M/S Phx Electronics PVT. LTD. vs. Commissioner CGST And Central Excise, Delhi East Commissionerate & Ors.
Held
The Court acknowledged an incongruity in the existing mechanism for provisional release of seized goods under Rule 140(1) of the CGST Rules, 2017, which appears to restrict options to payment of the full tax, interest, and penalty, whereas Section 67(6) of the CGST Act, 2017, permits release upon execution of a bond and furnishing of security. The Court noted that this discrepancy warrants a policy decision. Consequently, the Court directed that the matter be placed before the GST Council for consideration. For the present case, the Petitioner was directed to file a reply to the SCN by January 15, 2026. The adjudication proceedings were to conclude with a decision by March 15, 2026, after a personal hearing. The Court explicitly stated that it had not delved into the merits of the case or the contentions of the parties, leaving all rights and remedies concerning the SCN open.
Facts
The Petitioner, M/s PHX Electronics Pvt. Ltd., filed a writ petition challenging a Show Cause Notice (SCN) dated March 18, 2019, issued under Section 130 of the CGST Act, 2017. The SCN followed a search by the DGGI where excess stock of televisions and motherboards, valued at Rs. 1,34,43,410/-, was seized. The Petitioner noted an incongruity regarding the authority to which the SCN was made answerable, with the Laxmi Nagar Division initially indicated but later stated to be under the Gandhi Nagar Division. The Petitioner had not filed a reply to the SCN. The seized goods, being electronic items imported six years prior, were potentially outdated.
Key Issues
1. Whether the existing mechanism under Rule 140(1) of the CGST Rules, 2017, for provisional release of seized goods, which mandates payment of the entire tax, interest, and penalty, is adequate, or if other forms of security should be permissible as suggested by Section 67(6) of the CGST Act, 2017? Petitioner's arguments: The Petitioner did not explicitly argue on this issue but highlighted the lack of clarity and options for provisional release in the SCN and the potential obsolescence of the seized electronic goods. Revenue's arguments: The Revenue submitted that the Petitioner never sought provisional release of the goods. They also indicated willingness for the Laxmi Nagar Division to adjudicate the SCN in a time-bound manner.
Sections Cited
Section 130, Section 67(6), Rule 140(1), Section 35(6), Section 73, Section 74, Section 74A
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Cause title — parties, addresses and appearances
O R D E R %
2025
This hearing has been done through hybrid mode.
The present petition has been filed by the Petitioner under Article 226 of the Constitution of India, inter alia, assailing the Show Cause Notice dated 18th March, 2019 (hereinafter, ‘impugned SCN’) issued to the Petitioner under Section 130 of the Central Goods and Services Tax Act, 2017 (hereinafter, ‘CGST Act’) by the Respondent Department .
A brief background of the Petitioner’s case is that, a search was conducted by the Directorate General of Goods and Services Tax Intelligence (hereinafter, ‘DGGI’) at the business premises of the Petitioner and excess stock of Televisions and Motherboards were seized on the ground that goods foun
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