Khalid S/O Shri Yasin Khan vs. The State Of Rajasthan

Held

The Court noted that the order of demand for tax and penalty was issued on February 8, 2021, giving 14 days for deposit. However, by the time the confiscation notice was issued on February 9, 2021, the 14-day period had already lapsed. The Court observed that the petitioner was virtually not given any adequate opportunity to deposit the tax and penalty. While the final confiscation order under Section 130 was passed on March 9, 2021, the Court found that the provisions of Section 129 are independent of Section 130. The Court held that the power to release goods provisionally under Section 129 is available to the owner provided they submit the required bond and security as per Rule 140(1). Therefore, the Court directed that the petitioner be given a chance to avail the provisional release of goods and vehicle in terms of Rule 140(1). The petitioner was advised to challenge the order dated March 9, 2021, and other orders before the Appellate Authority. The respondents were directed to release the goods provisionally if the petitioner fulfills the conditions under Rule 140(1), subject to the final outcome of the appeal. The Appellate Authority was expected to decide the appeal within two months, and the bank guarantee submitted by the petitioner was not to be encashed until the final disposal of the appeal.

Facts

The petitioner, Khalid, is the person in charge of a vehicle that was detained. The respondents, comprising the Finance Secretariat, Commissioner of Commercial Taxes, and Assistant Commissioner, Evasion, initiated proceedings under the CGST Act. The petitioner challenged initial orders dated January 22, 2021, and January 25, 2021. During the pendency of the writ petition, the respondents issued an order of demand for tax and penalty on February 8, 2021, giving 14 days for deposit. As this period lapsed, a notice for confiscation of goods was issued on February 9, 2021, and a final order of confiscation was passed on March 9, 2021. The goods were seized on January 22, 2021.

Key Issues

1. Whether the respondents followed the due process of law by providing adequate opportunity to the petitioner before passing the order of confiscation, considering the provisions of Section 129 and Section 130 of the CGST Act, 2017? 2. Whether the petitioner is entitled to the provisional release of the seized goods and vehicle under Rule 140(1) of the CGST Rules, 2017? The petitioner argued that the respondents proceeded to confiscate the goods without giving an appropriate opportunity, relying on a previous judgment of the High Court in Shri Wali Mohammad vs. State Tax Officer, which held that proceedings under Section 130 can only be initiated after a fair opportunity to deposit tax or penalty, and that seized goods can be released provisionally under Rule 140(1) upon furnishing a bond and security. The respondents contended that the petitioner failed to deposit the penalty and tax demanded after receiving the show cause notice and the order under Section 129, and therefore, the confiscation order was justified. They also argued that an appeal is available against the orders, and the petitioner should approach the Appellate Forum.