Facts of the Case

M/s Jai Mateshwari Steels Pvt. Ltd. filed Special Appeal Nos. 341 of 2022 and 342 of 2022 before the Uttarakhand High Court against the orders dated 15 September 2022 passed by the learned Single Judge in Writ Petition (M/S) No. 2160 of 2022 and Writ Petition (M/S) No. 2157 of 2022, respectively.

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.

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

However, according to the appellant’s submission before the Court, an order directing confiscation under Section 130 of the Central Goods and Services Tax Act had been passed merely on the basis of intelligence information allegedly available with the respondent authorities to the effect that the supplier, M/s Paras Allows, was a fake or non-existent firm.

The appellant further submitted that the goods and the 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

The proceedings raised the following important issues:

  1. Whether confiscation proceedings under Section 130 of the CGST Act could be sustained where the invoice and E-way bill were allegedly 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 goods and vehicle under Section 130 of the CGST Act.
  3. Whether the absence of an alleged intention to evade tax, coupled with the appellant’s assertion that tax or duty had been duly deposited, was relevant to the challenge against confiscation.
  4. Whether interim relief concerning release of the confiscated goods and vehicle required early consideration when they had allegedly remained confiscated since 17 May 2022.
  5. Whether the writ petitions required expedited consideration, particularly on the aspect of interim relief.

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 was allegedly founded merely upon intelligence information in the possession of the respondent authorities that the supplier, M/s Paras Allows, was a fake or non-existent firm.
  • The action of the authorities 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 might consider 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 by the respondents on the merits of the appellant’s challenge to confiscation under Section 130 of the CGST Act.

Court Order / Findings

The Division Bench disposed of the Special Appeals with procedural directions intended to ensure early consideration of the pending writ petitions, particularly on the issue of interim relief.

The Court directed as follows:

  • The respondents were directed to positively file their response by 1 November 2022.
  • A copy of the response was to be supplied to the counsel for the appellants/writ petitioners.
  • The rejoinder was to be filed before the date fixed before the learned Single Judge.
  • The Division Bench requested the learned Single Judge 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.

Important Clarification

This order should not be read as a final adjudication by the Division Bench on the legality or validity of confiscation under Section 130 of the CGST Act.

The Court did not finally hold in this order that:

  • the confiscation proceedings were illegal;
  • the alleged fake or non-existent status of the supplier was insufficient in law to initiate or sustain confiscation;
  • the existence of an invoice and E-way bill automatically invalidated proceedings under Section 130;
  • the appellant had conclusively established absence of intention to evade tax; or
  • the goods and vehicle were required to be immediately released.

Instead, the Division Bench primarily expedited the filing of pleadings and requested the learned Single Judge to hear the parties at least on the aspect of interim relief on 7 November 2022.

Therefore, the appellant’s contentions regarding valid invoice, E-way bill, absence of intention to evade tax, payment of tax or duty, and alleged reliance upon intelligence concerning a fake or non-existent supplier remained submissions requiring consideration in the writ proceedings.

Sections Involved

Section 130 of the Central Goods and Services Tax Act, 2017 – Confiscation of Goods or Conveyances and Levy of Penalty

Section 130 was directly involved because the appellant specifically challenged the order directing confiscation of the goods and vehicle under this provision.

The central controversy, as emerging from the appellant’s submissions recorded in the order, concerned confiscation where:

  • invoice and E-way bill were allegedly available;
  • such documents were allegedly produced before the flying squad;
  • there was allegedly no intention to evade tax or duty;
  • tax or duty was stated to have been duly deposited; and
  • the supplier was allegedly treated as a fake or non-existent firm on the basis of intelligence information.

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783414680_1413compressed.pdf

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