GST UPDATE ON WHETHER SEIZURE ORDERS OF GOODS ARE APPEALABLE? 66/2020-21

GST UPDATE ON WHETHER SEIZURE ORDERS OF GOODS ARE APPEALABLE?

With the introduction of e-way bill mechanism, the cases of seizure of goods and conveyances have increased manifold as numerous cases are being reported even for minor discrepancies in the e-way bill and related documents. The goods that are being accompanied by valid GST invoices and e-way bills but minor discrepancies are also being detained and the owner of goods is being asked to pay applicable tax and penalty equal to 100% of the tax payable on such goods. If the owner does not come forward for payment of tax and penalty, the goods are released only on payment of applicable tax and penalty equal to fifty per cent of the goods reduced by the tax amount paid thereon. One important point to note here is that the provision contained in section 129(5) of the CGST Act, 2017 pertaining to detention, seizure and release of goods and conveyances in transit states that “on payment of amount referred to in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded”. Now, what is the meaning of the phrase “deemed to be concluded” used in section 129(5) of the CGST Act, 2017? Whether it indicates that the proceedings will be final and it is not possible to file appeal before the appellate authority by the assessee against the detention/seizure order? We will try to answer this question in our present update.

In our opinion, the seizure orders passed under section 129 are appealable orders but it is necessary to analyse the relevant provisions to reach at correct conclusion. It is pertinent to note that the provision contained in section 129(6) of the CGST Act, 2017 states that where the person transporting any goods or the owner of goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated under section 130 pertaining to confiscation of goods or conveyances. Therefore, in our opinion, the meaning of the phrase “deemed to be concluded” used in section 129(5) is not to indicate that the seizure order is not appealable but rather it indicates that if the applicable amount is paid, then confiscation proceedings under section 130 would not be initiated and the matter raised in show cause notice for seizure/detention of goods or conveyances would be deemed to be concluded.

Now, coming to the provision contained in section 121 of the CGST Act, 2017 pertaining to non-appealable decisions and orders. It is stated in section 121 (b) of the CGST Act, 2017 that no appeal shall lie against any decision taken or order pertaining to the seizure or retention of books of account, register and other documents. If we carefully read the above provisions, it is found that the seizure of goods or conveyances is not specified. Therefore, again, this provision fortifies our view that seizure order of goods or conveyances is appealable in GST.

In this context, reference is also placed on the recent decision pronounced by Hon’ble Gujarat High Court in the case of M/S SHIV AGRO wherein it was held that since order in form GST MOV-11 has already been passed confiscating the goods and conveyance and so the applicant is directed to avail statutory remedy of filing appeal before the appellate authority under section 107 of the CGST Act, 2017 and the High Court refused to interfere in the matter. Hence, the above decision also substantiates our opinion that the orders of seizure passed under section 129 are appealable under GST law.

It is clear that the assessee may prefer appeal against the seizure/detention orders but another practical difficulty being faced by them is confusion as regards the authority before which appeal should be filed. Whether the appeal is required to be filed before appellate authority of intercepting officer region or the jurisdictional appellate authority? As of now, the assessees are filing appeal before both the authorities to be on safer side. A clarification on this aspect is awaited from the government

This is solely for educational purpose.
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GST UPDATE ON WHETHER SEIZURE ORDERS OF GOODS ARE APPEALABLE? 66/2020-21

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