Vasu Corporation vs. State Of Gujarat

Facts

The petitioner, Vasu Corporation, filed a writ application challenging the detention of its truck (HR 47B 3188) and goods. The detention order was dated April 21, 2019, and a notice in Form GST MOV-10 was issued on April 22, 2019. The petitioner argued that they had deposited the tax and penalty under Section 129 of the Gujarat Goods and Services Tax Act, 2017, "under protest." Despite this, the authorities continued detention and initiated confiscation proceedings under Section 130. The Court, in an interim order dated May 2, 2019, directed the release of the truck and goods upon payment of tax and penalty. The petitioner availed this benefit and got the vehicle and goods released. The proceedings are currently at the show cause notice stage under Section 130.

Held

The Court held that while authorities can invoke Section 130 of the GST Act at the threshold of detention and seizure, they must make out a very strong case supported by material evidence indicating an intent to evade tax. Merely on suspicion, invoking Section 130 is not justified. The authorities need to record their reasons in writing for such a belief, which should be reviewed by a superior authority. The notice for confiscation must disclose the materials upon which the belief is formed. The Court noted that the petitioner had already obtained the release of the vehicle and goods based on an interim order and that the proceedings were at the show cause notice stage under Section 130. The Court directed that it is now for the applicant to make good their case that the show cause notice deserves to be discharged. The writ application was disposed of with the rule made absolute to that extent.

Key Issues

1. Whether the authorities were justified in issuing a notice for confiscation under Section 130 of the GST Act at the initial stage of detention, thereby rendering Section 129 of the Act insignificant? (Question of law) 2. Whether the detention and subsequent confiscation proceedings were initiated without sufficient application of mind or material to indicate an intent to evade tax? (Question of mixed law and fact) Petitioner's Arguments: - The petitioner argued that upon depositing the tax and penalty under Section 129, the goods and vehicle should have been released. They contended that proceeding directly to a confiscation notice under Section 130 undermined the provisions of Section 129, which allows for release upon payment of tax and penalty or furnishing security. They relied on the principle that Section 130 is for cases with intent to evade tax, not for every contravention. Revenue's Arguments: - The judgment does not record any specific arguments made by the State of Gujarat (respondents).