Facts of the Case

The petitioner, M/s Aar Dee Enterprises, is the consignee of a consignment of iron scrap goods that was intercepted by GST authorities outside Durga Multimetals, Village Chatarpura, Mandi Gobindgarh, Punjab, on 16.08.2023, evidenced by a notice in Form GST MOV-02 issued the same day in respect of vehicle No. PB13Z8987. This was followed by a confiscation notice dated 22.08.2023 proposing confiscation of the goods and levy of tax, penalty and other charges under Section 130 of the Punjab GST Act and the Central Goods and Services Tax Act, 2017. On an earlier notice of motion dated 31.08.2023, a co-ordinate Bench had permitted release of the vehicle and goods on the petitioner depositing 25% of the disputed amount in cash and furnishing the balance as a personal bond with surety. The show cause notice referred to invoice no. 201 dated 16.08.2023 issued by Durga Multimetals Pvt. Ltd. for Rs.12,75,885, with a grand total of Rs.15,05,545, and the goods were stated to have been consigned by Rajan Trading Corporation, Rajkot, to the petitioner.

Issues Involved

  1. Whether the interception of goods and the proposed confiscation under Section 130 of the CGST/Punjab GST Act should be quashed in writ jurisdiction.
  2. Whether verification of the genuineness of the transaction, including compliance with Section 16(2)(c) of the CGST Act, was a matter for the writ court or the adjudicating authority.
  3. Whether the petitioner should instead be relegated to respond to the show cause notice before the competent authority.

Petitioner's Arguments

  • The interception and the subsequent confiscation notice under Section 130 were without proper basis, and the petitioner was ready to pay the penalty and fine indicated in Form GST MOV-02 to that extent.
  • The vehicle and goods ought to be released, particularly since the petitioner had already complied with the interim conditions of 25% cash deposit and the balance by personal bond with surety.
  • The documentary trail — from Rajan Trading Corporation, Rajkot, through Durga Multimetals to the petitioner — demonstrated the genuineness of the underlying transaction and invoice.

Respondent's Arguments

  • The genuineness of the transaction and the transit of the goods required further verification, including examination of compliance with Section 16(2)(c) of the CGST Act from the petitioner's books of account.
  • Such factual verification was a matter for the competent adjudicating authority and not suited to writ jurisdiction.
  • Reliance was placed on the Supreme Court's decision in State of Punjab vs M/s Shiv Enterprises & others, 2023 (96) GST 120, holding that it is not for the High Court to entertain writ petitions against GST show cause notices.

Court Order/Findings

  • The exigency concerning release of the vehicle and goods had already been addressed by the earlier interim order, and the petitioner, as consignee, would in any event have to respond to the show cause notice.
  • The genuineness of the facts and the transit of the goods required further verification, including examination of Section 16(2)(c) compliance from the books of account — a factual inquiry not suited to writ jurisdiction.
  • Following the settled position in State of Punjab vs M/s Shiv Enterprises & others, the Court held that it was not for the writ court to adjudicate a GST show cause notice on merits where the matter required verification by the competent authority.
  • The writ petition was disposed of with liberty to the petitioner to file its response to the show cause notice, leaving it open to the authorities to take action in accordance with law.

Important Clarification

  • Show cause notices under Section 130 of the CGST/State GST Act for confiscation of goods and conveyance are ordinarily not amenable to writ interference; the noticee must respond before the adjudicating authority.
  • Interim relief for release of a detained vehicle and goods (on partial cash deposit and bond) does not amount to quashing of the underlying confiscation proceedings.
  • Verification of the genuineness of a transaction, including the conditions for input tax credit under Section 16(2)(c) of the CGST Act, is a factual exercise for the adjudicating authority, not the writ court.
  • State of Punjab vs M/s Shiv Enterprises & others, 2023 (96) GST 120, remains the controlling precedent for declining writ interference against GST show cause notices at the threshold stage.

Sections Involved

  • Section 130 of the CGST/Punjab GST Act, 2017 – confiscation of goods and conveyance, and levy of tax, penalty and fine, for contravention of the Act.
  • Section 16(2)(c) of the CGST Act, 2017 – conditions for availing input tax credit, including that the tax charged must actually have been paid to the Government.
  • Form GST MOV-02 – notice issued on interception for physical verification of the conveyance, goods and documents.
  • Article 226/227 of the Constitution of India – writ jurisdiction invoked to challenge the interception and confiscation notice.

Decision – In Favour of

The writ petition was disposed of with liberty to the petitioner to respond to the show cause notice; the Court declined to interfere with the confiscation proceedings on merits. The outcome is best described as disposed of with directions, without a finding in favour of either the Assessee or the Department — the substantive dispute over confiscation under Section 130 remains to be decided by the adjudicating authority.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CWP-19125-2023
  • CNR: Not available on record
  • Coram: Hon'ble Mr. Justice G.S. Sandhawalia and Hon'ble Mr. Justice Deepak Manchanda
  • Decision Date: 16.12.2023
  • Disposal Nature: Disposed of with liberty to reply to the GST confiscation show-cause notice

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