The Karnataka High Court while remitting the matter back to the Single Judge Bench quashed the order imposing tax and penalty equal to 100% on areca nut for the release of detained goods and conveyances in transit.
The Vigilance Cell of Commercial Tax intercepted the conveyance of the goods which was carrying areca nuts at Bagalkot road.
It was alleged that on verification of the e-way bills and invoices it is noticed that the driver of the goods vehicle has taken 5 days to reach from Tumkur to Vijayapura and the statement of the driver was recorded which reveals that the vehicle has been loaded with 300 bags from M/s. K.S. Areca nut stores, Chalissery Road, Perumannur, Palakkad, Kerala.
The areca nut is the most evasion prone commodity and the driver taking a deviation route of more than 145 kms than the usual route, clandestine approach of the driver indicated suspicion. Subsequently, the goods have been taken possession and both the consignors have been summoned to appear before the Officer.
Subsequently, the owner of the conveyance came forward and discharged the fine of Rs.3,20,000/- under Section 130 (2) of the Central Goods and Services Tax Act, 2017 and in pursuant to the payment of fine the conveyance was released, however, the owner of the goods did not come forward to discharge the tax penalty and as such the goods were confiscated and stored in the warehouse. Subsequently, after following the procedure, an auction was conducted and the successful bidder bid it.
The Single Judge after hearing both the sides, permitted the petitioners to pay the applicable tax and penalty equal to 100% of the tax payable on such goods as per Section 129 of the Act.
It was further ordered that on such payment sale proceeds of Rs.75,33,620/- shall be returned to the petitioners and the respondents can collect the applicable tax from the petitioners as determined under Section 129 (1) (a) of the Act and to return the balance amount out of Rs.75,33,620/- to the petitioner, which was challenged by the government.
The division Judge bench of Justice B.N.Patil and Justice Hunchate Sanjeev Kumar held that when already the appellants have passed an order under Section 129 (1)(b) of the Act, by rejecting the documents tendered by the person in charge, until and unless that order is set aside, no order can be passed under Section 129 (1)(a) of the Act.
The court further noted that the Single Judge without looking into the said provisions, by taking shelter under Section 168 of the Act, went into the circular issued and passed the impugned order.
Therefore, the division judge bench without commenting on the merits of the case, remitted the matter back to the single judge bench for the fresh consideration.
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