Bhagwati Kiran Store vs. State Of Gujarat

Held

The Court, while disposing of the writ application, did not make a definitive finding on the specific invocation of Section 130 in this case. Instead, it referred to and relied upon the observations made in the case of Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat. The Court reiterated that for invoking Section 130 at the threshold, authorities need to make out a very strong case with material evidence, not mere suspicion. The notice for confiscation must disclose the materials upon which the belief is formed. The Court clarified that while it is not laying down a proposition that Section 130 can never be invoked at the threshold, the authorities must record their reasons in writing, supported by material, reflecting an intense application of mind, to justify such an action. The petitioner was advised to make good their case that the show cause notice deserved to be discharged. The writ application was disposed of with rule made absolute to the extent of the directions given.

Facts

The petitioner, Bhagwati Kiran Store, filed a writ application seeking the release of seized goods and trucks under Section 129(1)(a) of the Gujarat Goods and Services Tax Act, 2017. The Court, by an interim order dated May 9, 2019, directed the release of the detained goods and conveyance upon payment of the computed tax and penalty, and the filing of a solemn undertaking by the petitioner to make good any deficit liability. The petitioner availed this benefit and got the goods and vehicle released. The proceedings were at the stage of a show cause notice under Section 130 of the Act. The Court noted that the proceedings would continue in accordance with the law.

Key Issues

1. Whether the authorities were justified in invoking Section 130 of the Gujarat Goods and Services Tax Act, 2017, at the threshold, i.e., at the stage of detention and seizure, without sufficient material to establish an intent to evade tax? The petitioner argued that the authorities prematurely invoked Section 130 of the Act, rendering Section 129 provisions insignificant. They contended that Section 129 provides for the release of goods and conveyances upon payment of tax and penalty, and that Section 130, which deals with confiscation, should only be invoked when there is a clear intent to evade tax, supported by substantial material. The petitioner relied on the judgment in Synergy Fertichem Pvt. Ltd. V/s. State of Gujarat. The revenue, represented by the Government Pleader, did not present specific arguments on the invocation of Section 130 in the provided text, but the proceedings indicate their action of issuing a show cause notice under Section 130.