Bharatkumar Parambhai Chaudhari vs. State Of Gujarat

Held

The Court held that while Section 130 of the CGST Act, 2017, can be invoked at the threshold of detention and seizure, the authorities must make out a strong case with sufficient material to justify such action. Merely on suspicion, invoking Section 130 straightaway is not justified. The authorities need to record their reasons in writing for invoking Section 130, which should be reviewed by a superior authority. The formation of opinion for confiscation must reflect an intense application of mind, and not every contravention of the Act or Rules warrants confiscation. The notice for confiscation must disclose the materials upon which the belief is formed, and if challenged, the authority must disclose these materials. The judgment referred to the Supreme Court's decision in Sheonath Singh's case regarding the examination of materials for reasonable belief. The Court noted that the petitioner had already obtained interim relief for the release of the vehicle and goods upon payment of tax and penalty and that the confiscation proceedings were ongoing. The Court directed that it is now for the applicant to make good his case that the show cause notice deserves to be discharged.

Facts

The petitioner, Bharatkumar Parambhai Chaudhari, a proprietor engaged in trading agricultural products, filed a writ application challenging a notice in Form GST MOV-10 dated August 2, 2019, issued by Respondent No. 2. The petitioner's truck, carrying cumin (Jiru) from Radhanpur to Changod, Ahmedabad, was intercepted and detained by Respondent No. 2. The truck and goods were seized, and a notice under Section 130 of the CGST Act, 2017, was issued, proposing confiscation. The petitioner sought to quash this notice and secure the release of the truck and goods. An interim order dated August 8, 2019, directed the release of the vehicle and goods upon payment of tax and penalty, noting the perishable nature of the goods and the petitioner's deposit of Rs. 83,000/-. The petitioner availed this benefit. The confiscation proceedings under Section 130 were ongoing.

Key Issues

1. Whether the issuance of a show-cause notice under Section 130 of the CGST Act, 2017, at the initial stage of detention and seizure, without a thorough examination of the contravention and intent to evade tax, renders Section 129 of the Act otiose? Petitioner's contention: The authorities are prematurely invoking Section 130 by issuing confiscation notices at the outset, bypassing the provisions of Section 129 which allow for release on payment of tax and penalty. This leads to unnecessary detention and renders Section 129 insignificant. The presumption of intent to evade tax is being wrongly applied without proper application of mind or material evidence. Revenue's contention: Not recorded in the judgment.