Bobby O.S. vs. State Of Kerala

Facts

The petitioner, BOBBY O.S., Managing Director of BOS NATURAL FLAVORS(P) LTD., challenged Exts.P6 and P7 orders issued by the Assistant State Tax Officer. Ext.P6 is an order of detention of goods under Section 129(1) of the CGST Act, 2017, and Ext.P7 is a consequential demand order. The petitioner contended that the goods were in compliance with the Act and that an E-Way Bill was generated and available for inspection. The petitioner argued that the detention and demand orders were illegal and unwarranted. The respondent State argued that the writ petition was not maintainable as there was an admitted omission or illegality in the transportation of goods, specifically the failure to produce required documents at the time of inspection. The State further submitted that Section 129 provides for release of goods upon furnishing a bank guarantee for the demanded tax and penalty.

Held

The Court held that the issues raised were at a preliminary stage and it was not convinced to entertain the writ petition and adjudicate on the merits at that juncture. To conform to the scheme under the Act, the Court disposed of the writ petition with specific directions. The petitioner was directed to furnish a bank guarantee for the tax and penalty as shown in Ext.P7 and apply for the release of goods within two days. The Assistant State Tax Officer was directed to release the detained goods within twelve hours of receiving the bank guarantee. The bank guarantee was to be kept valid for six weeks. The Assistant State Tax Officer was further directed to complete the enquiry, afford a fair opportunity to the petitioner, and pass a final order within four weeks. If the order was not passed within this period, the petitioner would not be obligated to keep the bank guarantee alive beyond six weeks.

Key Issues

1. Whether the detention of goods and the consequential demand order are illegal and without jurisdiction, given the petitioner's assertion of compliance with the CGST Act and the availability of the E-Way Bill, as contemplated under Section 129 of the CGST Act, 2017? Petitioner's arguments: The petitioner argued that the detention was unwarranted as the goods were in full compliance with the law and the E-Way Bill was available. The proceedings initiated through Exts.P6 and P7 were therefore illegal. The petitioner was willing to furnish a bank guarantee but was concerned about the indefinite continuation of the proceedings and the associated costs of maintaining the guarantee. Revenue's arguments: The State contended that the writ petition was not maintainable because the petitioner admitted to an omission or illegality in transportation, specifically the failure to produce all required documents at the time of inspection. The State argued that Section 129 provides a mechanism for release of goods upon furnishing a bank guarantee for the tax and penalty, and the petitioner could avail this remedy.