M/S Moon Traders Through Harshadkumar Bhogilal Raval vs. State Of Gujarat

Held

The Court noted that the petitioner had already availed the benefit of the interim order and got the goods and conveyance released upon payment of the tax amount. The proceedings are currently at the stage of a show cause notice under Section 130 of the Central Goods and Services Act, 2017. The Court referred to its earlier pronouncement in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, which emphasized that Section 130 should not be invoked straightway at the threshold of detention and seizure without a strong case and proper application of mind. The Court clarified that while Section 130 can be invoked at the threshold, authorities must record reasons in writing for such belief, and these reasons should be reviewed by a superior authority. The formation of opinion must be based on material and reflect an intense application of mind, not mere suspicion. The Court stated that it is now for the applicant to make good his case that the show cause notice issued under GST-MOV-10 deserves to be discharged. The writ application was disposed of with the rule made absolute to the extent that the proceedings would continue in accordance with law, allowing the petitioner to present their case.

Facts

The petitioner, M/s Moon Traders, filed a writ application challenging an order of detention passed by respondent no. 2 under Section 129(1) of the GST Act concerning goods and a conveyance (Truck No. GJ-12-AY-3570) detained on March 7, 2019. The petitioner also challenged a subsequent notice dated March 22, 2019, for confiscation of goods and conveyance and levy of penalty under Section 130 of the GST Act. The petitioner argued that these actions were illegal, unlawful, contrary to facts and evidence, violative of natural justice, and against the Act and Rules. The Court, in an interim order, directed the release of the goods and conveyance upon payment of the tax amount as per the notice. The petitioner availed this benefit and got the goods and vehicle released. The proceedings are currently at the stage of a show cause notice under Section 130.

Key Issues

1. Whether the respondent no. 2 illegally invoked Section 130 of the GST Act for confiscation and penalty without first initiating proceedings under Section 129 of the GST Act, as required by law? (Question of law, turning on Section 129 and Section 130 of the GST Act). Petitioner's arguments: The petitioner contended that Section 130 of the GST Act can only be resorted to if there is non-compliance with an order passed under Section 129. They argued that the impugned notice sought to impose penalty, redemption fine, and confiscation under Section 130 without initiating any proceedings under Section 129, which is impermissible. They relied on the fact that a blank space in paragraph 4 of the notice indicated that the prescribed procedure under Section 129 had not been followed. Revenue's arguments: The judgment does not record specific arguments made by the revenue or State.