In a recent case, the Andhra Pradesh High Court set aside the confiscation order under the Central Goods and Service Tax ( CGST ) Act, 2017 as the proposal of confiscation without mentioning detailed reason allows writ petitions and sets aside confiscation orders under CGST Act
Both these Writ Petitions arise, essentially, out of the same set of facts and raise similar questions of fact and law. In such circumstances, both these Writ Petitions are disposed of by way of this Common Order.
Sri V. Bhaskar Reddy, Senior Counsel appearing on behalf of Sri V. Siddharth Reddy, counsel for the petitioner and the Government Pleader for Commercial Tax.
M/s.Cluster Enterprises, the petitioners herein are dealers of scrap iron and were transporting scrap iron for sale to a dealer in Telangana State. The vehicles in which this scrap iron was being transported were stopped for verification and inspection on 27.04.2024 by the Deputy Assistant Commissioner ( ST )- 2, Office of the Regional Vigilance & Enforcement Department, Kadapa.
After verifying the documents available with the driver of the conveyance, the 1st respondent issued a notice in Form GST MOV-10, under Section 130 of the Central Goods and Service Tax Act, 2017 [ the CGST, Act ], on 01.05.2024 calling upon the petitioners to show- cause why the goods under transport and as well as the vehicle in which the goods have been transported should not be confiscated. These notices were served on the driver of the vehicle.
Thereafter, the petitioners have filed their objections dated 08.05.2024, setting out the grounds why the proposed action should be dropped. After receipt of these objections, the 1st respondent passed orders, in both cases, dated 25.05.2024, confiscating the goods as well as the vehicle under Section 130 of the CGST, Act, Section 130 of the State Goods and Services Act /Section 21 of the Union Territory Goods and Service Tax, Act and under Section 20 of the Integrated Goods and Service Tax Act, 2017. The petitioners were also informed that the above said goods and conveyance could be released on payment of the penalty and fine set out in the said orders.
It was submitted that the 1st respondent, without invoking the provisions of Section 129 of the CGST Act had straight away issued notices under Section 130 of the CGST Act, which is impermissible and is not under the scheme of the Act. He relied upon Circular No. 41/15/2018-GST, dated 13.04.2018 issued by Central Board of Indirect Taxes and Customs.
It was contend that any detention of goods or conveyance can only be done on issuance of Form MOV-6 under Section 129 of the CGST Act and there is no provision under Section 130 of the CGST Act for detention of the goods. He would submit that detention of the goods without issuance of such Form MOV-6 is clearly impermissible and beyond of the jurisdiction and authority of the 1st respondent.
It was contended that the Central Board of Indirect Taxes and Customs had issued a circular bearing No.128/47/2019-GST, dated 23.12.2019 instructing all officials of the respective GST Departments that all communications/orders should contain Document Identification Numbers to authenticate the issuance of such communications/orders
A division bench of Justice R Raghunandan Rao and Justice Harinath N held that there is a clear intention to evade payment of tax, it would be open to the authorities to initiate action under Section 130 of CGST directly and without having to involve Section 129 of CGST, Act.
The requirement of every order or communication of the tax authorities to contain a DIN number is found in Central Board of Indirect Taxes and Customs circular bearing No.128/47/2019-GST, dated 23.12.2019. The circular does not make any distinction between proceedings/orders communicated directly to the dealers and proceedings which are uploaded on the portal. The non mention of DIN militates against the validity of the proceedings, dated 25.05.2024.
The court allowed the writ petitions and set aside the confiscation order in FORM GST MOV-11 dated 25-05-2024 issued by the 2nd respondent.
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