Messrs Tanay Creation Through Prop. Tanay Mahavir Shah vs. State Of Gujarat

Held

The Court held that the impugned order dated 15.09.2021 passed by respondent No.2 was in complete breach of the principles of natural justice. The Court noted a glaring absence of any notice to the petitioner and a gross violation of natural justice, as neither a show cause notice nor an opportunity of hearing was afforded to the petitioner, the owner of the goods. The notice was only served upon the truck driver. The Court found that the tax invoice contained the petitioner's full address and GSTN, making it clear that the petitioner should have been served. Therefore, the Court quashed and set aside the impugned order. The matter was restored to the file of respondent No.3 to issue a fresh notice under Section 130 of the GGST and CGST Act, afford a reasonable opportunity of hearing after serving a show cause notice to the petitioner, and pass a reasoned order. The Court directed the release of the goods and conveyance within 7 days, subject to the final outcome of the proceedings under Section 130, given that the petitioner had already deposited the tax and penalty amounts.

Facts

The petitioner, Messr Tanay Creation, a proprietorship firm dealing in gray fabrics, sent goods under four tax invoices to processors in Jetpur. The truck carrying the goods was intercepted on 22.08.2021 at Kamrej Toll Plaza. The grounds for detention were a mismatch between the bill and e-way bill, absence of the receiver's full address on the documents, and a quantity mismatch. The petitioner explained that the supplier's name was inadvertently mentioned as the consignee instead of the processors, but the e-way bill correctly indicated Jetpur as the delivery location. Despite this explanation, the truck and goods were detained on 24.08.2021. A notice for confiscation of goods/conveyance and penalty was issued, calculated at Rs.1,14,019/- for tax, Rs.1,14,019/- for penalty, and Rs.22,80,362/- as redemption fine. The petitioner paid the tax and penalty amounts. Subsequently, respondent No.2 passed an order under Section 130 of the CGST Act confirming confiscation and penalty, without serving a copy of the order or granting the petitioner a hearing.

Key Issues

1. Whether the order dated 15.09.2021 passed by respondent No.2 under Section 130 of the CGST Act is liable to be quashed and set aside for violation of the principles of natural justice, specifically for non-service of the order and lack of opportunity of hearing to the petitioner, and for non-issuance of a show cause notice to the petitioner, as argued by the petitioner? The petitioner contended that the impugned order was passed in clear violation of the principles of natural justice and Section 130 of the CGST Act, as neither a copy of the order nor a show cause notice was served upon them, and no opportunity of hearing was granted. The State argued that the power to levy tax includes incidental powers to prevent evasion, and seizure/confiscation are ancillary to this power. However, the judgment does not record specific arguments from the State regarding the procedural violations alleged by the petitioner.