M/S Gujarat Steel Suppliers Through Proprietor Manish Ramvinay Singh vs. State Tax Offier (2)

Held

The Court noted that the writ applicant had already deposited the tax and penalty amounts and obtained the release of the vehicle and goods based on the interim order. The proceedings were at the stage of a show cause notice under Section 130. The Court directed that the proceedings would continue in accordance with the law. Crucially, the Court advised the writ applicant to point out the recent pronouncement in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, specifically paragraphs 99 to 104. These paragraphs emphasize that Section 130 (confiscation) should not be invoked at the threshold without a strong case and proper application of mind, especially when Section 129 (detention, seizure, and release) provides a mechanism for resolution upon payment of tax and penalty. The Court highlighted that confiscation is a penal action and requires evidence of intent to evade tax, not merely a contravention. The ratio is that authorities must demonstrate a clear intent to evade tax before invoking Section 130, and Section 129 should be considered as the primary recourse for resolving detentions due to documentation lapses, unless there is substantial material indicating tax evasion.

Facts

The writ applicant, M/s Gujarat Steel Suppliers, a proprietary concern engaged in trading building materials, filed a writ petition challenging the seizure of its transport vehicle (Truck No. GJ-15-UU-0320) and the goods loaded therein. The seizure occurred because the driver could not produce an E-Way Bill. Subsequently, a notice in Form GST MOV-10 was issued for confiscation of goods under Section 130 of the Gujarat Goods and Services Tax Act, 2017, read with relevant CGST provisions. The petitioner had deposited the tax and penalty amounts as reflected in Annexure F, totaling Rs. 1,19,956 and Rs. 59,978, to secure the release of the vehicle and goods pending the final outcome of the petition. The High Court had previously granted an interim order directing the release of the vehicle and goods upon payment of the tax and penalty.

Key Issues

1. Whether the invocation of Section 130 of the Gujarat Goods and Services Tax Act, 2017, at the threshold, by issuing a show cause notice for confiscation, is justified when Section 129 of the Act provides for the release of goods and conveyances upon payment of applicable tax and penalty. Petitioner's arguments (implied from the relief sought and reliance on Synergy Fertichem): The petitioner argued that the authorities prematurely invoked Section 130 for confiscation without properly considering Section 129, which allows for release upon payment of tax and penalty. The petitioner likely contended that the absence of an E-Way Bill, while a contravention, did not automatically warrant confiscation and that the process under Section 129 should have been followed or exhausted first. They relied on the judgment in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat, particularly paragraphs 99-104, which discuss the proper application of Sections 129 and 130. Revenue's arguments (implied from the issuance of the notice): The State Tax Officer issued the notice under Section 130, implying a belief that the contravention was serious enough to warrant confiscation, likely due to the absence of an E-Way Bill, which could be construed as an attempt to evade tax.