Court Rules: GST Seizure Orders Not Appealable, Writ Petitions Allowed

Case Name:

M/s. RK Overseas Vs. UOI & Ors.

Writ Tax No. 111 of 2018

Key Takeaways:

- Seizure orders under Section 129(1) of the U.P. GST Act are not appealable.

- Writ petitions are maintainable against seizure orders, subject to judicial review limitations.

- Authorities must provide an opportunity for hearing before making adjudication-like findings for seizure purposes.

- The court can order the release of seized goods on furnishing indemnity bond and security.

Issue:

Is an order of seizure passed under Section 129(1) of the U.P. Goods and Service Tax Act, 2017 appealable, and if not, can it be challenged through a writ petition?

Facts:

- Goods in transit were seized on 18.01.2018 under Section 129(1) of the U.P. GST Act, 2017.

The seizure was based on two grounds:

- The goods were allegedly being transported from New Delhi, not Ghaziabad as claimed.

- The value of the goods was allegedly suppressed according to a "Kaccha bill" found with the consignment.

- The authorities disregarded the driver's statement and accompanying documents showing transit from Ghaziabad.

- A penalty order was also passed under Section 129(3) of the Act.

Arguments:

Petitioner (M/S. RK OVERSEAS):

- Challenged only the seizure order, not the penalty order under Section 129(3).

- Argued that the seizure order is not appealable and can be challenged through a writ petition.

Respondent (State of U.P.):

- Raised a preliminary objection that an appeal would lie under Section 107 of the Act against the order passed under Section 129(1).

- Argued that a penalty order has also been passed under Section 129(3) of the Act.

Key Legal Precedents:

The judgment doesn't cite specific case laws but relies heavily on the interpretation of Sections 80, 107, 121, and 129(1)(3) of the U.P. Goods and Service Tax Act, 2017.

Judgement:

- The court held that orders of seizure passed under Section 129(1) of the U.P. GST Act are not appealable.

- Writ petitions are maintainable against such seizure orders, subject to judicial review limitations.

- The court found that the authorities' finding for seizure purposes was in the nature of adjudication, which cannot be done without giving the party an opportunity to be heard.

- The court directed the respondent to file a counter-affidavit within two weeks and listed the petition for admission/final disposal.

- In the meantime, the court ordered the release of goods and vehicle upon furnishing an indemnity bond and security (other than cash and bank guarantee) for the proposed tax and penalty determined under Section 129(3) of the Act.

FAQs:

Q1: Why did the court rule that seizure orders are not appealable?

A1: The court interpreted Section 121 of the U.P. GST Act, which specifically excludes orders pertaining to seizure from being appealable.

Q2: Can seizure orders be challenged at all?

A2: Yes, they can be challenged through writ petitions, subject to the limitations of judicial review.

Q3: What was the basis for the court ordering the release of seized goods?

A3: The court found that the seizure was based on findings that were adjudicatory in nature, made without giving the party an opportunity to be heard.

Q4: Does this judgment apply to all GST seizure cases?

A4: This judgment specifically interprets the U.P. Goods and Service Tax Act, 2017. Its applicability to other states or the Central GST Act may vary.

Q5: What conditions did the court set for releasing the seized goods?

A5: The goods and vehicle can be released upon furnishing an indemnity bond and security (other than cash and bank guarantee) for the proposed tax and penalty.

Heard Sri N.C. Gupta, learned counsel for the petitioner and Sri C.B. Tripathi Special Counsel for the State of U.P. Sri Anant Kumar Tiwari learned counsel appearing for the Union of India.

The goods in transit have been seized vide order dated 18.01.2018 passed under Section 129(1) of the U.P. Goods and Service Tax Act, 2017 (hereinafter referred to as Act).

The order of seizure has been passed on two grounds that the goods were being transported from New Delhi and not from Ghaziabad as alleged. Secondly, the value of the goods has been suppressed and according to Kaccha bill found with the consignment, the value of the goods is much higher.

A preliminary objection is taken by Sri C.B. Tripathi, that against the order passed under Section 129(1) of the Act an appeal would lie under Section 107 of the Act and that a penalty order has also been passed under Section 129(3) of the Act.

In response to the above preliminary objection Sri Gupta has submitted that he is not challenging the order of penalty passed under Section 129(3) of the Act rather his challenge is only confined to the order of seizure.

Section 107 of the Act provides for appeal to appellate authority against the orders passed under the Act by the adjudicating authority but Section 121 of the Act carves out the exceptions.

Section 121 of the Act which provides for non-appealable orders reads as under:-

"121. Non-appealable decisions and orders-Notwithstanding anything to the contrary in any provisions of this Act, no appeal shall lie against any decision taken or order passed by an officer of State tax if such decision

taken or order passed relates to any one or more of the following matters, namely:

(a) an order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer; or

(b) an order pertaining to the seizure or retention of books of account, register and other documents; or

(c) an order sanctioning prosecution under this Act; or

(d) an order passed under Section 80."

A simple reading of the aforesaid provision reveals that the legislature has not provided for any appeal against the order if any passed pertaining to the seizure. The order impugned is nothing but an order pertaining to seizure and as such is not appealable.

On the conjoint reading of Sections 107 and 121 of the Act it is thus apparent that though all orders passed under the Act by the adjudicating authority are appealable but not the one's which have been specifically excluded from the purview of appeal under Section 121 of the Act such

as orders pertaining to seizure.

In view of the aforesaid facts and circumstances, we hold that the order of seizure of the goods in transit or storage passed under Section 129(1) of the Act is not appealable and therefore, a writ petition is maintainable against it subject to the limitations of judicial review.

In the instant case, the goods in transit have been seized for the reason that the authorities are of the opinion that the goods have originated from New Delhi and as such amounted to interstate transaction.

This finding has been returned by refusing to accept the statement of the driver of the vehicle, who had categorically stated that he had loaded the goods from Ghaziabad, on the basis of some secrete information furnished to the authorities and the loose papers (Kacchi Parchi) recovered from the vehicle in uttered disregard to the invoice and other documents accompanying the goods which disclosed the transit of goods from Ghaziabad only. Prima facie the recording of the aforesaid finding for the purposes of seizure is in the nature of adjudication which cannot be done without opportunity of hearing to the party concerned.

In this view of the matter, we consider that the matter requires consideration.

Accordingly, Sri Tripathi, is directed to seek instructions and file counter affidavit within two weeks. List the petition for admission/final disposal immediately thereafter.

In the meantime, the goods along with vehicle shall be released on furnishing indemnity bond and security other than cash and bank guarantee in respect of proposed tax and penalty as has been determined under Section 129(3) of the Act subject to the penalty of the said order.

Order Date : 1.2.2018

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