M/S Kanchan Supplier Through Its Prop. vs. State Of Punjab And Others

Facts

The petitioner, M/s. Kanchan Supplier, filed a writ petition challenging a notice in Form GST MOV-02 dated 26.12.2023 and an order in Form GST MOV-10 dated 02.01.2024, passed by respondent No.2 under Section 130 of the CGST/PGST Act, 2017. The petitioner argued the action was without jurisdiction. During the proceedings, an order dated 18.01.2024 in Form GST MOV-11 was passed, confiscating goods and vehicle and imposing penalty and fine totaling Rs. 5,33,004/- on goods valued at Rs. 9,87,044/-. The petitioner, a proprietorship concern from Uttar Pradesh, had not appeared on a prior date, leading to the ex-parte decision. The authorities found the petitioner's supply chain to be ingenuine, with purchases from entities that had not paid tax, indicating bogus transactions to defraud the exchequer.

Held

The Court held that the petitioner has an available statutory remedy of appeal against the order dated 18.01.2024. Regarding the interim relief, the Court, while acknowledging the petitioner's reliance on the Garg Oil Traders case, found that furnishing personal surety bonds for a petitioner from Uttar Pradesh would be difficult to enforce. Therefore, to adequately secure the interest of the State, the Court directed the release of the vehicle and goods upon the petitioner furnishing 25% of the amount mentioned in the MOV-11 order by cash, and the balance outstanding amount to be secured by a bank guarantee. The Court explicitly rejected the contention that a local consignee could furnish surety bonds, as the consignee was not a party to the proceedings. The Court also noted that a prima facie finding of bogus transactions had been recorded by the authorities, which the petitioner was free to challenge. The Court relied on the principle laid down in The State of Punjab vs. M/s. Shiv Enterprises and others, 2023 (96) GST 120.

Key Issues

1. Whether the impugned orders passed under Section 130 of the CGST/PGST Act, 2017, are without jurisdiction, as contended by the petitioner? 2. What is the appropriate interim measure for the release of confiscated goods and vehicle pending challenge to the final order, considering the petitioner's contention and the State's interest? Petitioner's Arguments: The petitioner contended that the orders were passed without jurisdiction. They also relied on the Apex Court's order in SLP (C) No. 19535 of 2023 (Garg Oil Traders vs. The State of Punjab and others), suggesting that depositing 25% of the total amount by cash and furnishing personal surety bonds for the remaining amount would be acceptable. Revenue's Arguments: The State of Punjab, represented by the Additional Advocate General, brought to the Court's notice the subsequent order dated 18.01.2024, which imposed confiscation and penalty. The State implicitly argued for securing its interest, as evidenced by the subsequent directions for bank guarantee. The Court noted that the State was un-represented in the Garg Oil Traders SLP.