M/S Livguard Energy Technologies PVT. Limited vs. State Of Uttarakhand

Held

The Court held that the Special Appeal was without infirmity and dismissed it. Regarding the first issue, the Court agreed with the learned Single Judge that the writ petition was premature. It reasoned that the appellant had the right to file a reply to the show-cause notice under Section 129(4) of the 2017 Act and that the competent authority should examine the matter in the first instance before the High Court exercises its writ jurisdiction. The Court directed the third respondent to consider both the original and any additional reply to be submitted by the appellant and pass a reasoned order expeditiously, excluding Diwali holidays from the one-week timeline. Regarding the second issue, the Court found no reason to accede to the appellant's request for release on an indemnity bond, noting that Section 129 of the 2017 Act provides for release only upon furnishing security (like a bank guarantee), and it would be inappropriate to issue a direction contrary to the statutory provision. The Court found no patent illegality in the order under appeal.

Facts

M/s Livguard Energy Technologies Pvt. Ltd. (appellant) filed a writ petition seeking to quash an order and release its detained vehicle and goods. The truck carrying goods from Baddi, Himachal Pradesh to Dehradun was detained at the Kulhal border on October 9, 2019, due to the E-way bill expiring seven hours prior to its arrival. The Assistant Commissioner, State Tax Department, issued a show-cause notice under Section 129(3) of the Central Goods and Services Tax Act, 2017, proposing tax and penalty. The learned Single Judge found the writ petition premature, directing the appellant to reply to the show-cause notice and mentioning that goods could be released upon furnishing security. The appellant filed a Special Appeal against the Single Judge's order.

Key Issues

1. Whether the writ petition filed against a show-cause notice under Section 129(3) of the Central Goods and Services Tax Act, 2017, was premature, and if the appellant should be directed to respond to the notice before approaching the Court. 2. Whether the appellant should be permitted to furnish an indemnity bond for the release of goods instead of the security stipulated in Section 129(1) of the 2017 Act. Arguments for the Appellant: The appellant contended that the delay of seven hours was due to traffic diversion for the Dussehra festival and not deliberate. They argued that the goods were not liable to tax, thus no penalty could be imposed. They also claimed to have already submitted a reply to the show-cause notice and sought release of goods on an indemnity bond, citing irreparable loss due to detention. They relied on Section 129(1)(a) of the 2017 Act. Arguments for the Revenue: The State argued that the goods were detained in contravention of the Act and rules, making them liable for detention or seizure under Section 129(1). They contended that the proper officer must issue a notice under Section 129(3) and that the appellant is entitled to an opportunity of being heard as per Section 129(4). They did not explicitly argue against the appellant's claim of non-liability to tax or the reason for delay, but focused on the procedural aspects.