Facts of the case
Post implementation of GST, it has been noticed that goods are being seized by the department during the course of movement, whether domestic or export. Such seizure is being doing on various grounds including unintended procedural lapses. The only remedy available to the registered person including transporters to challenge such seizure of goods under writ jurisdiction before the High Courts. It has been noticed that in most cases, High Courts have allowed release of goods.
Recently Apex Court of India had dealt with these matter wherein State of Uttar Pradesh and challenged relief given by Hon’ble High Court and another matter wherein registered person had filed writ with a prayer to quash the seizure order passed under Section 67(2) of the CGST Act, declaring such search and seizure proceedings to be void, and restraining the GST Authorities to take any action against the taxpayer.The Supreme Court decided to address the appeals on both such orders passed by the High Court.
Contention of the Appellants
In the second set of appeal filed by the assessee, the relief claimed was that to issue a suitable order or direction in thenature of certiorari quashing the seizure order passed by the department under Section 67(2) of the CGST Act. Secondly, to issue an order or direction in the nature ofmandamus/prohibition declaring the search and seizureproceedings, to be void and restraining the department from taking any coercive action against the petitioner. Thirdly, to issue an order or direction in the nature ofmandamus commanding and directing the department to release the goods of the petitioner forthwith without demanding any security. It is broadly agreed that similar relief has been claimed inall the writ petitions filed before the High Court, including theone disposed of by the High Court as infructuous.
Decision of the Supreme Court
- When a complete mechanism is envisaged in the CGST Act and Rules for release and disposal of the seized goods, the High Court should not have entertained writ petitions questioning the seizure of goods and issued directions for its release.
- The High Court should have directed the taxpayer to approach the appropriate authorities for complying with the procedure prescribed in Section 67 of the CGST Act read with the relevant CGST Rules for release of seized goods.
- Taxpayers should be directed to take recourse of the relief mechanism provided under the CGST Act and Rules for release, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner as may be prescribed.
- The High Court has erroneously insisted on cash payment of tax by the taxpayer, which is contrary to Section 67(2) of the CGST Act. Consequently, the GST Authorities should not give effect to the orders passed by the High Court, which are contrary to the provisions of the CGST Act. Instead, the GST Authorities were instructed to process the claims of the taxpayer afresh, as per the provisions in Section 67 of the CGST Act read with the relevant CGST Rules.
Based on the aforesaid Supreme Court ruling, various High Courts may now refuse to exercise jurisdiction under Article 226 of the Constitution of India to provide relief to the taxpayer for seizure of goods.
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