Shel Singh Purohit VS Commercial Taxes Officer

The primary legal question is whether goods can be released to their apparent owner before the conclusion of delayed confiscation proceedings under Section 130 of the CGST Act, 2017, if the owner deposits the amount that might become payable according to the demand notice, pending the outcome of these proceedings.

Context:

1. Petitioner: The petitioner is a dealer registered under both the Karnataka Goods & Services Tax Act, 2017, and the Central Goods & Services Tax Act, 2017.

2. Goods Involved: The petitioner had purchased pan masala and scented chewing tobacco.

3. Incident:

(i) Date: March 26, 2021.

(ii) Event: The goods were being transported in a vehicle (TN77 L 4639).

(iii) Location: The vehicle was intercepted at around 1:30 PM in the Bidadi industrial area.

(iv) Action: The driver’s statement was recorded, and the goods were seized.

The legal deliberation revolves around whether the seized goods can be temporarily released to the petitioner upon the deposit of the potential payable amount, while the confiscation proceedings are still pending.

The primary question to be addressed is whether goods can be released to their apparent owner before the conclusion of delayed confiscation proceedings under Section 130 of the CGST Act, 2017, if the owner deposits the amount specified in the demand notice, pending the outcome of these proceedings.

Factual Background:

1. Petitioner’s Registration: The petitioner is a dealer registered under both the Karnataka Goods & Services Tax Act, 2017, and the Central Goods & Services Tax Act, 2017.

2. Transportation and Interception: On March 26, 2021, the petitioner was transporting pan masala and scented chewing tobacco in a goods vehicle (TN77 L 4639). The vehicle was intercepted at around 1:30 PM in the Bidadi industrial area, and the driver’s statement was recorded. The goods and the vehicle were subsequently seized.

3. Verification and Detention: The physical verification of the goods was completed over a week later on April 3, 2021. On the same day, an order of detention was issued in Form GST MOV-06. However, no notice in Form GST MOV-07 was issued.

4. Request for Release: The petitioner sent a letter on April 12, 2021, via Speed Post to the JCCT (Vigilance), requesting the release of the detained goods on the grounds of perishability. No decision was made in response to this request.

5. Legal Action: Due to the lack of response and continued indefinite detention of the goods and the vehicle, the petitioner has approached the Writ Court for redress.

The core issue is the legality and feasibility of releasing detained goods to their owner upon the owner’s compliance with financial conditions set by authorities, pending the final decision in the confiscation proceedings.

After receiving notice, the respondents, represented by the learned AGA, have vigorously opposed the Writ Petition. They argue that the goods were transported illegally to the recipient’s place twice on June 23, 2021. On the same day, they requested CCTV footage of the goods conveyance from the CEO of Bidadi Industrial Association, which was provided on June 28, 2021. Additionally, they requested call details of mobile phone numbers belonging to.

persons associated with the transaction in question, and the information was furnished on July 17, 2021, and August 2, 2021. Based on the collected information, confiscatory proceedings were initiated under Section 130 of the Act by issuing a notice in Form GST MOV-10 dated August 13, 2021. The petitioner has the option to participate in these proceedings. However, instead of doing so, the petitioner has moved the Writ Court without justification. Hence, the respondents seek dismissal of the Writ Petition.

The court, after considering arguments from both parties and reviewing the petition papers, is inclined to provide limited leniency in the case for the following reasons:

(a) Section 129 of the Act stipulates the detention of goods along with the transport vehicle, while Section 130 allows for their confiscation under certain circumstances, as argued by the learned AGA. However, it is noted that subsection (2) of Section 130 also allows for redemption.

In the court’s deliberation on the matter, considering the arguments presented by both sides and examining the petition papers, a decision has been reached to extend limited leniency for the following reasons:

(a) Section 129 of the Act outlines provisions for detaining goods along with the transport vehicle, while Section 130 pertains to the confiscation of goods under certain conditions, as argued by the learned AGA. However, subsection (2) of Section 130, which allows for redemption, indicates that confiscation is more of a regulatory violation (mala prohibita) rather than an inherently wrongful act (mala in se). This distinction is crucial as it implies that even after a confiscation order, the goods and conveyances remain subject to redemption, a point rightly emphasized by Mr. K.G. Raghavan, the petitioner’s counsel.

(b) Mr. Raghavan’s argument is further supported by the understanding that even in cases where Section 130 proceedings result in confiscation, the wrongdoing is attributed not to the goods or conveyance themselves but to their owner, who can absolve themselves by paying the required taxes and penalties stipulated in subsection (2) of Section 130. Therefore, if the owner opts to settle the demanded amount, the goods and conveyances could potentially be released pending the conclusion of protracted confiscation proceedings.

This nuanced interpretation underscores the possibility of redemption even in cases of confiscation, thereby offering a pragmatic approach that balances regulatory enforcement with the rights of the concerned parties.

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