Jilani Shahnavaz Mulla vs. State Of Gujarat

Facts

The petitioner, Jilani Shahnawaz Mulla, filed a writ application seeking the release of his truck (MH-48AG-7266) and to quash a notice for confiscation of the conveyance. The truck was seized, and a notice under Section 130 of the CGST Act was issued. The petitioner argued that under the third proviso to Section 130(2), the owner should have the option to pay a fine equal to the tax payable on the goods in lieu of confiscation. The respondents disputed this, referring to the second proviso to Section 130(2) and Section 130(3). An interim order was passed directing the release of the truck upon payment of a proposed fine of Rs. 1,05,254/-, which was to be treated as a deposit subject to the final outcome of proceedings under Section 130.

Held

The Court noted that it was not certain whether a final order of confiscation under Section 130 of the CGST Act had been passed. If a final order of confiscation had been issued, the petitioner would be at liberty to prefer an appeal before the appellate authority under Section 107 of the Act. The Court stated that if the petitioner succeeded in such an appeal, they would be entitled to a refund of the amount deposited. The Court disposed of the writ application with these observations, explicitly refraining from expressing any opinion on the merits of the matter. The issue regarding the interpretation of the provisos to Section 130(2) and Section 130(3) was not definitively decided.

Key Issues

1. Whether the third proviso to Section 130(2) of the Central Goods and Services Tax Act, 2017, mandates that the owner of a conveyance used for carriage of goods for hire must be given an option to pay a fine equal to the tax payable on the goods in lieu of confiscation of the conveyance, even if other provisions of Section 130 might suggest otherwise? The petitioner contended that this proviso grants an absolute option to pay a fine equivalent to the tax on the goods. The revenue disputed this, relying on the second proviso to Section 130(2) and Section 130(3) of the Act, which they argued allow for confiscation and imposition of penalties beyond just the tax amount. The court had to decide the applicability and interpretation of these provisos and subsections in the context of confiscation and release of the conveyance.