Shri Anant Jignesh Shah, Proprietor Of M/S. Nakoda And Company vs. The Union Of INDIA, Through The Under Secretary

Held

The Court held that the Order of Detention under Section 129(1) and the Show Cause Notice under Section 130 of the CGST Act were not tenable in law. The Court found that the grounds for confiscating the goods and vehicle were based on assumptions and conjectures, specifically that the driver might have indulged in past contraventions. The Court emphasized that detention under Section 129 is permissible only if goods are transported in contravention of the Act or Rules. The Court noted that the Assistant Government Pleader conceded that no provision of the Act or Rules was contravened with regard to the transaction in question. The Court further held that a Show Cause Notice under Section 130 cannot be issued on mere suspicion; there must be prima facie material to satisfy the authority that the goods are liable for confiscation. Consequently, the Court quashed and set aside the Show Cause Notice dated 15th September, 2020. The Court clarified that if any other inquiry regarding other transactions is to be made, the authorities are at liberty to initiate such proceedings.

Facts

The petitioner, Shri Anant Jignesh Shah, proprietor of M/s. Nakoda and Company, filed a writ application challenging an Order of Detention under Section 129(1) of the CGST Act dated 13/09/2020 and a Show Cause Notice under Section 130 of the CGST Act dated 15/09/2020, both issued by Respondent No. 2. The petitioner had ordered pan masala worth Rs. 35,74,155/- from M/s. Atharva Enterprises, Ujjain, Madhya Pradesh, to be transported to Ahmedabad, Gujarat. The e-way bill generated was valid from 08.09.2020 to 13.09.2020. On 12.09.2020, the vehicle carrying the goods was intercepted. The detention order was passed on 13.09.2020, followed by the show cause notice on 15.09.2020.

Key Issues

1. Whether the Order of Detention under Section 129(1) of the CGST Act and the subsequent Show Cause Notice under Section 130 of the CGST Act are liable to be quashed and set aside. The petitioner argued that the detention and notice were based on mere suspicion and conjectures, not on any contravention of the Act or Rules. The petitioner contended that the authorities lacked prima facie material to justify confiscation. The revenue, represented by Mr. Chintan Dave, Assistant Government Pleader, argued that while there was no direct contravention during transit, the authorities had a grave suspicion that the driver might have engaged in tax evasion for an unknown transaction, evidenced by the vehicle's movement and the sensitive nature of the goods. The revenue's case was based on suspicion of evasion of tax for some unrecorded transaction.