Proceedings initiated u/s 129 of the CGST Act without Providing Hearing Opportunity is invalid: Andhra Pradesh HC [Read Order]

The Andhra Pradesh High Court has held that proceedings initiated under section 129 of the Central Goods and Service Tax ( CGST ) Act, 2017 without providing an opportunity to hear to the assessee is invalid.

The Petitioner submitted that the Respondent Authorities, without following the procedure of detention under Section 129 of CGST Act, 2017, directly invoked Section 130 of CGST Act, 2017 and ordered the confiscation of the goods and the auction is scheduled to be held on 31.05.2024.  Further submitted that it is a covered matter in the light of the Common Order dated 03.08.2023 passed by a Coordinate Division Bench of the Court.

Government Pleader for Commercial Taxes fairly conceded the same and would submit that the Court may pass appropriate orders by imposing certain conditions.

The petitioner purchased iron scrap from one hawker, Mr. Shaik Nazeer Ahmed of Nellore on 27.01.2024 and sold the same in favour of M/s. Agarwal Foundries Private Limited, Naidupeta under an invoice for a consideration of Rs. 4,91,400/-.

When the goods were in transit from Nellore to the consignee, the vehicle was intercepted at Venkatachalam Toll Plaza by respondent No.1 and issued the impugned proceedings on the ground that the relevant papers do not cover the consignment. Learned counsel would submit that the petitioner has purchased the goods from an unregistered dealer and consignment is covered by a valid invoice, Way Bill, and relevant transport documents. 

Proceedings were issued for confiscation of goods in Form G.S.T MOV-10, by invoking the power under Section 130 of the CGST Act, 2017. The impugned proceedings dated shows that a show cause notice has been issued calling upon the petitioner to explain, within fifteen days from the receipt of the notice, why the goods shall not be confiscated.

But the very next sentence would reveal that the petitioner is directed to appear before the Deputy Assistant Commissioner on 16.02.2024, at 11.00 a.m., which would indicate that without giving fifteen clear days, the matter is called on 16.02.2024. Hence, there is some force in the contention of the Petitioner that the impugned order passed in violation of the principles of natural justice.  

It was found that respondent No.1 has detained the goods of the petitioner while they were in transit from Nellore to Naidupeta. Respondent No.1 may initiate proceedings for confiscation under Section 130 of the CGST Act, 2017, in view of the absence of address of the unregistered dealer, from whom the Petitioner purchased the goods.  When it is the case of the petitioner that he bona fidely purchased the goods from an unregistered dealer for valuable consideration under authenticated documents, it is his duty to establish the same.

The Court observed that as the petitioner claims to have purchased the iron scrap from an unregistered dealer at Nellore, owes a responsibility to prove the genuineness of the sale transaction. As rightly argued, the authorities can initiate proceedings under Section 129 of CGST Act, 2017 against the petitioner and conduct enquiry by giving opportunity to establish their case. 

A division bench of Justice Subba Reddy Satti and Justice Venkata Jyothirmai Pratapa disposed of the writ petition by giving liberty to the Respondent Nos.1 and 2 to initiate proceedings against the Petitioner under Section 129 of CGST/APGST Act, 2017 within two weeks from the date of receipt of a copy of the order and conduct enquiry by giving an opportunity of hearing to the Petitioner and pass appropriate orders in accordance with governing law and rules.

The Court further set aside the auction notice directed the respondent 1 to release, the detained goods in favour of the Petitioner on a deposit of 25% of their value and execute a personal bond for the balance. 

V. Siddharth Reddy, counsel appeared for the Petitioner and P. Shreyas Reddy, Government Pleader appeared for Commercial Taxes.

To Read the full text of the Order CLICK HERE

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