M/S K K Traders vs. Union Of INDIA

Held

The Court chose not to entertain the petition, finding that the prima facie details presented by the respondent were not acceptable under the law. The Court noted that information was received regarding discrepancies in the conveyance, leading to its interception. Upon verification, it was found that the recipient, Shri Nandha Trade Mart, had filed a NIL GSTR3B return for June 2021, despite generating significant inward e-way bills. Physical verification of Shri Nandha Trade Mart's business premises revealed a small shop with no stock, despite claimed purchases of Rs. 4.50 crores. Furthermore, RFID data did not match e-way bill movements, suggesting only billing was done without actual goods movement. The petitioner's own registration in Kerala was cancelled due to alleged tax evasion. The Court concluded that there was no breach of principles of natural justice and that the petitioner should pursue the alternative remedy of appeal.

Facts

The petitioner, M/s K K Traders, filed a writ petition challenging the detention and confiscation of goods (Areca nut) and conveyance. The consignment was intercepted on July 22, 2021, at Vasad Toll Plaza. The petitioner claimed to have generated requisite documents under Section 68(1) of the CGST Act, including e-way bills and invoices. However, an order for detention under Section 129(1) was passed, followed by a show cause notice under Section 130 and an order of confiscation of goods and conveyance with a demand for tax, fine, and penalty. The petitioner contended that the fine imposed was arbitrary and exceeded the market value of the goods less the tax chargeable, as per Section 130(2). The respondent State argued that the petition was not maintainable and that the credentials of both the seller (petitioner) and the purchaser, Shri Nandha Trade Mart, were questionable.

Key Issues

1. Whether the detention order under Section 129(1) of the CGST Act and the subsequent show cause notice under Section 130 of the CGST Act, along with the order of confiscation, were passed arbitrarily and without proper grounds, violating principles of natural justice? The petitioner argued that the show cause notice was vague and that the authority had travelled beyond its scope. The petitioner relied on Synergy Fertichem Pvt. Ltd. vs. State of Gujarat, Sri Krishna Traders vs. State of Gujarat, and Shri Anant Jignesh Shah, Proprietor of M/s. Nakoda and Company vs. The Union of India. The respondent State contended that the credentials of both the purchaser and seller were questionable, justifying the interception and subsequent proceedings, and suggested the petitioner pursue the alternative remedy of appeal under Section 107 of the CGST Act.