M/S A T Trading Company vs. State Of Gujarat

Held

The Court held that the impugned show-cause notice in Form GST MOV-10 was not liable to be quashed outright, but the writ-applicant was directed to make their case good before the concerned authority. The Court emphasized that for invoking Section 130 of the Act, especially at the threshold, the authorities need to make out a strong case and demonstrate an intention to evade tax payment. Mere suspicion is not sufficient. The notice must disclose the materials upon which the belief of confiscation is formed. The Court referred to its previous decision in Synergy Fertichem Pvt. Ltd. Vs. State of Gujarat, highlighting that not every contravention attracts confiscation under Section 130, which is an independent provision for cases where tax evasion intent is found. The authority must reflect intense application of mind and act in good faith. The Court directed the authority to hear the writ-applicant, consider the submissions made, and pass an appropriate order within four weeks, keeping in mind the observations in the Synergy Fertichem case.

Facts

M/s A T Trading Company, a proprietory concern dealing in Arecanut, filed a writ petition challenging a detention order dated April 25/26, 2019, and a show-cause notice dated April 26, 2019, issued by Respondent No. 2. The petitioner sought quashing of these orders and the release of seized goods and a vehicle. Initially, an ad-interim order dated May 21, 2019, directed the release of goods and conveyance upon payment of tax and penalty, subject to the petitioner filing an undertaking to make good any deficit liability. The goods and vehicle were subsequently released. The core of the present challenge pertains to the legality and validity of the show-cause notice in Form GST MOV-10, which proposed confiscation of goods and conveyance under Section 130 of the Central GST Act, 2017.

Key Issues

1. Whether the show-cause notice issued under Section 130 of the Central GST Act, 2017, is liable to be quashed for failing to explicitly state an intention to evade tax payment by the petitioner? (Question of law) Petitioner's Arguments: - The primary argument is that the impugned show-cause notice in Form GST MOV-10 deserves to be quashed because it lacks any mention of an intent to evade tax payment, which is a crucial ingredient for confiscation under Section 130. - Reliance is placed on the High Court's decision in Synergy Fertichem Pvt. Ltd. Vs. State of Gujarat, specifically paragraphs 101 to 104, which emphasize the necessity of proving intent to evade tax for confiscation. - Even if the grounds mentioned in the show-cause notice are accepted, they are insufficient to attract Section 130 for confiscation. Revenue's Arguments: - The matter is at the stage of a show-cause notice, and the petitioner should be directed to file a reply before the authority. - The mere omission of the intent to evade tax in the show-cause notice does not automatically render it susceptible to challenge or make it without jurisdiction.