M/S Kpm Enterprises vs. Assistant Commissioner

Held

The Court held that the writ petitions were not maintainable at this stage. Regarding the issue of whether the procedure under Section 129 of the Act was followed, the Court found it to be a disputed question of fact that could not be decided in writ jurisdiction without the respondents filing a counter-affidavit. The Court also noted that the confiscation order was not violative of the principles of natural justice, as a show cause notice was issued and an opportunity for a hearing was provided. The Court found the petitioner's reliance on the Delhi High Court's order regarding GST registration cancellation to be relevant to the issue of the petitioner's existence, but still considered it a disputed fact. The Court observed that the confiscation order presumed intent to evade tax based on the transaction being with a bogus firm, which it considered sufficient for passing a confiscation order under Section 130. The Court emphasized that the order of confiscation is appealable under Section 107 of the Act, and the issues raised could be better adjudicated in appeal. Therefore, the Court declined to exercise its discretionary writ jurisdiction. The Court did not expressly leave any issue undecided, but rather declined to adjudicate them in the writ petitions.

Facts

The petitioner, M/s KPM Enterprises, filed writ petitions challenging a show cause notice dated 02.10.2022 and a confiscation order dated 02.11.2022 passed by the Assistant Commissioner, State Tax Circle-F, Jaipur-III, under Section 130 of the Rajasthan Goods and Services Act, 2017. The petitioner alleged that goods (Areca nuts) purchased from Karnataka and being transported to Delhi were intercepted and confiscated. The petitioner contended that the confiscation order was passed without jurisdiction, in violation of principles of natural justice, and without following the procedure under Section 129 of the CGST Act. The revenue objected, stating the order was appealable and the issues involved disputed questions of fact. The revenue's grounds for confiscation included suspicious documents, a non-existent supplier, and a bogus transaction.

Key Issues

1. Whether the confiscation order passed under Section 130 of the Rajasthan Goods and Services Act, 2017, is valid when the procedure prescribed under Section 129 of the Central Goods and Services Tax Act, 2017, was allegedly not followed? 2. Whether the confiscation order is sustainable in law without a specific finding that the petitioner had an intention to evade tax? 3. Whether the writ petitions are maintainable, given that the order of confiscation is appealable under Section 107 of the Act and the issues raised involve disputed questions of fact? Petitioner's Arguments: The petitioner argued that the confiscation order was passed without jurisdiction and in violation of natural justice. They asserted that Section 129 of the CGST Act, which provides a complete mechanism for detention and seizure of goods in transit, was not followed. They also contended that no finding of intent to evade tax was made. The petitioner further pointed to a Delhi High Court order quashing the cancellation of their GST registration, refuting the claim that they were a non-existent or bogus firm. Respondent's Arguments: The respondent objected to the maintainability of the writ petitions, arguing that the confiscation order is appealable and that the petitioner's contentions involve disputed questions of fact. They stated that the goods and conveyance were confiscated because the accompanying documents were suspicious, the transaction appeared bogus, and the supply was made to a non-existent person. The respondent also argued that the penalty was calculated based on the integrated tax, implying tax assessment.