Ms Ami Enterprises PVT LTD Through Its Director Chandrakant Zatakia vs. Union Of INDIA Through Its Commissioner Central Goods And Services Tax And Central Excise

Held

The Court held that the proceedings initiated under Section 129 of the CGST Act and Rule 68 thereof suffered from procedural infirmities. A bare perusal of Section 129 indicates that a notice must be issued within seven days of detention/seizure, and an order passed within seven days of service of notice. Crucially, Section 129(4) mandates an opportunity of being heard before penalty determination. The Court found that the detention, show-cause notice, and adjudication order were all passed on the same date, which did not allow for the statutorily prescribed timelines or a proper opportunity to defend. While the respondents claimed the proceedings were expedited at the petitioner's instance, there was no substantiation for this. Therefore, the impugned adjudication order dated September 20, 2021, and the appellate order dated February 17, 2022, were set aside due to lack of proper opportunity. The respondents were granted liberty to take a fresh decision after providing due opportunity to the petitioner as per the Act. The Court did not decide on the issue of intention to evade tax as the primary ground for setting aside the orders was procedural.

Facts

The petitioner, M/s. AMI Enterprises Pvt. Ltd., had its vehicle intercepted on September 18, 2021, for alleged violation of Section 129 of the CGST Act, 2017, as the E-Way bill had expired. The detention, show-cause notice, and adjudication order were all passed on September 20, 2021. The petitioner appealed, but the appeal was dismissed on February 17, 2022. The petitioner had deposited the tax and interest and got the vehicle released on September 21, 2021. The petitioner approached the High Court challenging the proceedings.

Key Issues

1. Whether the proceedings initiated under Section 129 of the CGST Act, 2017, and Rule 68 thereof, which were concluded on the same date as the detention, afforded the petitioner a proper opportunity of being heard as mandated by Section 129(4) of the CGST Act, 2017? Petitioner's contention: The entire proceedings were ex parte, and no proper opportunity of furnishing a reply or hearing was given to the petitioner or its driver. There was no intention to evade tax, and the vehicle was seized in contravention of Section 129(1) of the CGST Act. Reliance was placed on the Apex Court's decision in Assistant Commissioner (ST) & Ors. Vs. M/s. Satyam Shivam Paper Ltd. & another, arguing that intention to evade tax is crucial and vitiates the liability. Respondents' contention: The E-Way bill had expired, and no extension was sought. A notice with seven days to reply was served on September 20, 2021, with a direction to appear on the same day, but the authorized person did not appear. The proceedings were expedited at the taxpayer's request. Section 129 does not require an intention to evade tax for imposing liability.