M/S Bahubali Trading Co. Thru. Its Propritor Arvind Kumar Jain And Another vs. Commissioner Of State Tax Lko. And Another

Held

The Court observed that the petitioners had raised a prima-facie case and contended that the seizure of goods and vehicle was in derogation of the provisions of law. While the respondent argued for compliance with Section 129 of the CGST Act, the Court found it appropriate to grant liberty to the petitioners to file an application for provisional release of the goods and vehicle before the adjudicating authority (Assistant Commissioner, Sector-3, Barabanki) within seven days. The Court directed that if such an application is filed, it shall be considered and disposed of strictly in accordance with law, affording the petitioners an opportunity of hearing, with expedition, preferably within seven days of receipt, and the order passed thereon shall be communicated forthwith. The Court did not decide the merits of the tax evasion claim or the validity of the seizure but focused on the procedural aspect of provisional release.

Facts

The petitioners, M/s Bahubali Trading Co. and its proprietor, filed a writ petition challenging an order dated June 20, 2023, passed under Section 129(1) of the Act by the Assistant Commissioner, Sector-3 (Mobile Squad), State Tax Office, Barabanki. This order led to the detention/seizure of goods (Mentha Oil) and a vehicle (UP 41 AT 1722) transporting them from Masauli to Fatehpur. The petitioners argued that the goods were being transported on a stock transfer basis from an additional place of business to the principal place of business, and there was no tax evasion. They also contended that prolonged detention would lead to deterioration of the goods and unnecessary halting of the vehicle. They sought provisional release of the goods and vehicle.

Key Issues

1. Whether the detention and seizure of goods and vehicle under Section 129(1) of the Central Goods & Services Tax Act, 2017 (CGST Act) were justified, considering the goods were transported on a stock transfer basis and no tax evasion was involved? 2. Whether the petitioners are entitled to the provisional release of the detained goods and vehicle pending adjudication proceedings? Petitioner's Arguments: The petitioners argued that the entire exercise of detention/seizure was against the Act as there was no tax evasion, the transport being on a stock transfer basis. They contended that the adjudication proceedings would take time, during which the Mentha Oil could deteriorate and the vehicle would be halted unnecessarily. They asserted a prima-facie case and requested provisional release of their goods and vehicle. Respondent's Arguments: The respondent (State Tax Department) argued that the goods and vehicle could be released if the petitioners satisfied the conditions stipulated in Section 129 of the CGST Act.