Siddhbali Stone Gallery vs. State Of Gujarat

Facts

The petitioner, Siddhabali Stone Gallery, filed a Special Civil Application challenging a notice dated September 26, 2019, in Form GST MOV-10, issued by Respondent No. 2. The petitioner sought quashing of this notice and release of truck number GJ-12-AZ-5184 along with its goods. The goods, marble imported from Italy, had IGST paid at the time of import. During transit, due to an inadvertent omission to generate an e-way bill for one of three vehicles, the truck was intercepted. The petitioner subsequently paid the tax and penalty as computed by the authorities. Despite this, a notice for confiscation of goods and conveyance under Section 130 of the GGST Act was issued. The High Court, by an interim order, directed the release of the truck and goods upon payment of the tax and penalty.

Held

The Court noted that the writ applicant had availed the benefit of the interim order and secured the release of the vehicle and goods upon payment of the tax amount. The proceedings were at the stage of a show cause notice under Section 130 of the Central Goods and Services Act, 2017. The Court directed that the proceedings should continue in accordance with the law. It also advised the writ applicant to refer to the recent pronouncement in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, particularly paragraphs 99 to 104. These paragraphs emphasize that invoking Section 130 at the threshold requires a strong case, not mere suspicion, and that authorities must record reasons for their belief in writing, subject to review by a superior authority. The Court clarified that not every contravention warrants confiscation, and Section 130 is an independent provision for cases of intent to evade tax, with confiscation being penal in character. The applicant was advised to make good their case for the discharge of the show cause notice.

Key Issues

1. Whether the issuance of a notice for confiscation under Section 130 of the Gujarat Goods and Services Tax Act, 2017 (GGST Act), at the threshold of detention and seizure, is justified when the tax and penalty have been paid and all other documents were in order, rendering Section 129 of the Act insignificant? Petitioner's arguments: The petitioner argued that the issuance of a confiscation notice under Section 130 was unjustified, especially since all documents except the e-way bill were produced, the e-way bill was subsequently generated, and the tax and penalty were paid. They contended that this action rendered Section 129 of the Act redundant. They relied on the principle that confiscation is a severe penalty and should not be invoked without sufficient grounds, and that the authorities should have proceeded under Section 129 for release upon payment of tax and penalty. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or State. However, the issuance of the notice under Section 130 by the authorities implies their contention that the contravention warranted such action.