Goods and conveyance detained will be released upon payment of penalty and furnishing of a bank guarantee

The Hon'ble Gujarat High Court in Ravi Trading Co. v. Deputy Commissioner of State Tax [SCA no. 6407 of 2023 dated May 4, 2023] directed the Revenue Authority to release goods on conditions that the assessee deposits a certain amount of penalty towards tax in lieu of confiscation of conveyance and furnish bank guarantee in lieu of confiscation of goods.

Facts

The Revenue Department ("the Respondent") seized the goods of Ravi Trading Co. ("the Petitioner") while they were being transported in a conveyance with registration number MH-50-2399. The goods were seized under Section 129 of the Central Goods and Services Tax Act, 2017 ("the CGST Act"). Additionally, the Respondent issued an order dated April 09, 2023, GST MOV-11, under Section 130 of the CGST Act.

Issue

Whether goods can be released by furnishing a bank guarantee and conveyance by paying the required penalty?

Held

The Hon'ble Gujarat High Court in SCA no. 6407 of 2023 held as under:

• Directed that, the goods of the Petitioner as well as vehicle bearing registration MH-50-2399, will be released subject to the following conditions,
• The Petitioner must pay a penalty of INR 93,750 to the authorities as the tax remains unassessed.
• The Petitioner should provide a Bank Guarantee of INR 19,68,750 as a fine in lieu of confiscating the goods.
• Additionally, the Petitioner must deposit INR 93,750 as a fine instead of confiscating the conveyance.
• Held that, the goods and the vehicle both shall be released by the authority. Further, non-compliance with any of the aforementioned conditions by the Petitioner, shall render the interim relief granted earlier being revoked.

Further, the Hon'ble Gujarat High Court tagged the present Petition with Special Civil Application No. 8353 of 2022.

Relevant Provisions

Section 129 (3) of the CGST Act

"Detention, seizure and release of goods and conveyances in transit

(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).”

Section 130 (2) of the CGST Act

"Confiscation of goods or conveyances and levy of penalty

(2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit:

Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:

Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty equal to hundred per cent. of the tax payable on such goods:

Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon."