Detention of vehicles and seizure of goods in transit under GST - Kerala High Court's clarification
Facts of the case:
The Appellant filed the writ petitions challenging detention orders passed under the CGST Act when the scheme of the Act clearly indicated that the writ court was not to be ordinarily approached in detention cases where effective alternative remedies by way of provisional clearance, and appeal thereafter, were provided against alleged arbitrary/illegal detention orders. The goods and the vehicles were detained by the respondents on the ground that there was only one common invoice (for 22 packages) that was generated in respect of the two consignments, and when compared with the number of packages that were contained in each of the vehicles, there was a shortage of packages in both the vehicles. It was also found that the petitioner had not complied with the procedure prescribed under Rule 55 (5) of the CGST Rules while transporting goods in semi knocked down (SKD) or completely knocked down (CKD) condition or in batches or lots.
Kerala High Court explained the provision when the seizure of the goods or the vehicle can be exercised in a case where there seems a doubt of evasion in taxes. The consignee can choose to make the stipulated payments as per the notice, after which the notice would be concretized in the form of another order and the proceedings closed. But if the consignee wishes to challenge the detention/seizure, he can furnish security in the form of a bank guarantee covering the prescribed sum and get his goods/vehicle released provisionally, and then make his representation. Further, when it comes to making an appeal in the High Court, it was clearly specified that only after the consignee is given an opportunity to be heard and his objections considered can the concerned authority issue an order. If aggrieved, the consignee can approach the relevant authority under the legislation in appeal, but cannot approach the High Court at this stage. Hence, it was decided that detention and seizure of goods and vehicles is a reasonable restriction on the exercise of free trade and movement, but shouldn’t be exercised strictly only in order to prevent possible tax evasion. The Court opined that the need for strict construction of detention laws was “what is at stake is a constitutional right, fundamental or otherwise, of a citizen”
M/s Podaran Foods India (P) Ltd. (Appellant) vs. State of Kerala (Respondent) Kerala High Court decided on 12.01.2021
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