Court directs release of seized goods on provisional basis upon execution of bond and furnishing security.

Case Name:

M/s. AK Overseas Vs. State Of U.P. & 2 Ors.

Writ Tax No. 3 of 2020

Key Takeaways:

- The court emphasized the provision under Rule 140 of the CGST Rules, 2017, which empowers the proper officer to release seized goods on a provisional basis upon execution of a bond and furnishing of security.

- The court directed the concerned authority to release the seized goods and vehicle provisionally if the petitioner complies with the requirements of Rule 140 and its explanation.

- The decision highlights the legal mechanism available to taxpayers for the provisional release of seized goods, subject to fulfilling the prescribed conditions.

Issue:

Whether the court should direct the concerned authority to release the seized goods on a provisional basis upon the petitioner’s execution of a bond and furnishing of security as per Rule 140 of the CGST Rules, 2017.

Facts:

The petitioner, M/S. AK OVERSEAS, filed an appeal seeking the release of goods seized by the authorities on a provisional basis upon execution of a bond and furnishing security. The petitioner cited Rule 140 of the CGST Rules, 2017, which empowers the proper officer to release seized goods provisionally upon execution of a bond and furnishing of security in the form of a bank guarantee equivalent to the applicable tax, interest, and penalty payable.

Arguments:

The petitioner argued that Rule 140 of the CGST Rules, 2017, provides for the release of seized goods on a provisional basis upon execution of a bond and furnishing of security. The petitioner expressed readiness to comply with the requirements of Rule 140 and its explanation.

The Special Counsel appearing for the respondents submitted that if the petitioner complies with the mandatory requirements of Rule 140 and its explanation, there is no objection to the release of the goods.

Key Legal Precedents:

The court did not cite any specific legal precedents in this case. However, it relied on the provisions of Rule 140 of the Central Goods and Services Tax (CGST) Rules, 2017, which governs the release of seized goods on a provisional basis.

Judgement:

- The court allowed the appeal and directed the concerned authority (respondent no. 3) to release the seized goods and vehicle provisionally if the petitioner complies with the requirements of Rule 140 of the CGST Rules, 2017, and its explanation. The court ordered the following:

- The petitioner must file an application before the respondent no. 3 (concerned authority) within three weeks, indicating their readiness to comply with the requirements of Rule 140.

- Within one week of receiving the petitioner’s application, the respondent no. 3 shall pass appropriate orders regarding the release of the seized goods and vehicle.

- If the petitioner fulfills the requirements of Rule 140 and its explanation, the respondent no. 3 shall release the seized goods and vehicle provisionally.

FAQs:

Q1: What is the significance of Rule 140 of the CGST Rules, 2017, in this case?

A1: Rule 140 provides a legal mechanism for the provisional release of seized goods upon execution of a bond and furnishing of security in the form of a bank guarantee equivalent to the applicable tax, interest, and penalty payable. This case highlights the application of this rule.

Q2: Can the petitioner appeal further if the concerned authority does not release the seized goods despite complying with Rule 140?

A2: Yes, the petitioner can potentially appeal to a higher court if the concerned authority does not comply with the court’s order, subject to applicable legal provisions and procedures.

Q3: What are the implications of this decision for other taxpayers facing similar situations?

A3: This decision reinforces the legal provision under Rule 140 of the CGST Rules, 2017, allowing taxpayers to seek the provisional release of seized goods by fulfilling the prescribed conditions. It provides clarity on the process and requirements for such release.

Q4: What happens if the petitioner fails to comply with the requirements of Rule 140 within the stipulated time?

A4: If the petitioner fails to comply with the requirements of Rule 140 within the specified time, the concerned authority may not be obligated to release the seized goods provisionally, as per the court’s order.

Heard learned counsel for the petitioner and learned Standing Counsel who has accepted notice on behalf of respondent nos. 1, 2 and 3 as well as Sri C. B. Tripathi, Advocate appearing as Special Counsel for the respondent nos. 2 and 3.

Learned counsel for the petitioner has submitted that there is a provision

under Rule 140 of the Central Goods and Services Rules, 2017 empowering the proper officer, which in the present case, is respondent no. 3 to release the seized goods on provisional basis upon execution of a bond for the value of the goods under Form G. S. T. He has next submitted that the petitioner is ready to comply with the requirement of Rule 140 together with its explanation and the seized goods along with vehicle be released.

Sri C. B. Tripathi, learned Special Counsel appearing for the respondents has submitted that in case the petitioner complies with the mandatory requirement of Rule 140 of the Central Goods and Services Rules, 2017 together with its explanation, he has no objection to the release of the

goods.

We have heard learned counsel for the petitioner and gone through the Rule 140, which is being extracted here in below together with its explanation:

"140. Bond and security for release of seized goods--

(1) The seized goods may be released on a provisional basis upon execution of a bond for the value of the goods in FORM GST INS-04 and furnishing of a security in the form of a bank guarantee equivalent of applicable tax, interest and penalty payable.

Explanation-

For the purpose of the rules under the provisions of this Chapter, the "applicable tax" shall include central tax and State tax or central tax and the Union territory tax, as the case may be and the cess, if any, payable under the Goods and Service Tax (Compensation to States) Act, 2017 (15 of 2017)."

In case the petitioner files an application before the respondent no. 3

within three weeks from today indicating therein that he is ready to comply with the Requirement of Rule 140, the respondent no. 3 shall pass appropriate orders thereon within a further period of one week. In case the petitioner fulfils the requirement of Rule 140 together with its explanation,he shall release his vehicle along with the goods.

Order Date :- 9.1.2020