2019 Taxo.online 717
WRIT PETITION NO.19098/2019 & NOS.19722-19723/2019 (T-RES)
M/s K.S. ARECANUT STORES AND OTHERS
STATE OF KARNATAKA
Goods and Services Tax Act, 2017
Section 129 of CGST Act, 2017 and Section 130 of CGST Act, 2017
Circular Number 76/50/2018-GST
John Michael Cunha, Justice
Partly in favour of assessee
Represented By : –
Petitioner : – Sri Venkatesh C Mallabadi and Sri Ammet Kumar Deshpande
Respondent : – Sri Mallikarjun Sahukar
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER OF DETENTION UNDER SECTION 129 (1) OF THE KGST/CGST AND IGST ACT DATED 01.02.2019 BEARING NO.CTO (ENF)-02/VJP/VIG-27/2018-19 AS PER ANNEXURE-A; IMPUGNED ORDER DATED 25.02.2019 PASSED BY THE 3RD RESPONDENT UNDER SECTION 129 (3) OF THE KGST/CGST AND IGST ACT BEARING NO.CTO(ENF)- 02/VJP/VIG-30/2018-19 AS PER ANNEXURE-Al AND THE IMPUGNED ORDER DATED 11.04.2019 PASSED BY THE 3RD RESPONDENT UNDER SECTION 130 (1) OF THE CGST R/W IGST ACT BEARING NO.CTO(ENF)-2/VJP/VIG-30/2018-19 AS PER ANNEXURE – A2 AND AS A CONSEQUENCE THEREOF DIRECT THE RESPONDENTS TO PERMIT THE PETITIONER TO TRANSIT THE GOODS THROUGH THE STATE OF KARNATAKA AND DELIVER THE CONSIGNEES IN STATE OF MAHARASHTRA AS PER THE INVOICES DATED 23.1.2019 BEARING NO.A189 AND A42 REFERRED IN THE STATEMENT OF THE 61″ RESPONDENT ON 30.01.2019 BEARING CTO/ENF/ViP/VIG-30/2018-19 AS PER ANNEXURE – B AND PHYSICAL VERIFICATION REPORT DATED 1.2 2019 ISSUED BY THE 3RD RESPONDENT BEARING NO.CTO-02/(ENF)/VJP/VIG/30/2018-19 AS PER ANNEXURE – B2 BY ISSUING WRITS OF CERTIORARI AND MANDAMUS RESPECTIVELY OR ANY OTHER ORDER IN THE NATURE CF A WRIT ETC.
THESE PETITIONS COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
Order : –
Heard learned counsel for the petitioners and learned and Government pleader for respondent no. 1 to 5.
2. Petitioners are aggrieved by the order of detention under Section 129 (1) of the Karnataka Goods and Services Tax Act (KGST Act)/Central Goods and Services Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGET Act) dated 01.02.2019 (Annexure-A); order dated 25.02.2019 under Section 129 (3) of the KGST/CGST and IGST Act (Annexure-A1) and the order dated 11.04.2019 under Section 130 (1) of the CGST R/W IGST Act (Annexure-A2).
3. The proceedings were initiated against the petitioners under Section 129 (1) of the Karnataka Goods and Services Tax Act/Central Goods and Services Tax Act, 2017 (for short ‘the Act’) apparently based on the report obtained by respondent No.3 from CAMPCO Limited. Petitioners claim to be the owners and consignors of the goods detained by respondent No.3.
4. Section 129 of the CGST Act reads as under:-
“129. Detention, seizure, and release of goods and conveyances in transit – (1)
Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, –
a) on payment of the applicable tax and penalty equal to one hundred per cent of the tax payable on such goods and, in case of exempted aoods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may he prescribed:
Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
2. The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.
3. The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).
4. No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
5. On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.
6. Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130:
Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.”
5. Clarification issued by the Government of India on certain issues as per clarification dated “31.12.2018 (Circular No.76/50/2018-GST)” states that:-
“If the invoice or any other specified document is accompanying the consignment of goods, then either the consignor or the consignee should be deemed to be the owner. If the invoice or any other specified document is not accompanying the consignment of goods, then in such cases, the proper officer should determine who should be declared as the owner of the goods.”
6. Petitioners claim that they were accompanying the consignment of goods with necessary documents and therefore, they are entitled to get the goods released under Section 129 of the Act on payment of applicable tax and penalty equal to one hundred percent of the tax payable on such goods.
7. Learned counsel for the petitioners submits that petitioners were prepared to pay the tax for release of the goods in terms of the Section 129 of the Act.
8. Learned High Court Government Pleader however has filed a memo along with the paper publication of the auction proceedings drawn by the respondents cai!ing for public auction of confiscated goods and submits that the seized goods are already auctioned on 19.07.2019 and successful bidder has deposited Rs.75,33,620/- on 22.07.2019 and therefore the reliefs claimed by the petitioners have become infructuous.
9. The records indicate that much earlier to the
publication of the auction, learned Addit!onal Government Advocate had entered appearance on behalf of respondents and the notice of auction was not brought to the notice of the Court, even though the respondents participated in the proceedings. That apart, there is nothing on record to show that an opportunity was given to the petitioners to get the seized goods released in terms of Section 129 (1) (a) of the Act. Respondents have also failed to comply with Section 130 (7) of the Act. In view of the said provisions, the concerned officer was required to give reasonable time not exceeding three months to pay fine in lieu of confiscation before disposal of the goods or conveyance as stipulated therein.
10. In view of the above provisions, the only order that could be passed is to permit the petitioners to pay the applicable tax and penalty equal to one hundred percent of the tax payable on such goods as per Section 129 of the Act and on such payment, sale proceeds of Rs.75,33,620/- shall be returned to the petitioners. Alternatively, it is open for the respondents to collect applicable tax from the petitioners as determined in accordance with Section 129 (1) (a) of the Act and to return the balance amount out of Rs.75,33,620/- to the petitioners without prejudice to the other rights and remedies available to the petitioners under the Act. Petitions stand disposed of in terms of the above order.