Singal Road Carrier vs. State Of Gujarat

Facts

The writ applicant, Singal Road Carrier, a transporter, filed a writ petition challenging the seizure of Truck No. RJ 14 GK 4863 and its goods. The seizure was related to alleged contravention of GST provisions. The applicant sought the release of the truck and goods and to quash a notice dated July 17, 2019, for proposed confiscation under Section 129 of the GST Acts. An interim order dated August 7, 2019, directed the release of the conveyance and goods upon deposit of Rs. 3,11,016. The applicant availed this benefit and got the vehicle and goods released. The proceedings were at the stage of a show cause notice under Section 130 of the GST Act, 2017.

Held

The Court, referring to its decision in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, held that authorities should not straightway invoke Section 130 of the GST Act for confiscation without sufficient application of mind and justifiable grounds. The contravention of provisions must be examined to determine if it was with an intent to evade tax. Section 130 is an independent provision for confiscation in cases of proven intent to evade tax and is penal in nature. While authorities can invoke Section 130 at the threshold, they must make out a strong case, supported by material evidence, and record their reasons in writing for such belief. Mere suspicion is insufficient. The notice for confiscation must disclose the materials upon which the belief is formed, and the formation of opinion should reflect intense application of mind. The Court noted that the applicant had already obtained interim relief by depositing the tax amount and the proceedings were at the show cause notice stage under Section 130. The Court disposed of the writ application, making the rule absolute to the extent that the applicant should make good their case that the show cause notice deserves to be discharged.

Key Issues

1. Whether the authorities were justified in directly invoking Section 130 of the GST Act, 2017, for confiscation at the threshold, bypassing the provisions of Section 129 of the Act, without sufficient application of mind or justifiable grounds to believe that there was an intent to evade tax payment? Petitioner's Arguments: The petitioner argued that the authorities prematurely invoked Section 130 by issuing a confiscation notice without properly considering Section 129, which provides for release on payment of tax and penalty or furnishing security. They contended that such an approach renders Section 129 otiose and leads to unnecessary detention of goods and conveyance. They relied on the judgment in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, specifically paragraphs 99 to 104, which discuss the proper application of Sections 129 and 130. Revenue's Arguments: The judgment does not explicitly record arguments made by the revenue or State.