Confiscation order passed on the ground of presumption that Assessee is involved in bogus billing without taking consideration of the actual movement and documents related to transaction was not justifiable.

Case Title: Raj Chamunda Roadlines v. State of Gujarat

Court: High Court of Gujarat

Petition Number: R/Special Civil Application No. 20021 of 2019

Category of Dispute: Detention and Confiscation of Goods

Date of Judgement: November 15, 2019

Relevant Sections: Section 130 of the CGST Act, 2017

Facts of the Case

1. The petitioner’s vehicle carrying goods was detained by Respondent No. 2 for verification purposes as per Form GST-MOV-02. [Para 1]
2. The time for inspection was extended via Form GST-MOV-03, and subsequent physical verification was carried out. No discrepancies were found and Form GST-MOV-04 was issued. [Para 1]
3. Despite no discrepancies in goods or documents, a notice was issued in Form GST-MOV-10 under Section 130 of the CGST Act based on alleged bogus billing or false ITC claims by the dealer for August and September 2019. [Para 1]
4. Consequently, an order of confiscation of goods and vehicle was passed under Section 130. [Para 1]

Questions in Consideration

1. Whether the confiscation of goods and vehicle under Section 130 is lawful when no discrepancy is found in the physical verification? [Para 2]
2. Can proceedings under Section 130 be sustained solely on the allegation of dealer’s past conduct without any irregularity in the current consignment? [Para 2]

Observation of Court

1. The court noted the absence of any discrepancy in the physical verification as recorded in Form GST-MOV-04. [Para 1]
2. The court opined that, prima facie, the action under Section 130 on grounds of past alleged conduct (bogus billing/false ITC) without present discrepancy in goods or documents appears untenable. [Para 2]

Judgement of the Court

1. The court issued notice returnable on 18th November 2019, implicitly acknowledging the need for scrutiny over the legality of confiscation. [Para 3]
2. Direct service of the notice was permitted to expedite the matter. [Para 4]

Between Fine Lines

• The Gujarat High Court questioned the legality of invoking Section 130 CGST Act in the absence of any discrepancy in goods or documents during transport.
• Physical verification having found no fault, confiscation seems legally disproportionate.
• The case raises the principle that past conduct of the dealer cannot justify detention/confiscation if the current transaction is compliant.
• The matter was not conclusively decided but listed for further hearing, suggesting interim relief may follow.
• This case can be a precedent for challenging arbitrary application of Section 130.

Summary of Referred Cases