Shree Nandwana Transport vs. State Of Gujarat

Facts

The petitioner, Shree Nandwana Transport, filed a writ application challenging a notice in Form GST MOV-10 dated May 15, 2019, issued by Respondent No. 2, initiating confiscation proceedings against Truck No. MH-48-AG-0126. The petitioner sought the release of the truck and the quashing of the notice. A co-ordinate bench had previously ordered the release of seized goods upon payment of tax and penalty in a related writ application filed by the owner of the goods. Subsequently, the petitioner's vehicle was also ordered to be released. The petitioner availed this interim relief and got the vehicle and goods released upon payment of the tax amount. The proceedings are currently at the show cause notice stage under Section 130 of the GST Act.

Held

The Court held that while Section 130 of the GST Act can be invoked at the threshold, the authorities must make out a very strong case, not merely rely on suspicion. There must be material on which the authority could form an opinion in good faith that confiscation is necessary. The notice for confiscation must disclose the materials upon which the belief is formed. If challenged, the authority must disclose these materials. The Court referenced the Supreme Court's decision in Sheonath Singh's case, stating that while the sufficiency of reasons for belief cannot be investigated, the materials must be such that an honest and reasonable person could base their belief upon them. The formation of opinion for confiscation should reflect intense application of mind, as not every contravention warrants confiscation. The Court noted that the petitioner had already obtained the release of the vehicle and goods by paying the tax amount and that the proceedings are at the show cause notice stage. The petitioner was advised to make good their case that the show cause notice deserves to be discharged, and to rely on the observations in the Synergy Fertichem case.

Key Issues

1. Whether the authorities were justified in straightway invoking Section 130 of the GST Act and initiating confiscation proceedings at the threshold, without properly considering the provisions of Section 129 of the GST Act? 2. Whether the show cause notice issued under Section 130 of the GST Act is sustainable in the absence of sufficient material and application of mind to justify the belief of intent to evade tax? Petitioner's arguments: The petitioner contended that the authorities prematurely invoked Section 130 of the GST Act, rendering Section 129 of the Act insignificant. They argued that confiscation proceedings should not be initiated straightway without proper application of mind and justifiable grounds, especially when the tax and penalty have been deposited. The petitioner relied on the pronouncement 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. Revenue's arguments: The judgment does not record specific arguments made by the revenue or State.