Facts of the Case

M/s Jai Mateshwari Steels Pvt. Ltd. preferred two Special Appeals against the orders dated 15 September 2022 passed by the learned Single Judge in the connected writ petitions.

The learned Single Judge had issued notice in the writ petitions filed by the appellant and granted time to the respondents to file their counter-affidavits. The matters had been posted for 22 December 2022.

The appellant’s case was that both the invoice and the E-way bill relating to the movement of goods were available and had been produced before the flying squad. According to the appellant, there was no intention to evade tax or duty and the tax liability had been duly deposited.

The appellant challenged the confiscation action initiated under Section 130 of the CGST Act, contending that the confiscation order had been passed merely on the basis of intelligence information allegedly available with the respondent authorities that the supplier, M/s Paras Allows, was a fake or non-existent firm.

It was further submitted that the goods and vehicle had remained confiscated since 17 May 2022. The appellant expressed willingness to comply with such terms and conditions as the Court might consider appropriate for release of the vehicle and goods.

Issues Involved

  1. Whether confiscation proceedings under Section 130 of the CGST Act could be sustained in the circumstances where the invoice and E-way bill were stated to be available and produced before the flying squad.
  2. Whether alleged intelligence information that the supplier was a fake or non-existent firm could justify confiscation of the goods and vehicle under Section 130 of the CGST Act.
  3. Whether the appellant’s assertion that there was no intention to evade tax or duty and that the tax had been duly deposited required consideration while examining the legality of the confiscation action.
  4. Whether, considering that the goods and vehicle had remained confiscated since 17 May 2022, the appellant’s prayer for interim relief required early consideration by the learned Single Judge.

Appellant’s Arguments

The appellant, through learned Senior Counsel, submitted that:

  • The invoice and E-way bill were both available and had been produced before the flying squad.
  • There was no intention to evade any tax or duty.
  • The tax or duty had been duly deposited.
  • The confiscation order under Section 130 of the CGST Act had been passed merely on the basis of intelligence information claimed to be in possession of the respondent authorities.
  • The intelligence information allegedly suggested that the supplier, M/s Paras Allows, was a fake or non-existent firm.
  • The action of confiscation was completely unjustified and illegal.
  • The goods and vehicle had remained confiscated since 17 May 2022.
  • The appellant was ready and willing to comply with whatever terms and conditions the Court considered appropriate for release of the vehicle and goods.

Respondents’ Arguments

Learned counsel appearing for the respondents on advance notice submitted that she had received instructions and would soon file the counter-affidavit in the writ proceedings.

The order does not record any detailed rebuttal on the merits of the appellant’s challenge to confiscation. The respondents’ submission, as recorded by the Court, was principally that their counter-affidavit would be filed shortly in the writ proceedings.

Court Order / Findings

The Division Bench disposed of the Special Appeals with procedural directions intended to secure early consideration of the pending dispute and interim relief.

The Court directed as follows:

  • The respondents were required to positively file their response by 1 November 2022.
  • A copy of the response was to be supplied to counsel for the appellants/writ petitioners.
  • The rejoinder was to be filed before the date fixed before the learned Single Judge.
  • The learned Single Judge was requested to hear the parties at least on the aspect of interim relief on 7 November 2022.
  • The writ petitions were directed to be listed before the learned Single Judge on 7 November 2022 for consideration.

Accordingly, the Special Appeals were disposed of with the above directions.

Important Clarification

The Division Bench did not finally adjudicate upon the legality or validity of the confiscation proceedings under Section 130 of the CGST Act.

The Court also did not record a final finding that:

  • confiscation under Section 130 was illegal;
  • the existence of an invoice and E-way bill automatically invalidated confiscation;
  • the allegation concerning a fake or non-existent supplier was insufficient as a matter of final law; or
  • the goods and vehicle were required to be released unconditionally.

The appellant’s contentions regarding the availability of invoice and E-way bill, absence of intention to evade tax, payment of tax, and the alleged fake or non-existent status of the supplier were submissions placed before the Court. The Division Bench primarily directed expedited filing of the respondents’ response and early consideration of interim relief by the learned Single Judge.

Therefore, the order should be understood as a procedural and interim-relief-oriented appellate direction and not as a final ruling on the merits of confiscation under Section 130 of the CGST Act.

Sections Involved

Section 130 of the Central Goods and Services Tax Act, 2017 — Confiscation of goods or conveyances and levy of penalty.

The controversy arose from confiscation action stated to have been taken under Section 130 of the CGST Act against the goods and vehicle, despite the appellant’s assertion that the invoice and E-way bill were available and produced before the flying squad, there was no intention to evade tax or duty, and the tax liability had been duly deposited.

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783407308_1405compressed.pdf

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