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

Held

The Court noted its previous interim order which directed the release of the vehicle and goods upon payment of the tax amount as per the impugned notice, a relief availed by the petitioner. The proceedings were at the stage of a show cause notice under Section 130. The Court referred to its pronouncement in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, emphasizing that Section 130 (confiscation) is an independent provision for cases involving intent to evade tax and is penal in character. It clarified that while Section 130 can be invoked at the threshold, a very strong case with material evidence and application of mind is required, not mere suspicion. The notice for confiscation must disclose the materials upon which the belief was formed. The Court stated that it is for the applicant to make good their case that the show cause notice deserves to be discharged. The writ application was disposed of, making the rule absolute to the extent that the proceedings would continue in accordance with law, allowing the petitioner to challenge the show cause notice.

Facts

The petitioner, M/s Moon Traders, filed a writ application challenging an order of detention passed by the respondent no. 2 under Section 129(1) of the GST Act concerning goods and a conveyance (Truck No. GJ-12-AT-6507) detained on March 7, 2019. Subsequently, a notice dated March 22, 2019, was issued 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, violative of natural justice, and against the Act and Rules. The Court, in an interim order, directed the release of the vehicle and goods upon payment of the tax amount as per the impugned notice. The petitioner availed this relief and got the goods and vehicle released. The proceedings were 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 of goods and conveyance without first initiating proceedings under Section 129(3) and affording an opportunity of hearing, as required by law? 2. Whether the notice for confiscation under Section 130 was issued without proper application of mind and sufficient material, rendering Section 129 otiose? Petitioner's Arguments: The petitioner contended that the authorities were required to issue a notice under Section 129(3) and pass an order thereunder after providing an opportunity of hearing. It was argued that Section 130 could only be resorted to if there was non-compliance with the order passed under Section 129. The petitioner highlighted that the impugned notice sought to impose penalty, redemption fine, and confiscation under Section 130 without initiating proceedings under Section 129, which is impermissible. They also pointed to a blank in the notice indicating procedural non-compliance. Revenue's Arguments: The judgment does not record specific arguments made by the revenue or State. However, the interim order indicates the revenue's position was to proceed with the notice under Section 130.