Issuance of notice specifying tax and penalty is mandatory before passing order under Section 129: HC

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Facts: Synergy Fertichem (P.) Ltd (“the Appellant or the Petitioner”) filed present petition against notice issued by the Revenue Department under Section 130 of the CGST Act, 2017 imposing tax and penalty. Section 129 stipulates for detention of goods or vehicle in transit whereas Section 130 of the CGST Act, 2017 provides for confiscation of goods in case the owner does not come forward.

The petition was filed on the grounds of non-compliance of Section 129 of the CGST Act, 2017. As per Section 129 of the CGST Act, 2017 the concerned officer has to first issue notice. Thereafter, on giving an opportunity to be heard to the person, pass an order of detention or seizure with reasons. The Petitioner approached the High Court for release of goods are they were perishable in nature with a limited shelf life.

Issues Involved: In absence of issuance of notice under Section 129 of the CGST Act, 2017, whether issuance of notice for confiscation of goods in transit under Section 130 of the CGST Act, 2017 was correct?

Held: The Hon’ble High Court of Gujarat vide R/Special Civil Application No.4730 of 2019 dated March 06, 2019 held that the show cause notice under question imposes tax and penalty without initiating any proceedings under Section 129 of the CGST Act, 2017 which is not permissible in law. In addition, IGST has been discharged on the goods in question at the time of import itself.  Hence, the notice was issued to the Revenue Department by the High Court.

Citation: [2019] 103 taxmann.com 426 (Gujarat)