The Madras High Court has held that in the matters of interception, seizure, and detention, the GST Department did not recognise the concept of "working day" and "holiday" since substantial civil rights of the parties were at stake.
The single bench of Justice Anitha Sumanth has observed that neither the assessee nor the department could have the luxury of reference to a holiday to delay or protract the proceedings. The acts of interception and retention, though an invasion of the rights of citizens have been accorded statutory sanction in pursuance of the aims and objects of the Goods and Services Act. Thus, it was imperative that the intrusive acts be carried out in strict compliance with the statutory provisions.
The petitioner has sought directions from the department to release the goods, being a consignment of Polystardone XL-10, stated to be a life-saving drug. The consignment was cleared from Chennai Seaport Customs and seized/detained on August 13, 2022, at 2.15 a.m. by the Roving Squad of the Commercial Taxes Department together with the conveyance.
The petitioner contended that there has been no proper procedure followed, in any event, none in line with the statutory prescription and that the actions of the respondents have been irregular and contrary to the Statute and Regulations.
The department contended that there was no statutory prescription for any of the forms that are referred to in Section 129. The entirety of the procedure followed, and the forms issued post interception, are only as per the mandate of the Circular issued by the Commissioner under Section 168.
The petitioner contended that there were serious flaws in the procedure followed as neither the order of detention nor the SCN had been issued within the stipulated time. A combined appreciation of the proviso under Section 129(1) and 129(3) makes it apparent that the order of detention is intended to be issued prior to the issuance of the SCN, which, in terms of Section 129(3), must be issued within 7 days from the date of detention/seizure.
The department contended that the procedure was within time, arguing that the limitation of 7 days expires on a holiday, 19.08.2022, being Janmashtami. Thus, according to him, excluding 20.08.2022 and 21.08.2022, being Saturday and Sunday, when the GST Department does not function, the notice was liable to be issued only on 22.08.2022.
Incidentally, notice has not been issued on August 22, but only on August 24, 2012. Section 129(3) requires a show cause notice to be issued within 7 days of detention or seizure. In an amendment brought to clause 2(e) of Circular dated 13.04.2018 by Circular dated 21.06.2018, the expression 'three working days' in the April circular was replaced by the expression 'three days'.
The court held that the detention is a pre-condition/requisite for the issuance of the SCN and that the order of detention is necessarily to be issued prior to the 7th day from the date of the detention/seizure of the conveyance/consignment in question.
The court stated that there is a critical difference between directing the driver to station the vehicle carrying the consignment and not to move it until further orders, when compared with an order of detention in Form GST MOV-06. In the former situation, the risk and responsibility for the consignment remain with the transporter/consignor; whereas, in the latter, and upon passing an order of detention, the risk and responsibility with regard to the consignment shifts to the GST Department. Because the transition has not occurred, claiming that Form GST MOV-02 would result in a detention order is completely incorrect.
"The procedure that has been followed by the respondents in this matter is contrary to statutory requirements as well as the instructions issued by the Commissioner. The submissions of the revenue, that the circular has no statutory force and the instructions thereunder are to be taken as flexible, are rejected," the court said.
Case Title: M/s.D.K.Enterprises Versus The Assistant /Deputy Commissioner (ST)
Case No: W.P. No.22646 of 2022
Citation: 2022 LiveLaw (Mad) 408
Counsel For Petitioner: Advocate S.Baskaran
Counsel For Respondent: Advocate C.Harsha Raj