The Coronation Fireworks Factory vs. The Joint Director

Facts

The petitioner, M/s. The Coronation Fireworks Factory, filed a writ petition challenging a show cause notice dated 28.12.2023 issued by the Joint Director, DGGI. The notice proposed to appropriate Rs. 1,82,25,000/- cash seized from the petitioner's partner on 08.10.2020. This seizure was initially part of proceedings under the Central Excise Act, 1944, leading to an Order-in-Original dated 31.01.2023. The petitioner appealed this order, along with an appeal by the partner, to the Customs, Excise and Service Act Appellate Tribunal. The Tribunal, by order dated 20.03.2024, allowed the appeals and noted that the show cause notice did not propose confiscation of the seized cash, directing its refund if not already done. The petitioner argues the impugned show cause notice, issued after the Tribunal's order, is without jurisdiction and intended to defeat their rights.

Held

The Court held that the Writ Petition lacked merit and was liable to be dismissed. The Court reasoned that the petitioner could not scuttle the show cause proceedings initiated under the GST enactments merely because they had secured a favourable order from the Tribunal. The Court noted that the impugned show cause notice only sought to appropriate the amount seized, not confiscate it. It further stated that the seized amount could be appropriated only towards the tax liability of the petitioner under the respective GST enactments, and it was for the petitioner to explain why it should not be appropriated. The Court directed the petitioner to participate in the show cause notice proceedings by filing a reply within 30 days and ordered the respondent to pass orders on merits. The Court also observed that if the petitioner succeeded in the proceedings, the seized amount would have to be refunded.

Key Issues

1. Whether the impugned show cause notice dated 28.12.2023, issued by the Joint Director, DGGI, proposing to appropriate seized cash of Rs. 1,82,25,000/-, is without jurisdiction and liable to be quashed, given the Tribunal's order dated 20.03.2024 directing refund of the seized cash? Petitioner's arguments: The petitioner contends that the impugned show cause notice is without jurisdiction as it was issued after the Tribunal allowed their appeal and directed the refund of the seized cash. They argue that the Tribunal's order, which found the seizure of cash irrelevant to the department's case and directed its refund, supersedes any subsequent attempt to appropriate it. They also cite various High Court decisions and Section 67 of the GST enactments, arguing there is no scope for seizure or confiscation of cash. Respondents' arguments: The respondents state that they are in the process of filing a statutory appeal against the Tribunal's order. They submit that the impugned show cause notice does not propose confiscation of the cash but only its appropriation towards tax liability. They argue that the seized amount can be appropriated towards tax liability if any, and it is for the petitioner to explain why it should not be.