M/S Kpm Enterprises vs. State Of Rajasthan

Held

The Court held that the writ petitions were not maintainable in the exercise of extraordinary jurisdiction. The Court found that the issues regarding the existence of the petitioner-firm, the intention to evade tax, and whether the procedure under Section 129 was followed, involved disputed questions of fact and law. These issues could not be adjudicated at the admission stage without a counter-affidavit from the respondents. The Court noted that the confiscation order was passed after a show cause notice and afforded the petitioner an opportunity to respond, thus not violating principles of natural justice. The Court also observed that the calculation of penalty was based on the integrated tax, implying tax assessment. The presumption of intention to evade tax, based on the transaction being to a bogus firm, was considered sufficient for a confiscation order under Section 130. The Court relied on the fact that the order of confiscation is appealable under Section 107 of the Act. Therefore, the Court dismissed the writ petitions, granting liberty to the petitioner to avail the statutory appeal remedy.

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. The petitioner had purchased Areca nuts from Karnataka and was transporting them to Delhi. The goods and conveyance were intercepted and confiscated under Section 130 of the Rajasthan Goods and Services Act, 2017. The petitioner contended that the 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 confiscation was based on suspicious documents and the belief that the supply was to a non-existent person.

Key Issues

1. Whether the confiscation order passed under Section 130 of the Rajasthan Goods and Services Act, 2017, is maintainable without strictly following the procedure prescribed under Section 129 of the Central Goods and Services Tax Act, 2017, and without a specific finding of intention to evade tax? (Question of law and mixed fact and law, turning on Section 130 and Section 129 of the CGST Act). Petitioner's arguments: The confiscation order is illegal as Section 129, which deals with detention and seizure of goods in transit, was not followed. The order was passed straightaway under Section 130 without establishing any intention to evade tax. Reliance was placed on the Delhi High Court's order quashing the cancellation of the petitioner's GST registration, proving the petitioner is not a non-existent or bogus firm. Respondent's arguments: The writ petitions are not maintainable as the confiscation order is appealable under Section 107. The issues raised are disputed questions of fact that cannot be adjudicated in writ jurisdiction. The goods and conveyance were confiscated because the accompanying documents were suspicious, and the transaction appeared bogus, with the supply being made to a non-existent person.