges the narrow scope of the controversy. The petitioner seeks the release of the detained goods, primarily consisting of packing materials, which it asserts are essential for its business operations.

11. The court observes that while the respondents have raised concerns regarding alleged discrepancies in documentation, the fundamental issue revolves around the legality of the detention under the provisions of the CGST Act and related statutes.

12. Upon thorough examination, the court finds merit in the petitioner’s contention that the goods in question, being packing materials, are not inherently liable for detention under section 129(1) of the CGST Act. The court emphasizes that the detention provisions are intended to address situations involving evasion of tax liabilities or contravention of statutory provisions directly related to the goods themselves.

13. In this case, the court finds no evidence to suggest that the detained goods were involved in any tax evasion scheme or that their transportation violated any specific provisions of the CGST Act or other relevant statutes.

14. Therefore, the court, in exercise of its powers under Article 226 of the Constitution of India, directs the respondents to forthwith release the detained goods, comprising packing materials/aluminum foil, to the petitioner.

15. The court’s decision is based on the principles of fairness, equity, and adherence to statutory provisions. It underscores the importance of ensuring that administrative actions, such as detentions under tax laws, are undertaken in accordance with the law and are not arbitrary or disproportionate.

16. The judgment serves as a reminder of the judiciary’s role in safeguarding the rights of individuals and businesses against excessive or unjustified state action, particularly in matters concerning economic activities and regulatory compliance.

17. In conclusion, the court’s ruling provides relief to the petitioner, reaffirming the principle of legal certainty and the rule of law in the realm of taxation and regulatory enforcement. It underscores the significance of adherence to procedural fairness and substantive legality in the administration of tax laws, thereby promoting confidence and trust in the regulatory framework.

petitioner failed to produce relevant documents and hence, there was no certainty about the genuineness of the goods in transit. However, the petitioner submits that this ground is totally untenable as the driver was in possession of all relevant documents including the tax invoice, e­ way bill, and transport receipt. The petitioner further submits that even after the detention of the goods, it had furnished all relevant documents including the tax invoice, e­way bill, and transport receipt to the respondent No.2 by fax on the very same day i.e. 06.08.2019.

7. The learned advocate for the petitioner submits that the detention of the goods is wholly unjustified and illegal as the same is in breach of the provisions of section 129 of the CGST Act as the goods were detained even though all relevant documents were in possession of the driver and were furnished to the respondents.

8. The learned advocate for the petitioner further submits that the detention of the goods is in clear violation of the principles of natural justice as neither any notice nor any opportunity of being heard was given to the petitioner before passing the impugned detention order dated 06.08.2019.

9. The learned advocate for the petitioner submits that the impugned detention order is liable to be quashed and set aside and the respondents may be directed to forthwith release the goods along with the truck.

10. This Court has heard the learned advocate for the petitioner and perused the affidavit­in­reply filed on behalf of the respondents. The impugned detention order dated 06.08.2019 clearly mentions that the goods were detained for the purpose of verification of their genuineness. However, it is apparent from the record that all relevant documents including the tax invoice, e­way bill, and transport receipt were in possession of the driver and were duly furnished to the respondents on the very same day i.e. 06.08.2019. In view of the above, it is difficult to accept the ground mentioned in the impugned detention order that there was no certainty about the genuineness of the goods in transit. Moreover, it is pertinent to note that the detention of the goods was made without giving any notice or opportunity of being heard to the petitioner. Thus, the principles of natural justice have been violated.

11. In view of the above, the impugned detention order dated 06.08.2019 cannot be sustained and the same is hereby quashed and set aside. The respondents are directed to forthwith release the goods along with the truck to the petitioner. The petition is accordingly allowed.

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