M/S Gajanand Granite vs. Office Of State Tax Officer

Facts

The petitioner, M/s Gajanand Granite, had a lorry carrying its goods intercepted. The authorities inspected the documents and issued a show-cause notice. Subsequently, an order imposing fine, penalty, and confiscation of goods was passed on the same day. The petitioner contends that the entire process was completed on the same day without affording a proper opportunity to be heard, and the reply was given by the driver, who was not connected with the goods. The respondent, the State Tax Officer, Dehradun, admitted the sequence of events.

Held

The Court held that the action complained of was not only arbitrary but also in direct contravention of Section 130(4) of the CGST Act, 2017. This sub-section explicitly states that no order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. The Court found that the respondent had failed to provide such an opportunity, as the entire process was completed on the same day the goods were intercepted and the show-cause notice was issued. The reasoning was that a proper opportunity to be heard is a fundamental procedural safeguard before imposing penalties with civil consequences. Therefore, the order of confiscation and imposition of fine and penalty was set aside. The matter was remitted back to the Competent Authority/Deputy Commissioner, Commercial Tax, Dehradun, to redo the process from the stage of issuing the show-cause notice, ensuring compliance with the principles of natural justice. The ratio decidendi is that a summary imposition of penalty and confiscation without affording a proper opportunity of being heard violates Section 130(4) of the CGST Act, 2017.

Key Issues

1. Whether the confiscation of goods or conveyance and imposition of penalty under Section 130 of the CGST Act, 2017, can be issued without providing an adequate opportunity of being heard to the person concerned, as mandated by Section 130(4) of the CGST Act, 2017? Petitioner's argument: The petitioner argued that the entire process, from interception to the passing of the order imposing fine, penalty, and confiscation, was completed on the same day. They contended that this did not provide them with a reasonable opportunity to be heard, especially since the reply to the show-cause notice was submitted by the driver, who lacked the authority to represent the petitioner's interests in such matters. The petitioner emphasized that actions with serious civil consequences cannot be taken summarily. Respondent's argument: The learned Brief Holder for the State of Uttarakhand fairly admitted the sequence of events as narrated by the petitioner.