Court Orders Release of Seized Goods for Registered Dealer, Subject to Security Bond

Case Name:

M/S. Sapna Goods Carrier & Another vs. Union of India

Key Takeaways:

The court emphasized that for registered dealers within the state, detaining goods may not serve a useful purpose.

The penalty order was set aside due to procedural defects, highlighting the importance of proper procedure in GST cases.

The court balanced the interests of both the taxpayer and the revenue department by ordering the release of goods subject to security.

Issue:

Should the goods seized from a registered dealer during transit be released, and was the penalty order issued by the proper officer valid?

Facts:

The petitioner was transporting goods from Kanpur to Delhi.

The goods were seized by the proper officer on 15.10.2017.

A penalty notice was issued on the same day under section 129(3) of the U.P. GST Act, 2017.

The penalty order was passed on 28.10.2017, imposing a penalty equal to 100% of the value of goods seized plus 5% tax.

The petitioner claimed to have furnished proper documents in response to the show cause notice, but the revenue disputed this.

Arguments:

Petitioner's Arguments:

All proper documents were furnished to the proper officer in response to the show cause notice.

The penalty order was never served on the petitioner.

Revenue's Arguments:

The existence of the documents claimed by the petitioner was disputed.

However, the revenue counsel admitted that there appeared to be some defects in the penalty order.

Key Legal Precedents:

The judgment doesn't explicitly mention any specific legal precedents. However, it refers to section 129(3) of the U.P. GST Act, 2017, which deals with the detention, seizure, and release of goods and conveyances in transit.

Judgement:

The court set aside the penalty order dated 28.10.2017 due to admitted defects.

The matter of penalty was remitted to be decided afresh.

The petitioner was allowed a week to file a final reply to the notice and charges.

The proper officer was directed to pass a fresh, reasoned order within a week of receiving the reply.

The court ordered the release of the seized goods and vehicle, subject to the petitioner furnishing an adequate security in the form of an indemnity bond.

FAQs:

Q1: Why did the court set aside the penalty order?

A1: The court set aside the penalty order because the revenue counsel admitted there were some defects in it.

Q2: What conditions did the court set for releasing the seized goods?

A2: The court ordered the release of goods subject to the petitioner furnishing an adequate security in the shape of an indemnity bond to the satisfaction of the proper officer.

Q3: What was the court's reasoning for ordering the release of goods?

A3: The court reasoned that since the petitioner was a registered dealer inside the State of U.P., no useful purpose would be served by continuing to detain the goods.

Q4: What happens next in this case?

A4: The petitioner has a week to file a final reply to the notice and charges. Then, the proper officer must pass a fresh, reasoned order within a week of receiving this reply.

Q5: Did the court make any comment about the tax payment?

A5: Yes, the court noted that it was stated that the tax had already been paid by the petitioner as the transactions were performed in October 2017.

Heard Sri Rahul Agarwal learned counsel for the petitioner and Sri C.B. Tripathi learned special counsel for the revenue.

The affidavit of service dated 19.12.2017 filed on behalf of respondent no.6 by the learned Special Counsel Sri C.B. Tripathi today in court, is taken on record.

After the amendment made in the writ petition, the petitioner seeks to challenge the penalty order dated 28.10.2017 as also the order dated 15.10.2017 by which certain goods which the petitioner was transporting from

Kanpur to Delhi had been seized.

At the time of detention of goods, admittedly, the same

were not accompanied with proper documents. However

the petitioner contends that all proper documents were

furnished by it to the proper officer in response to the

show cause notice.

The revenue however disputes this position of fact. At

the same time, copies of documents that the petitioner

claims to have been produced by it, had been annexed

with the writ petition. These are supported by the

averments in this regard made in para 19 and 20 of the

writ petition.

Consequently the goods had been seized on 15.10.2017

and on that date itself penalty notice was issued under

section 129 (3) of the U.P. G.S.T. Act, 2017. Ultimately

the date fixed in the matter was 27.10.2017 and the

impugned order appears to have been passed on

28.10.2017 imposing penalty equal to 100% of the value

of goods seized together five per cent tax thereon.

It is in the above background, the challenge has been

raised both seizure as also to the penalty order. In so far

as the penalty order is concerned, it is disputed by the

petitioner that the same was ever served on it.

Upon instructions received, Sri C.B. Tripathi learned

counsel for the revenue states that there appears that

the penalty order was passed ex parte and there are

some defects in the same.

In view of such statement, we do not consider it

necessary to consider the matter of penalty any further.

The penalty order dated 28.10.2017 is therefore set

aside and the matter is remitted to decide those

proceedings afresh.

The petitioner is allowed a week's time to file final reply

to the final notice as also the charges that have been

mentioned in the penalty order dated 28.10.2017 treating

the same to be the part of the penalty notice itself. Upon

the reply being furnished by the petitioner, the proper

officer may pass a fresh and reasoned order within a

period of one week thereafter.

In so far as the seizure of goods is concerned, we find

that the petitioner is a registered dealer inside the State

of U.P. and certain documents i.e. original tax invoices,

goods receipts etc. are being claimed to have been

issued to cover the transactions.

Since the revenue disputes the existence of those

documents, an enquiry may be required to be conducted

in that regard. However prima facie the petitioner being a

registered dealer inside the State of U.P.,no useful

purpose would be served in allowing the goods to

continue under detention.

Accordingly it is provided that subject to the petitioner's

furnishing an adequate security in the shape of

indemnity bond to the satisfaction of the proper officer

for the value of goods seized, the goods as well as the

vehicle so seized pursuant to the impugned notice, shall

be released forthwith. It is also stated that the tax had

already been paid by the petitioner as the transactions

were performed in Oct., 2017.

The writ petition is disposed of as above. No costs.

Order Date :- 21.i2.2017