A P Refinery PVT. LTD. vs. State Of Uttaakhand

Held

The Court allowed the writ petitions partly. It quashed and set aside the impugned orders dated 23.04.2021, passed by the respondent no.3 under Section 130 of the CGST/SGST Act in Form GST MOV-11. The Court directed the respondents to release the detained vehicles and goods upon the petitioner executing a bond for the value of the goods in Form GST INS-04 and furnishing a bank guarantee equivalent to the amount of applicable tax, interest, and penalty. This release is subject to the final outcome of any ongoing confiscation proceedings. The Court clarified that the respondents may proceed further in accordance with law after giving the petitioner an opportunity of being heard. The Court did not explicitly address the constitutional validity of Section 129 or the issue of re-deposit of tax, but the operative directions imply that the detention and confiscation orders based solely on expired e-Way bills, without further discrepancies, were not upheld.

Facts

The petitioner, M/s A.P. Refinery Pvt. Ltd., was transporting Rice Bran Oil from Punjab to Uttarakhand. The consignment was transported in three trucks, accompanied by e-Invoices and e-Way bills. The e-Way bills were set to expire on 30.03.2021. The trucks were intercepted on 31.03.2021 by officers of the Assistant Commissioner (GST-State). Although physical verification revealed no discrepancy in the goods or quantity matching the e-Invoices, the trucks and goods were detained. Show-cause notices were issued on 01.04.2021, citing expired e-Way bills as the reason. The petitioner claims their reply was refused by the respondent-department. Subsequently, orders of detention under Section 129(1) and orders under Section 130 of the CGST/SGST Act were passed, leading to the present writ petitions challenging these actions and the constitutional validity of Section 129.

Key Issues

1. Whether Section 129 of the CGST/SGST Act, read with Rule 140 of the CGST/SGST Rules, is constitutionally valid? The petitioner argued that Section 129 is arbitrary and unreasonable, as it mandates the deposit of tax, interest, and penalty even when the goods are not liable for confiscation. They contended that the provision is disproportionate and violates Article 14 of the Constitution. The revenue did not record any specific arguments on this point. 2. Does Section 129 of the CGST Act mandate the deposit of tax again if tax has already been paid? The petitioner argued that once tax has been paid and accounted for through e-Invoices, Section 129 should not require a fresh deposit of tax. The revenue did not record any specific arguments on this point. 3. Whether the show-cause notice dated 01.04.2021, and subsequent orders passed by the respondent-department under Section 129(3) and Section 130 of the CGST/SGST Act, are legal and valid? The petitioner contended that the detention and subsequent orders were illegal as there were no discrepancies found during physical verification, and the primary ground for detention (expired e-Way bills) was not a sufficient reason for confiscation or imposition of penalty under Section 129 or 130. The revenue argued that the expired e-Way bills constituted a violation warranting action under Section 129.