Case Note & Summary
The petitioner, M/s. Vinod Metal and M/s. Vinod Steel, proprietorship and HUF concerns of Vinodkumar Velraj Mehta, filed multiple writ petitions under Article 226 of the Constitution of India challenging orders of detention of goods and show cause notices issued under Section 129 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Maharashtra Goods and Services Tax Act, 2017. The goods were detained during transit on the ground of alleged discrepancies in the e-way bill and invoice. The petitioner contended that after the detention, they filed a reply to the detention order, but the adjudicating authority issued a show cause notice without considering the reply, thereby violating principles of natural justice. The respondents, represented by the State of Maharashtra and the Union of India, argued that the procedure was followed as per law. The court, after hearing the parties, found that the show cause notices were issued mechanically without application of mind, as the petitioner's detailed reply was not considered. The court held that the procedure adopted was contrary to the principles of natural justice and quashed the impugned orders, directing the respondents to pass fresh orders after giving the petitioner a proper opportunity of hearing. The court also directed that the goods be released provisionally subject to the petitioner furnishing a bank guarantee for the amount demanded. The judgment was delivered by a division bench of Justices G.S. Kulkarni and Jitendra Jain on 18 July 2023.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Detention of Goods - The petitioner challenged detention orders and show cause notices under Section 129 of the CGST Act, 2017, on the ground that the adjudicating authority issued show cause notices without considering the petitioner's reply to the initial detention order. The court held that the procedure adopted was contrary to the principles of natural justice and quashed the impugned orders, directing the respondents to pass fresh orders after hearing the petitioner. (Paras 1-18) B) Goods and Services Tax - Detention of Goods - Section 129 of the CGST Act, 2017 - Show Cause Notice - The court observed that the show cause notices were issued mechanically without application of mind, as the petitioner's detailed reply was not considered. The court set aside the impugned orders and remanded the matters for fresh adjudication, emphasizing that the petitioner must be given a proper hearing. (Paras 10-18)
Issue of Consideration
Whether the detention orders under Section 129 of the CGST Act, 2017, and the subsequent show cause notices were valid when the petitioner was not given a proper opportunity of hearing and the adjudicating authority failed to consider the petitioner's reply before issuing the show cause notice.
Final Decision
The court allowed the writ petitions, quashed the impugned detention orders and show cause notices, and directed the respondents to pass fresh orders after giving the petitioner a proper opportunity of hearing. The goods were directed to be released provisionally subject to the petitioner furnishing a bank guarantee for the amount demanded.
Law Points
- Principles of natural justice
- Right to be heard
- Section 129 of the CGST Act
- 2017
- Section 20 of the IGST Act
- Article 226 of the Constitution of India
