State Tax Officer,Bureau Of Investigation(North Bengal) vs. Surinder Kumar Kotnala And Ors

Held

The Court held that the writ petition was rightly entertained by the learned Single Bench because there was no Appellate Tribunal available as on the date of filing the writ petition, rendering the alternative remedy under Section 112 of the CGST Act, 2017, unavailable. Regarding the release of goods and vehicle, the Court found that the learned Single Bench's exercise of discretion was neither improper nor irrational. The Court noted that the revenue's interest was sufficiently safeguarded as 30% of the disputed tax had been collected (10% deposited earlier and an additional 20% directed by the writ court). The Court expressed concern about the goods being unfit for consumption due to prolonged detention and the vehicle's deterioration. On the respondents' undertaking to send the goods back to the consignor in Uttar Pradesh, the Court found this to be a satisfactory arrangement. The Court directed the respondents to execute a bond securing the balance disputed tax and an undertaking to produce the vehicle when required. The goods and vehicle were to be released upon compliance with these conditions, with the specific instruction that the goods be sent back to Uttar Pradesh. The Court clarified that this order was based on the peculiar facts and circumstances and should not be treated as a precedent.

Facts

The State Tax Officer, Bureau of Investigation (North Bengal), filed an intra-court appeal against an interim order of the High Court dated November 25, 2021. The interim order was passed in a writ petition filed by Surinder Kumar Kotnala & Ors. (respondents). The respondents challenged an order dated September 15, 2021, passed by the Appellate Authority, which confirmed an order dated May 6, 2021, levying tax of Rs. 26,45,299/- and penalty of Rs. 37,84,829/-. The goods, alleged to be pan masala, were detained since March 2021, as they were attempted to be offloaded in West Bengal despite being consigned to Assam. The respondents sought release of the goods and vehicle due to deterioration. The writ court, noting the absence of an Appellate Tribunal, entertained the petition and directed the release of goods and vehicle upon payment of 20% of the disputed tax, in addition to the 10% already deposited by the consignee.

Key Issues

1. Whether the learned Single Bench was justified in entertaining the writ petition challenging the order of the Appellate Authority, given the absence of an Appellate Tribunal under Section 112 of the CGST Act, 2017? The petitioner argued that the writ petition was rightly entertained due to the non-availability of the statutory remedy. The revenue contended that the exercise of discretion by the writ court in directing the release of goods and vehicle was improper and arbitrary, jeopardizing the interest of revenue, and that the conditions stipulated in Section 112(8)(a) should have been considered. 2. Whether the learned Single Bench's direction for the release of goods and vehicle upon payment of 20% of the disputed tax, in addition to the 10% already deposited, was a proper exercise of discretion? The petitioner argued that releasing the goods and vehicle would not protect the revenue's interest. The respondents argued that the goods were deteriorating and the vehicle was also affected by weather exposure, and that they had no intention to offload the goods in West Bengal, with the driver having mistakenly entered the state.