Facts of the Case

The petitioners, Sonu (petitioner No.1, proprietor of M/s Mitansh Enterprises) and Deepak Kumar (petitioner No.2), approached the Punjab and Haryana High Court under Articles 226 and 227 of the Constitution of India seeking release of a confiscated vehicle bearing registration No. PB 10/EH-9157, registered in the name of petitioner No.2, along with the goods carried in it. The vehicle and goods had been detained on the allegation that the transaction was being carried out in contravention of the Punjab GST Act, 2017, with intent to evade tax. A temporary GST registration No. 032300001231TMP had been generated in the name of petitioner No.2, who had come forward as the owner after detention, while petitioner No.1, his wife and proprietor of M/s Mitansh Enterprises, was alleged to own the goods. The demanded tax and penalty had been paid on 21.09.2023, but under petitioner No.1's own GST registration rather than the temporary registration created for petitioner No.2.

Issues Involved

  1. Whether the confiscated goods and vehicle could be released where the tax and penalty had already been paid, but under the wrong GST registration.
  2. Whether the petitioners, citing financial hardship, could be compelled to deposit the demanded amount a second time before release.
  3. What directions were necessary to reconcile the wrongly deposited amount with the correct temporary registration to secure release.

Petitioner's Arguments

  • The petitioners have a financial handicap and are not in a position to deposit the demanded amount twice over at the same time.
  • Since the tax and penalty had already been paid, albeit under petitioner No.1's registration, a direction should first be issued to refund that amount so it could be redeposited by the correct person, namely petitioner No.2, under the temporary registration created in his name.
  • Only after such a refund-and-redeposit sequence would the petitioners be in a financial position to secure release of the goods and vehicle.

Respondent's Arguments

  • The vehicle belonged to petitioner No.2 and the goods allegedly belonged to petitioner No.1, giving rise to the present confusion over whose GST registration the demand should be met from.
  • The temporary GST registration No. 032300001231TMP had been generated in the name of petitioner No.2 based on his identity proof, since he projected himself as the owner of the goods and came forward after the vehicle was detained; petitioner No.1 never came forward personally.
  • The penalty and fine had been wrongly deposited in the GST registration of petitioner No.1 and could not be adjusted against the present demand; petitioner No.1 could instead use that amount for her own future tax liabilities or seek a refund through the jurisdictional officer via the GST portal.
  • The conveyance would be released immediately once the penalty and fine were correctly deposited under the temporary registration No. 032300001231TMP created in petitioner No.2's name.

Court Order/Findings

  • The Court noted the admitted facts and the State's affidavit explaining why the amount had been wrongly credited to petitioner No.1's registration instead of the temporary registration created for petitioner No.2.
  • Where GST penalty has been deposited under the wrong person's registration due to a bona fide dispute over ownership at the time of interception, the Court can direct a sequential refund-then-redeposit-then-release mechanism instead of requiring the petitioners to pay twice.
  • The Superintendent, Muktsar Ward I, Central GST/Jurisdictional Officer, was directed to refund the wrongly deposited amount to petitioner No.1 within 10 days of receipt of the certified copy of the order.
  • Thereafter, if the amount was deposited by petitioner No.2 under the correct temporary registration, the goods and vehicle were to be released within one week.

Important Clarification

  • Where confiscated goods and a conveyance are held up because the GST demand and penalty were deposited under the wrong person's registration - typically arising from a dispute over ownership of the goods versus the vehicle - the High Court can craft a practical, sequential remedy: refund of the wrongly deposited amount first, followed by redeposit by the correct person under the correct (including temporary) registration, followed by release.
  • Such relief is available on undisputed facts without requiring the petitioners to bear the burden of double payment pending resolution of the ownership dispute.

Sections Involved

  • Punjab GST Act, 2017 - the state GST enactment under which the goods and conveyance were detained and penalty imposed for alleged contravention with intent to evade tax.
  • Articles 226 and 227, Constitution of India - invoked by the petitioners to seek release of the confiscated goods and conveyance.

Decision - In Favour of

The decision is disposed of with directions, in part in favour of the Assessees/Petitioners. The Court did not order unconditional release, but it directed a refund of the wrongly deposited amount and set a clear timeline for redeposit under the correct registration and consequent release of the goods and vehicle.

Related Case Laws

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

Case Details

  • Court: Punjab and Haryana High Court
  • Case No.: CWP-25691-2023
  • CNR: Not available on record
  • Coram: Justice G.S. Sandhawalia and Justice Lapita Banerji
  • Decision Date: 21 November 2023
  • Disposal Nature: Disposed of

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