Ram Traders vs. The State Of Madhya Pradesh

Held

The High Court, considering the preliminary objection raised by the learned Government Advocate for the respondents/State, disposed of the petition. The Court held that an efficacious alternative remedy is available to the petitioners under Section 107 of the GST Act. Therefore, the petitioners were relegated to avail this alternative remedy of appeal. The Court did not delve into the merits of the case concerning the legality of proceedings under Section 130 versus Section 129, nor did it address the issue concerning Petitioner No. 2. The operative direction was to approach the appellate authority under Section 107.

Facts

The petitioners, Ram Traders (a registered dealer) and its transporter, filed a writ petition challenging an order dated 07.06.2025 (GST MOV-11) and a notice dated 23.05.2025 (GST MOV-10) issued by Respondent No. 3. The challenge was to the confiscation of goods and conveyances, and the imposition of tax and penalties totaling Rs. 16,72,440/- under Section 130(1) and Rs. 33,44,880/- under Section 130(2) of the GST Act. The petitioners contended that their goods and vehicle were detained on May 14, 2025, due to an e-way bill being prepared later and a discrepancy between stock and bills, suggesting tax evasion. They argued that before initiating proceedings under Section 130, the authorities should have initiated proceedings under Section 129(3) by issuing a notice in Form GST MOV-07.

Key Issues

1. Whether the proceedings initiated under Section 130 of the GST Act for confiscation of goods and conveyances are illegal and unjustified when the authorities failed to initiate proceedings under Section 129(3) by issuing a notice in Form GST MOV-07 after detention of goods and vehicle. 2. Whether the proceedings initiated against the vehicle owner (Petitioner No. 2) should be set aside, as they have no connection with the contravention of GST provisions under Section 129. Petitioner's Arguments: The petitioners argued that the respondents illegally initiated proceedings under Section 130 directly, bypassing the mandatory requirement of initiating proceedings under Section 129(3) and issuing a notice in Form GST MOV-07. They contended that the transporter (Petitioner No. 2) should not be proceeded against as they are merely service providers and not involved in the alleged contravention. They sought quashing of the impugned order and notice, and a direction to initiate proceedings under Section 129(3). Revenue's Arguments: The respondents raised a preliminary objection regarding the availability of an efficacious alternative remedy under Section 107 of the GST Act.