Karnataka High Court
M/S Sreelakshmi Transport vs The Joint Commissioner Of Commercial ... on 11 December, 2023
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NC: 2023:KHC-D:14548
WP No. 105057 of 2023
C/W WP No. 102770 of 2022
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 11TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
WRIT PETITION NO. 105057 OF 2023 (T-RES)
C/W
WRIT PETITION NO. 102770 OF 2022
IN WP NO. 105057/2023.
BETWEEN:
M/S. SREELAKSHMI TRANSPORT,
KGP 23643 KUMBLA, KASARAGOD,
KERALA STATE-671321.
REPRESENTED BY ITS SOLE PROPRIETOR
SHRI. MANJUNATH S/O. MOHANDAS NAYAK
AGE: 45 YEARS, R/O. KUMBLA,
KASARGOD, KERALA STATE-671321.
...PETITIONER
(BY SRI. GIRISH A. YADAWAD AND PRAMOD YADAWAD, ADVS.)
AND:
1. THE JOINT COMMISSIONER OF COMMERCIAL
Digitally signed
by
TAXES (APPEALS), COMMERCIAL TAX HOUSE,
MOHANKUMAR
MOHANKUMAR B SHELAR
B SHELAR
Date:
2023.12.20
A-BLOCK, DEVARAJ ARAS BARANGAY,
16:15:18 +0530
DAVANAGERE-577006.
2. THE COMMERCIAL TAX OFFICER
ENFORCEMENT-4, VANIJYA TERIGE BHAVAN,
2ND STAGE, 6TH CROSS, RAGHAVENDRA
COLONY, BALLARI-583101.
...RESPONDENTS
(BY SRI. SHIVAPRABHU HIREMATH, AGA FOR RESPONDENTS)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING THIS COURT TO, ISSUE
A WRIT IN THE NATURE OF CERTIORARI TO QUASH THE ORDER IN
APPEAL NO. KGST/AP-31/20-21 DATED 06/01/2022 VIDE
ANNEXURE-A, IN SO FAR AS IT IS CONTAINED AT SL.NO. 3 OF THE
ORDER OF RESPONDENT NO.1 AS APPLICABLE TAX AND PENALTY AS
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WP No. 105057 of 2023
C/W WP No. 102770 of 2022
PER SEC. 129 (1) (B) IS TO BE QUANTIFIED AND ADJUSTED WITH
THE DEPOSIT MADE BY THE APPELLANT, IN THE INTEREST OF
JUSTICE AND EQUITY AND DIRECT THE RESPONDENT NO.2 TO
ISSUE REFUND AND/OR TO CAUSE THE REFUND OF THE AMOUNT OF
RS. 59,41,688-00 DEPOSITED BY THE PETITIONER AS PER FORM
GST DRC-03 ARN. AD32022101439Q DATED 25/02/2021 VIDE
ANNEXURE-E IN PURSUANCE OF THE INTERIM ORDER DATED
19/02/2021 IN WP NO. 100514/2021 VIDE ANNEXURE-B AND
DIRECT THE RESPONDENT NO.2 TO RELEASE THE VEHICLE BEARING
NO. RJ 06 GB 3838 ALONG WITH THE GOODS CONTAINED IN THE
SAID VEHICLE FORTHWITH, IN THE INTEREST OF JUSTICE AND
EQUITY.
IN WP NO.102770/2022.
BETWEEN:
THE COMMERCIAL TAX OFFICER
(ENFORCEMENT)-04, RAGHAVENDRA COLONY,
6TH MAIN, 2ND STAGEM ANANTAPUR ROAD,
BALLARI-583101.
...PETITIONER
(BY SRI. SHIVAPRABHU HIREMATH, AGA)
AND:
1. SRI. MANJUNATH S/O. SRI. MOHANDAS NAYAK
M/S SHREE LAKSHMI TRANSPORT, KUMBLA,
KASARAGOD, KERALA BEARING-671121.
GSTIN: 32BOQPN8124M2ZE.
2. M/S. ARAVIND TRADERS,
A PROPRIETORY CONCERN OF
SRI. BHASKARAN S/O. SHREEDHARA. K.
AT KMC VI/11A, MOGRAL GRAMA
PANCHAYAT, PERIYADKA, KASARGOD,
STATE OF KERAL, PC-671124.
3. THE JOINT COMMISSIONER OF COMMERCIAL
TAXES (APPEALS), DAVANAGERE AND
FIRST APPELLATE AUTHORITY.
DAVANAGERE-577001.
...RESPONDENTS
(BY SRI.PRAMOD S. YADAWAD AND
SRI. GIRISH A. YADAWAD, ADV. FOR R1,
NOTICE TO R2 AND R3 SERVED)
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WP No. 105057 of 2023
C/W WP No. 102770 of 2022
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO SET ASIDE THE
IMPUGNED ORDER BEARING NO. KGST/AP-31/2020-21 PASSED BY
THE RESPONDENT NO.3 HEREIN JOINT COMMISSIONER OF
COMMERCIAL TAXES (APPEAL) DAVANAGERE, DATED 06.01.2022
VIDE ANNEXURE-Q UNDER SECTION 107 (11) OF THE GST ACT,
2017 HOLDING IT AS ILLEGAL AND PREJUDICIAL TO THE INTEREST
OF REVENUE AND CONSEQUENTLY RESTORE THE ORDER PASSED
UNDER SECTION 130 OF GST ACT- 2017 DATED 12.01.2021 ISSUED
IN FORM GST MOV-11 DATED 12.01.2021 FOR CONFISCATION OF
GOODS AND CONVEYANCE PRODUCED AS ANNEXURE-S.
THESE PETITIONS, COMING ON FOR DICTATING ORDERS,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner/transporter of goods is aggrieved by
the order dated 06.01.2022, in Appeal No.KGST/AP-
31/2020-21 passed by the 3rd respondent in the exercise
of power under Section 107 of the Karnataka Goods and
Service Tax Act, 2017 (for short 'Act of 2017'). In terms
of the said order, the petitioner is directed to pay
Rs.59,41,668/- as tax and penalty under Section
129(1)(b) of the Act of 2017. Hence, the
petitioner/transporter has filed W.P. No.105057/2023.
2. The respondent/revenue has also filed a Writ
Petition No.102770/2022 challenging the order passed by
the Appellate Authority under Section 107 of the Act of
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2017, being aggrieved by the order to release the goods
and the vehicle in favour of the transporter. The revenue
is also aggrieved by the order setting aside the order of
confiscation passed under Section 130 of the Act of 2017.
3. For the sake of convenience, the petitioner in
W.P. No.105057/2023 is referred to as the transporter and
the petitioner/Revenue in W.P. No.102770/2022 is
referred to as the Revenue.
4. A few other facts necessary for adjudication of
the present writ petitions can be summarized as under:
- On 08.09.2020, the petitioner's vehicle carrying a
certain quantity of arecanut was intercepted and detained
invoking Section 129(1) of the Act of 2017. The
respondent claims that on a preliminary enquiry, it is
noticed that the petitioner did not possess the necessary
documents to legally transport the goods. The petitioner
claims that at the time of intercepting the vehicle, valid e-
way bill as well as the tax invoices were available.
However, despite the goods were being transported by
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complying with the requirements of Act of 2017, the
vehicle was intercepted without any justification.
On 21.09.2020, the Revenue issued a notice under
Section 130 of the Act of 2017 in MOV 10. Thereafter, on
12.01.2021, an order is passed confiscating the goods and
imposing tax and penalty in Form MOV 11.
The challenge to the said order was initially not
entertained by the appellate authority on the premise that
the petitioner who is a transporter of the goods has no
locus to question the order of confiscation. It is also
relevant to note that the person, who claims to be the
owner of the goods, had also filed an appeal before the
appellate authority which was subsequently withdrawn.
However, the transporter is prosecuting the matter. The
order refusing to entertain the appeal before the appellate
authority is questioned by the transporter by filing Writ
Petition No.100514/2021.
5. This Court permitted the petitioner to file an
appeal subject to the transporter/petitioner depositing the
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entire amount of tax and penalty imposed. The
transporter claims to have deposited the entire amount of
tax and penalty before the GST authorities and it is said
that the online payment is credited to the account of GST
authorities in Kerala, as the e-way bill was generated in
Kerala.
6. The appellate authority in exercise of the power
under Section 107 of the Act of 2017, considered the
appeal on merits and vide impugned order dated
06.01.2022, allowed the appeal-in-part, set aside the
order of confiscation under Section 130, and directed the
petitioner to pay the tax and penalty as contemplated
under Section 129 (1)(b) of the Act of 2017. A further
direction is issued to release the goods and the vehicle
immediately to the transporter.
7. As already noted, two writ petitions are filed,
one by the transporter and another by the Revenue
challenging the orders to the extent each party is
aggrieved.
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8. Heard Sri Girish Yadawad, the learned counsel
appearing for the transporter and Sri Shivaprabhu S
Hiremath, the learned counsel appearing for the Revenue.
9. Sri Girish Yadawad referring to the judgment of
the co-ordinate Bench of this Court in M/s Rajeev
Traders Vs Union of India and Others (Writ Petition
NO.100849/2022) would contend that the order
confiscating the goods in question is without jurisdiction as
the procedure contemplated under Section 129(6) of the
Act of 2017 is not followed by the authorities. He would
urge before the Court that admittedly, Section 129(6)
notice and an order under the said provision have not
been issued and passed, and as a consequence, the entire
proceeding under Section 130 of the Act of 2017 is
vitiated.
10. He would also contend that the applicable tax is
paid by raising invoices in the State of Kerala where the
goods confiscated were loaded and this being the position,
there cannot be a finding that the transporter has evaded
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the tax and thus, would contend that order directing
payment of penalty under Section 129(2)(b) is also
impermissible.
11. Sri Shivaprabhu Hiremath, the learned counsel
for the Revenue/respondent at the outset would submit
that the judgment in the case of M/S Rajeev Traders,
supra is per incuriam as the Court has not noticed the
earlier judgment of the co-ordinate Bench of this Court in
M.S. Meghdoot Logistics, Delhi vs. Commercial Tax
Officer (Enforcement-09) Bengaluru (Writ Petition
No.10832/2020 decided on 21.12.2020) and to support his
contention that the proceeding under Section 130 is not
dependent on the order under Section 129(6) of the Act of
2017, he would refer to the non-obstante clause in Section
130 of the Act of 2017 (as it stood before the amendment
of 2022). He would refer to the judgment of the Division
Bench of Gujarat High Court in Synergy Fertichem Pvt.
Ltd. Vs State of Gujarat, reported in 2023(1) Taxman.
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12. By referring to the aforementioned judgments,
and non obstante clause in Section 130 of the Act of 2017,
he would contend that the authorities are justified in
intercepting and confiscating the goods after collecting
enough materials to arrive at a conclusion that it is a case
of deliberate tax evasion. Referring to the judgment of
the Hon'ble Apex Court in the State of Uttar Pradesh vs
M/S Kay Pan Fragrance Pvt. Ltd. he would submit that any
judgment by the High Court which is in contravention of
the provisions of GST Act of 2017, should not be treated
as a precedent.
13. He would urge that the materials placed on
record establish that the confiscated lorry which was
empty at a particular time, and was moving in the State of
Karnataka on the day when the alleged invoices were
raised in the State of Kerala, could not have reached
Kerala on the same day and after loading the said vehicle
with arecanuts, could not have reached the place where it
was intercepted on the same day. It is also urged that the
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name and address of the consignor and name and address
of the purchaser shown in the invoices are fake, he would
urge that the authorities had all the reasons and materials
to conclude that it is a case of deliberate tax evasion and
in such circumstances, Section 130 of the Act of 2017,
enabled the authorities to confiscate the goods.
14. This Court has considered the contentions
raised at the Bar.
15. The primary question that requires
consideration of this Court is, "Whether the order under
Section 130 of the Act of 2017 (before amendment of
2022) is to be preceded by an Order under Section 129(6)
or, whether Section 130 is an independent provision
conferring jurisdiction on the authorities to confiscate the
goods without complying the requirement of Section
129(6) of the Act of 2017.
16. As already noticed, the co-ordinate Bench of
this Court in the case of M/s Rajeev Traders supra, has
taken a view that there cannot be a confiscation of goods
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under Section 130 of Act of 2017, unless the procedure
contemplated under Section 129(6) is complied.
17. Though, the aforementioned judgment does not
refer to the previous judgment of the co-ordinate Bench of
this Court in MS Meghdoot Logistics supra, the Division
Bench of this Court in Writ Appeal No.10041/2022 has
confirmed the view taken in M/s Rajeev Traders supra.
Thus, the contention that the judgment in M/s Rajeev
Traders supra, per incuriam is not available to the
Revenue. Hence, the Court has to hold that Section 130
of the Act of 2017 as it stood prior to the amendment of
2022 can be invoked only after complying with Section
129(6) of the Act of 2017.
18. The First Appellate Authority in exercise of
jurisdiction under Section 107 has concluded that the case
is not made out for invoking Section 130 of the Act of
2017. The authorities have assigned different reasons for
concluding so. However in view of the law declared by this
Court in M/s Rajeev Traders supra, this Court is of the
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view that the order confiscating the goods invoking
Section 130 is unsustainable, as the condition precedent
for invoking Section 130 viz., the procedure of issuance of
notice under Section 129(6) and further Order under the
said provision is not complied.
19. This being the position, the contention of the
Revenue to uphold the order of confiscation cannot be
accepted and the writ petition filed by the Revenue has to
be dismissed.
20. Now, the question is whether the petitioner has
made out a case for refund of the tax and penalty paid.
Admittedly, the order under Section 129(6) of the GST Act
of 2017 is not passed before confiscating the goods.
21. Though, the learned counsel for the Revenue
would press into service the Division Bench judgment of
the Gujrat High Court in Synergy Fertichem Pvt. Ltd.
as well as the judgment of the Kerala High Court in the
case of Muhammed Saleem Shemsudeen vs.
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Enforcement Officer, the finding of the Division Bench of
this Court M/s Rajiv Traders, is binding on this Court.
22. As far as the judgment of the Kerala High Court
in Muhammed Saleem Shemsudeen supra, it is to be
noticed that the said judgment is rendered interpreting the
scope of Sections 129 and 130 of the GST Act of 2017
after the amendment of 2022. Since, this Court is dealing
with the scope of Sections 129 and 130 of the GST Act of
2017 before the amendment, the aforementioned
judgment of the Kerala High Court is of no avail.
23. Admittedly procedures contemplated in Section
129 (6) of the Act of 2017 are not complied. Hence the
order confiscating the goods and imposing tax and penalty
under Section 130 is unsustainable. Accordingly, for the
reasons recorded, the transporter is entitled to the relief
claimed.
Hence, the following.
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(i) The writ petition No.102770/2022 filed by
the Revenue is dismissed and writ petition
No.105057/2023 filed the transporter is
allowed.
(ii) Consequently, the transporter is entitled to
refund of tax and penalty determined by the
2nd respondent on 11.01.2021 i.e.,
Rs.59,41,688/- which is said to have been
deposited on 25.02.2021 as per Form GST
DRC-03, ARN : AD 320221010439Q.
(iii) It is further made clear that this Court in
these petitions has examined the power of
the authority to invoke Section 130 of the
GST Act of 2017. This order shall not come
in the way of any other the authority
exercising the power conferred under the Act
of 2017 either in the State of Kerala or in the
State of Karnataka, in case of any tax
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evasion in respect of the transaction referred
to in the petition.
(iv) Since, the petition filed by the Revenue is
dismissed and the petition filed by the
transporter is allowed, the benefit of the
order passed by the appellate authority for
release of the vehicle and the goods shall be
given effect to within four weeks from today.
(v) Since the tax and penalty imposed is said to
have been deposited through online
mechanism and is said to have been credited
to the account of the Revenue in the State of
Kerala, and as the tax and penalty is
determined by the authority in Karnataka,
the amount of tax and penalty referred to
above has to be released in favour of the
transporter.
(vi) A direction is issued to authority in the State
of Kerala, to refund the said amount as the
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said amount is ordered deposited in terms of
the interim order passed by this Court. In
case, the authority in State of Kerala has
any grievance relating to refund, the State of
Kerala is at liberty to move an application
before this Court seeking appropriate order.
Sd/-
JUDGE
CHS,CKK/ct-an
