M/S Maruti Traders Through Proprietor Binod Kumar Shaw Thru. Authorised Umeshkumar Shivkumar Khemka vs. State Of Gujarat

Held

The Court noted that the petitioner had already availed the benefit of an interim order for the release of goods and conveyance upon payment of tax and penalty, subject to further determination. The proceedings were at the stage of a show cause notice under Section 130. The Court referred to its recent pronouncement in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, emphasizing that Section 130 (confiscation) should not be invoked at the threshold without a strong case and material to indicate an intent to evade tax. The Court clarified that while Section 130 can be invoked early, authorities must record reasons for such belief, and the material relied upon must be sufficient for an honest and reasonable person to form that belief. The Court stated that not every contravention warrants confiscation under Section 130. The Court concluded that it is now for the applicant to make good their case that the show cause notice under GST-MOV-10 deserves to be discharged. The writ application was disposed of, and the rule was made absolute to that extent.

Facts

The petitioner, M/s Maruti Traders, filed a writ application challenging the order of detention passed by the respondent under Section 129(1) of the GST Act concerning goods and a conveyance (Truck No.GJ-04-GB-6069) detained on March 9, 2019. The petitioner also challenged the subsequent notice for confiscation of goods and levy of penalty under Section 130 of the GST Act. A co-ordinate bench had previously directed the release of the goods and conveyance upon payment of tax and penalty as computed by the authorities and filing of a solemn undertaking to make good any deficit liability. The petitioner availed this interim relief and got the goods released after paying the tax amount. The proceedings were at the stage of a show cause notice under Section 130 of the GST Act.

Key Issues

1. Whether the respondent authorities were justified in invoking Section 130 of the GST Act for confiscation at the initial stage of detention and seizure, thereby rendering Section 129 of the Act insignificant? The petitioner argued that the authorities prematurely invoked Section 130 of the GST Act for confiscation without properly considering Section 129, which provides for release on payment of tax and penalty. They contended that such an approach makes Section 129 otiose and leads to unnecessary detention of goods and conveyances. The petitioner relied on the judgment in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, particularly paragraphs 99 to 104, which discuss the proper application of Sections 129 and 130. The respondent's arguments are not explicitly recorded in the provided text, but their actions indicate they believed confiscation under Section 130 was warranted.