Seizure of Vehicle on allegation of Fraudulent business activities and Fake Claim of  ITC: Orissa HC directs release Vehicle after Payment of Penalty u/s 129 (1)(b) GST Act

In a recent case in which the seizure of a vehicle was done on allegations of fraudulent business activities and fake claims of ITC, the Orissa High Court directed to release of the vehicle after payment of penalty under Section 129(1) (b) of the GST Act, 2017.

Sunil Mishra, Additional Standing Counsel appearing for CT & GST has received the instruction, that Vehicle bearing registration No. OR15R3871 was intercepted on 17.03.2023 at Sergarh, Balasore near about 1.05 A.M. For further verification, the statement of the driver was recorded in Form-GST MOV-01 and was directed to station the vehicle at office premises vide Form-GST-MOV-02.

Verification from the portal revealed that the consigner is engaged in fraudulent business activities and claiming fake ITC. Therefore, a detention notice in Form GST MOV-06 was served on the driver directing him to station the vehicle at the office premises. The bonafideness of the consignor M/s. Mitigater Techsecure Pvt. Ltd was verified by the CT & GST Enforcement Unit, Bhubaneswar and found to be suspicious.

A show cause notice in Form GST-MOV-07 was served on the driver directing him to show cause as to why the penalty under Section 129 (1)(b) shall not be payable by him. In absence of a reply, an order of demand was issued to the driver in Form-GST-MOV-09 vide order No. 301, dt.29.03.2023 raising a demand of Rs.9,57,600/- under Section 129 (3) of the GST Act.

Section 129(1) provides that any person who is interested in the goods shall be liable under Section 129(1)(b). Particularly, a reading of Section 129(6) would indicate that where a person transporting any goods or the owner of the goods, fails to pay the amount of tax and penalty as provided in sub-Section (1) within 14 days of such detention or seizure, further proceedings shall be initiated by the provisions of Section 130.

It appeared that the petitioner has not approached the authority, even though the authorities have expressed their view that the conveyance can be released on payment of penalty as per the demand order or after furnishing the bank guarantee of an equal amount.

Behura, counsel for the petitioner undertakes that the petitioner shall furnish the bank guarantee of an equal amount within a period of two days so that the authority can release the vehicle.

A Coram Comprising of Justice B R Sarangi and Mr Justice M S Raman held that if the petitioner fails to furnish the bank guarantee, it will be open to the opposite parties to confiscate the vehicle of the petitioner.

To Read the full text of the Order CLICK HERE

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