Piya Vikram Rajai vs. State Of Gujarat

Held

The Court noted that the writ applicant had already availed the benefit of the interim order and got the vehicle and goods released upon payment of the tax amount. The proceedings were at the stage of a show cause notice under Section 130 of the CGST Act, 2017. The Court directed the applicant to make good their case that the show cause notice deserves to be discharged. The Court referred to its recent pronouncement in Synergy Fertichem Pvt. Ltd. Vs. State of Gujarat, emphasizing that authorities should not straightway invoke Section 130 at the stage of detention and seizure without proper application of mind and sufficient grounds indicating an intent to evade tax. While Section 130 is an independent provision for confiscation in cases of tax evasion, it requires a strong case and material evidence, not just suspicion. The notice for confiscation must disclose the materials upon which the belief is formed, and the formation of opinion should reflect an intense application of mind. The Court did not decide the merits of the case but disposed of the writ application with the liberty to the applicant to argue their case before the authorities.

Facts

The writ applicant, Piya Vikram Rajai, filed a petition challenging a detention order dated June 16, 2019, passed in Form GST MOV-6, and a notice dated June 25, 2019, in Form GST MOV-10. The applicant sought the release of truck number GJ-04-X-6804 and the goods contained therein. A co-ordinate bench of the High Court, on July 4, 2019, had directed the release of the truck and goods upon payment of tax and penalty, subject to the petitioner filing an undertaking to cooperate in further proceedings. The applicant availed this interim relief and got the vehicle and goods released after paying the tax amount. The proceedings were at the stage of a show cause notice under Section 130 of the CGST Act, 2017.

Key Issues

1. Whether the authorities were justified in issuing a notice of confiscation under Section 130 of the CGST Act, 2017, at the threshold, i.e., at the stage of detention and seizure under Section 129 of the Act, without sufficient application of mind or justifiable grounds to believe that the contravention was with intent to evade tax? (Section 130 vs. Section 129 of CGST Act, 2017) Petitioner's contention (implied through reliance on Synergy Fertichem Pvt. Ltd. judgment): The authorities should not straightway invoke Section 130 of the Act and issue a notice of confiscation at the inception of detention and seizure. Section 129 provides for release on payment of tax and penalty, and Section 130 should only be invoked when there is a clear intent to evade tax, supported by material evidence, not mere suspicion or a generic presumption. The notice under Section 130 must disclose the materials upon which the belief is formed. Revenue's contention: Not recorded in the judgment.