M. K. Traders Through Proprietor Mohammed B. K. Son Of Imbichi Bava vs. Union Of INDIA

Held

The Court held that the conveyance and goods should be released pending the confiscation proceedings. The reasoning was primarily based on the perishable nature of the Arecanut, which had been detained for approximately 35 days and was at risk of significant damage or complete destruction by the time confiscation proceedings concluded. The Court noted that the writ applicant had deposited the tax amount of Rs. 2,29,320 and a penalty of Rs. 2,29,320. While acknowledging the respondents' calculation of a fine for confiscation of goods amounting to Rs. 45,86,400, the Court directed the release of the conveyance and goods upon the writ applicant executing a personal bond of Rs. 45,86,400 to the satisfaction of the respondents. This release was made subject to the final outcome of the ongoing confiscation proceedings and the petitioner's right to appeal or pursue other legal remedies.

Facts

The petitioner, M.K. Traders, challenged the seizure of goods (Arecanut) and a truck by the respondents under Section 68 of the CGST Act, 2017. The goods were transported from RM Traders, Kerala, to the petitioner in Gujarat. The truck was intercepted on June 6, 2019, at Songadh, District Tapi. Despite the driver possessing invoices, e-way bills, and LR receipts, which were initially certified by the respondent, the truck and goods were seized. The petitioner submitted various documents via email, including bank statements and GSTR1 returns. The respondent issued Form GST MOV-04 and MOV-06, questioning the genuineness of the transaction. The petitioner paid the applicable tax and penalty under Section 129(1)(a) of the CGST Act, 2017, but the goods were not released. The respondents initiated confiscation proceedings under Section 130 of the CGST Act, 2017, demanding Rs. 52,74,360, including tax, penalty, and fine for confiscation of goods and conveyance.

Key Issues

1. Whether the Court should order the release of the seized conveyance and goods pending confiscation proceedings under Section 130 of the CGST Act, 2017? The petitioner argued that the goods are perishable and have been detained for over 35 days, risking deterioration. They contended that a genuine commercial transaction occurred between two GSTIN registered entities with valid documents, and they had already deposited the applicable tax and penalty under Section 129(1)(a). The respondents, represented by Ms. Maithili Mehta, argued that confiscation proceedings under Section 130 were in progress, and the demand of Rs. 52,74,360 was calculated as per the provisions of Section 130(1) and (2) of the GST Act, 2017, which included tax, penalty, and fine for confiscation of goods and conveyance.