Kerala High Court

Sr. Sheetal Jain vs The State Of Kerala on 19 January, 2021

                IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                PRESENT

                  THE HONOURABLE MR. JUSTICE A.M.BADAR

    TUESDAY, THE 19TH DAY OF JANUARY 2021 / 29TH POUSHA, 1942

                        WP(C).No.1417 OF 2021(B)


PETITIONER/S:

                SR. SHEETAL JAIN, AGED 34 YEARS
                S/O DILIP KUMAR,M/S.SRI SITAL JEWELLERS,
                HAVING ITS REGISTERED OFFICE AT 13/35-5,
                SRI.RAJENDRA COMPLEX,MANDAPALA STREET,
                NELLORE,ANDHRA PRADESH-524001.

                BY ADVS.
                T.S.SARATH
                SRI.MANU RAMACHANDRAN
                SRI.R.RAJESH (VARKALA)
                SRI.M.KIRANLAL
                SHRI.SAMEER M NAIR

RESPONDENT/S:

      1         THE STATE OF KERALA
                STATE GOODS AND SERVICES TAX DEPARTMENT,
                REPRESENTED BY ITS SECRETARY,
                MINISTRY OF FINANCE,THIRUVANANTHAPURAM-695002.

      2         THE STATE TAX OFFICER(INTELLIGENCE),
                MOBILE SQUAD VI,SGST DEPARTMENT,REVENUE TOWERS,
                NEDUMANGAD,THIRUVANANTHAPURAM-695541.




                SMT. THUSHARA JAMES, GOVERNMENT PLEADER

     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
19.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C).No.1417 OF 2021                  2



                                JUDGMENT

Dated this the 19th day of January 2021

Heard both sides.

2. The petitioner has claimed the following reliefs in the

instant petition:-

'' a) issue a writ of certiorari or any other appropriate writ/order/direction in the nature of Certiorari and thereby be pleased to quash and set aside the confiscation of goods and release such goods to the petitioner

b) issue a writ of certiorari or any other appropriate writ/order/direction in the nature of Certiorari and thereby be pleased to quash and set aside the Adjudication Order No.108/2020-2021.''

3. Learned counsel appearing for the petitioner drew my

attention to Ext.P2 notice and argued that the respondent

department has not followed the provisions of Section 129 of the

Central Goods and Services Tax Act, 2017. He contended that

Ext.P2 notice reflects that the goods viz-a-viz jewellery items were

seized and detained by the respondent authorities and as such, the

respondent authority was duty bound to issue notice as envisaged

under Section 129(3) of the GST Act, specifying the tax and

penalty payable and then to proceed to pass the order after

hearing the petitioner.

4. Learned counsel appearing for the petitioner further

argued that in case of the adverse order, if any, the respondent

authority was duty bound to grant time of 14 days to the petitioner

to pay the amount of tax and penalty as per the provisions under

Section 129(6) of the GST Act. In submission of the learned

counsel appearing for the petitioner, in order to impose huge

amount of the tax and penalty apart from confiscation of goods,

the respondent authority resorted to the provisions of Section 130

of the GST Act and there is no basis for coming to prima facie

conclusion that there was an attempt on the part of the petitioner

to evade payment of tax under the GST Act. He argued that

seized articles were in fact, samples meant for showing the same

to the wholesalers for the purpose of soliciting business. According

to the petitioner, Ext.P5 impugned order, no where points out as to

which provision of the GST Act were contravened by the petitioner.

Therefore, according to the learned counsel for the petitioner, the

petition needs to be admitted with interim stay as prayed.

5. Learned Government Pleader appearing for the

respondent department opposed the petition by contending that

Sections 129 and 130 of the GST Act operates in totally different

fields. Mens rea is an essential part for an action under Section

130 of the GST Act whereas the action under Section 129 of the

GST Act is contemplated only if there is contravention of the

provisions of the said Act or Rules while the goods were in transit.

Irregularity in transport of goods by contravening the provisions of

the said Act and Rules result in action under Section 129 of the

GST Act. Therefore, according to the learned Government Pleader,

the petition is devoid of merit and the same is liable to be

dismissed.

6. I have considered the submissions so advanced and

perused the materials placed before me.

7. Perusal of section 129 of the GST Act, 2017 makes it

clear that the authorities under the Act are vested with powers to

detain or seize and after detention or seizure to proceed further in

the matter for assessing the tax and penalty, in case if it is found

that the person transporting the goods or storing the goods while

they are in transit indulge in contravention of the provisions of the

GST Act or the Rules made thereunder. However, Section 130 of

the GST Act deals with mens rea of a person who intends to avoid

payment of taxes. If any person supplies or misuses any goods in

contravention of the provisions of the GST Act or Rules with intend

to evade payment of taxes or fails to account for any goods, on

which he is liable to pay tax, the provisions of Section 130 of the

GST Act applies. Similarly, supplying the goods liable for tax

without application for registration as well as contravention of the

provisions of the GST Act and Rules with intent to evade payment

of tax can also result in action under Section 130 of the GST Act,

2017. Thus act or omission with intention to avoid payment of tax

is sine quo non for the purpose of action under Section 130 of the

GST Act.

8. On this backdrop, notice issued under section 130 of the

GST Act (Ext.P2) makes it clear that, officers of the respondent

department during shadow operation noticed two persons entering

and coming out of the jewellery shop. The bags held by them

were checked and those were found to be containing gold

ornaments weighing 2270.13 grams including stone weight.

Ext.P2 notice makes it clear that goods were not accompanied by

any documents showing or reflecting payment of tax on them as

per the provisions of the GST Act, 2017. What was found was

'authority letters' authorising those persons to carry gold

ornaments of 130 grams, 300 grams and 500 grams. Those

authority letters were not having source of law. On these facts, the

respondent authority came to the conclusion that the goods i.e.,

gold jewellery were being supplied and received in contravention of

the provisions of the GST Act and Rules made thereunder, with

intend to avoid payment of tax and accordingly, notice under

Section 130 of the GST Act came to be issued.

9. The impugned order Ext.P5 shows that petitioner filed

reply to that notice on 15.12.2020 and he was heard in pursuant

to that notice. By Ext.P5 impugned order, the Sales Tax Officer

(Intelligence) came to the conclusion that detained goods are liable

for confiscation in pursuant to the provisions of Section 130 of the

GST Act.

10. In the backdrop of these facts, I am of the considered

opinion that the respondent Department has rightly proceeded in

the matter by taking notice action under Section 130 of the GST

Act,2017 as gold jewellery weighing more than 2 kilograms was

found in possession of the petitioner and another person who were

entering the jewellery shops and coming out of such shops. The

material reflected in the show cause notice reflects mens rea on

the part of petitioner.

11. The act on the part of the petitioner while carrying the

gold jewelelery in huge quantity and visiting the jewellery shops as

reflected from the notice action certainly gives an indication that

there was intention to evade payment of taxes as required by the

GST Act of 2017. Neither before the authority under the GST Act

nor before this Court, the petitioner has filed any evidence to show

that the goods in the form of gold jewellery weighing more than

two kilograms possessed by them were held by them under any

authority of law after making payment of taxes as per GST Act. No

documents evidencing payment of tax as contemplated under the

GST Act of 2017 are shown by the petitioner even before this

Court.

The writ petition, as such, is totally devoid of merits and the

same is accordingly dismissed.

Sd/-

                                                A.M.BADAR
ajt                                               JUDGE





                            APPENDIX
PETITIONER'S/S EXHIBITS:

EXHIBIT P1              A TRUE COPY OF THE SAID APPLICATION DATED
                        01.12.2020

EXHIBIT P2              A COPY OF THE SHOW CAUSE NOTICE DATED
                        01.12.2020.

EXHIBIT P3              THE COPY OF THE JUDGMENT IN

EXHIBIT P4 THE TRUE COPY OF REPLY DATED DECEMBER 15,2020.

EXHIBIT P5 THE TRUE COPY OF THE ADJUDICATION ORDER DATED 31.12.2020.