Hamza Traders vs. State Of Kerala

Facts

The petitioner, Hamza Traders, challenges a notice (Ext.P3) issued under Section 129(3) of the Central Goods & Service Tax Act, 2017, by the Assistant State Tax Officer (second respondent). The petitioner was transporting goods as per an invoice dated 13.5.2019. On 14.5.2019, the vehicle was intercepted, and certain omissions were noted, leading to the issuance of the notice. The petitioner submitted a reply (Ext.P4), which was rejected by the second respondent with an endorsement stating a violation of Rule 138 of CGST Rules, 2017, and that Section 126 could not be invoked. The petitioner's request for the release of goods was consequently rejected.

Held

The Court held that the issues raised were at a preliminary stage and it was not convinced to adjudicate on the merits through a writ petition. To conform to the scheme under the Act, the writ petition was disposed of with specific directions. The petitioner was directed to furnish a bank guarantee for the tax and penalty amount shown in Ext.P3 and apply for the release of goods within two days. The second respondent was directed to release the detained goods within twelve hours of receiving the bank guarantee, which was to be kept valid for six weeks. The second respondent was also directed to complete the enquiry, afford a fair opportunity to the petitioner, and pass a final order within four weeks. If the second respondent failed to pass the order within this period, the petitioner would not be obligated to keep the bank guarantee alive beyond six weeks. The handwritten endorsement on Ext.P4 was set aside, and the second respondent was directed to consider the objection strictly in accordance with law, afford an opportunity, and pass and communicate the order.

Key Issues

1. Whether the interception of goods and the subsequent notice under Section 129(3) of the CGST Act, 2017, are legally sustainable given the petitioner's contention of possessing valid documents and the ability to produce an E-Bill. Petitioner's arguments: The petitioner contends that the goods were transported with valid documents and that an E-Bill could be submitted. They argue that the circumstances do not warrant the detention of goods and pray for the setting aside of the order rejecting their reply. Respondents' arguments: The respondents argue that the vehicle was intercepted beyond the place of detention covered by the invoice, and the E-Bill was generated after interception. They assert that at the time of inspection, the transporter could not produce all required documents for valid transit. They further state that the detention order is not final and that goods can be released upon furnishing a bank guarantee for the tax and penalty amount demanded in Ext.P3.