Sri Shel Singh Purohit vs. Commercial Taxes Officer (Vigilance)-21

Held

The Court allowed the writ petition in part. It held that Section 129 of the CGST Act provides for detention, while Section 130 provides for confiscation. However, Section 130(2) allows the owner to pay a fine in lieu of confiscation, indicating that confiscated goods and conveyances are not rendered res extra commercium or res nullius. The Court found merit in the petitioner's submission that even if confiscation proceedings lead to an order, the owner can 'purge' the 'sin' by paying the tax and penalty, thereby allowing for the release of goods and conveyances pending the conclusion of long-drawn confiscation proceedings. This interpretation aligns with the elements of justice embedded in the provisions. Furthermore, the Court noted that the CBIC Circular No. 41/15/2018-GST supports the petitioner's claim for release, as it prescribes a short period for inspection and allows for release upon payment of tax and penalty. The Court issued a Writ of Mandamus directing the respondent to release the detained goods and conveyance immediately to the petitioner upon ascertaining his prima facie ownership and on his depositing the total amount comprised in the Section 130 Notice (dated August 13, 2021, in Form GST MOV-10), subject to the outcome of the confiscation proceedings. The petitioner was also directed not to raise any grounds of equity based on this order.

Facts

The petitioner, Sri. Shel Singh Purohit, proprietor of M/s Bhavani Trading, was transporting pan masala and scented chewing tobacco in a vehicle on March 26, 2021. The vehicle was intercepted, and its driver's statement was recorded. The goods and vehicle were seized. Physical verification of the goods occurred over a week later, on July 3, 2021, on which date an order of detention (Form GST MOV-06) was issued. No notice in Form GST MOV-07 was issued. The petitioner's request for release of the perishable goods, made on July 12, 2021, was not decided. The petitioner filed a writ petition challenging the continued detention of the goods and vehicle. The respondent contended that confiscation proceedings under Section 130 of the CGST Act were initiated on August 13, 2021, based on collected information.

Key Issues

1. Whether the subject goods can be released to the apparent owner pending conclusion of delayed confiscation proceedings under Section 130 of the CGST Act, 2017, upon deposit of the amount payable as per the demand notice, subject to the outcome of those proceedings? Petitioner's arguments: The petitioner argued that the goods were perishable and had been detained indefinitely without proper procedure. They contended that even if confiscation proceedings culminate, the owner can seek redemption by paying the tax and penalty, as provided under Section 130(2). The petitioner relied on the principle that the 'sin' attaches to the owner, not the goods, and that payment of tax and penalty should allow for release pending proceedings. The petitioner also cited the CBIC Circular No. 41/15/2018-GST, dated April 13, 2018, which prescribes a short period for concluding inspection proceedings and allows for release upon payment. Respondent's arguments: The respondent opposed the writ petition, stating that confiscation proceedings under Section 130 of the Act had been initiated and that the petitioner should participate in those proceedings rather than approaching the writ court. They highlighted that the transport of goods was allegedly made illegally twice on June 23, 2021, and that investigations involving CCTV footage and call details were ongoing.