Neuvera Wellness Ventures (P.) Ltd   VS  State Of Gujarat

This case pertains to a petition filed under Article 226 of the Constitution of India, challenging a demand order dated April 2, 2019. The demand order was issued by the second respondent, the State Tax Officer (Mobile Squad-2, Enforcement-7, Surat), who acted in the enforcement of tax regulations under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioners are requesting that the court issue a directive for the immediate release of their goods and the truck, registered under No. MH-43-U-8620, which were detained and seized.

The petitioners’ challenge is centered on the seizure of goods conducted under the powers granted by sections 129 and 130 of the CGST Act, which pertain to the detention, seizure, and confiscation of goods in transit. The primary grievance of the petitioners is that the seizure was unjustified, and they are seeking relief from the court to restore their property.

The first petitioner, a business entity involved in the import and sale of dietary food products, including protein powders, is at the heart of this dispute. The petitioner operates in the dietary supplements sector and is responsible for importing such goods into India. In the course of their business, the petitioner was required to pay both customs duty and Integrated Goods and Services Tax (IGST) on the imported goods before they could be cleared for home consumption.

The specific goods in question were Whey Protein Powder consignments imported from Budapest, Hungary, and the United States. These imports were processed through Mundra Port, with the petitioner filing warehousing bills of entry corresponding to four different invoices for the goods in question. The petitioners assert that they complied with all relevant regulations and tax obligations at the time of importation.

The case was expedited for final hearing due to the narrow scope of the dispute and the agreement of the parties’ legal representatives. This streamlined approach aims to resolve the matter efficiently, considering the procedural and substantive issues involved in the dispute over the detention and seizure of the goods.

In this case, the petitioners are contesting the actions taken by the second respondent, a State Tax Officer, who refused to release their detained goods. The refusal was based on the absence of Part-B of the E-way bills, which are required under the tax regulations.

On March 31, 2019, the second respondent issued notices in FORM GST MOV-07 under section 129(3) of the Gujarat Goods and Services Tax Act, 2017 (GGST Act) and the Central Goods and Services Tax Act, 2017 (CGST Act). These notices demanded the payment of GST amounting to Rs. 5,93,505/- along with a 100% penalty of Rs. 5,93,505/-, citing section 129 of the GST Acts as the legal basis for this action.

The petitioners responded to this notice with a letter dated April 1, 2019, requesting the release of their goods. Despite their response, the second respondent issued a demand order on April 2, 2019, in FORM GST MOV-09. This order directed the petitioners to pay the aforementioned tax and penalty within seven days. The order also warned that failure to comply would result in further action under section 130 of the GST Acts, which deals with the confiscation and disposal of goods and conveyances.

Dissatisfied with the refusal to release their goods and the demand for payment of both tax and penalty, the petitioners filed the present petition seeking judicial intervention. They are challenging the demand order and the subsequent actions taken by the second respondent, arguing that the detention of their goods and the penalties imposed were unjustified.

In this case, the court has decided not to delve into the substantive issues regarding the petitioners’ liability to pay the demanded tax and penalty or the accuracy of the tax amount due. Instead, the court’s focus is on procedural and administrative aspects related to the impugned order.

The order in question, dated April 2, 2019, was issued by the second respondent in FORM GST MOV-09. This order demanded payment of tax and a penalty from the petitioners. The basis for this demand, as outlined in the order, was the Integrated Goods and Services Tax (IGST) that the petitioners had already paid. However, the court noted several critical deficiencies in the order.

Firstly, the order did not address or acknowledge the arguments and submissions made by the petitioners. The petitioners had contended that IGST had already been paid for the transaction in question and argued that the goods in transit were merely moving from a customs warehouse to their own godown, with no supply occurring that would necessitate the application of GST. These arguments were neither discussed nor refuted in the impugned order.

Secondly, the second respondent failed to provide any reasons or justifications for the imposition of tax and penalty despite the petitioners’ compliance with the IGST payment and their claim of no applicable supply. The absence of a reasoned explanation undermines the legitimacy of the order, as it did not address the procedural or substantive points raised by the petitioners.

Given these procedural shortcomings and the lack of engagement with the petitioners’ contentions, the court refrained from examining the merits of the case concerning the actual tax and penalty obligations. Instead, the court’s focus remained on the procedural validity of the order issued by the second respondent.

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