State of UP Vs Kay Pan Fragrance Pvt Ltd
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.8941/2019
(@Petition for Special Leave to Appeal (C) No. 25291/2019)
THE STATE OF UTTAR PRADESH & ORS. Appellant(s)
VERSUS
M/S KAY PAN FRAGRANCE PVT. LTD. Respondent(s)
WITH
CIVIL APPEAL NO.8942/2019
(@SLP(C) No. 25292/2019)
CIVIL APPEAL NO.8944/2019
(@SLP(C) No. 27609/2019)
O R D E R
Leave granted.
Heard the learned counsels appearing for the parties.
These appeals throw up common issues for consideration. The
first set of appeals is filed by the State of U.P., questioning the
interim order passed by the High Court directing the State to
release the seized goods, subject to deposit of security other than
cash or bank guarantee or in the alternative, indemnity bond equal
to the value of tax and penalty to the satisfaction of the
Assessing Authority. It has come on record that similar orders came
to be passed in several other writ petitions by the High Court, Signature Not Veri fied
Date: details whereof have been mentioned in the affidavit filed by the2019.11.27 11:15:59 IST
- eason:
- tate in this Court. It was brought to our notice that the High
Court, after passing the said interim order would then dispose of
the main Writ Petition as having become infructuous, consequent to
release of goods by the appropriate authority in terms of the
interim order of the High Court. In the context of that grievance,
this Court had to pass an order on 16.9.2019 which reads thus:
“Applications for exemption from filing certified copy of the impugned order and official translation are
allowed.
Issue notice on the special leave petition as also
on the prayer for interim relief.
Dasti allowed.
Tag with Special Leave Petition (C) Diary No.24795 of 2019.
Considering the fact that in the present case goods have already been released pursuant to the impugned order, no interim relief can be granted.
However, our attention was invited to an order dated
31.01.2019 passed by the High Court in a similar matter
i.e. Writ Tax No.141 of 2019 and couple of other case(s),
wherein the High Court allowed the writ petitioner(s) to
withdraw writ petition(s) after release of goods pursuant
to the interim order, despite the fact that the interim
order passed by it directing release of goods was subject
matter of challenge pending before this Court. That cannot be countenanced. For, the claim of the State cannot be made faitaccompli in this manner.
In future, if such occasion arises including in the
case of writ petitioners in this case, it will be open to
the petitioner(s) (Department) to invite the attention of High Court regarding the pending special leave petition before this Court. We are certain that the High Court will consider the request for withdrawal of writ petition
appropriately.”
(emphasis in italics supplied)
It is now brought to our notice that after the aforementioned
order of this Court, the High Court is disposing of Writ Petitions
by referring to Section 67 (8) of the Central Goods and Services
Act, 2017 (for short, ‘the Act’) and Rule 141 of the relevant
Rules. We deem it proper to advert to one such order passed by the
High Court, which is assailed by the assessee in the second set of
appeal filed before this Court. The said order reads thus:
“Heard learned counsel for the petitioner and learned Additional Advocate General for the State.
It has been brought to notice of the Court that the
goods are perishable and hazardous in nature.
Sri Manish Goyal, learned Addl. Advocate General has submitted that the Central Goods and Services Tax Act, 2017 provides a complete procedure for release of such goods, as contained in Section 67(8) of the Act read with Rule 141 of the relevant Rules, which are quoted herein below:
“Section 67(8). The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods
with the passage of time, constraints of storage
space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as
may be, after its seizure under subsection (2),
be disposed of by the proper officer in such a manner, as may be prescribed.
Rule 141. Procedure in respect of seized
goods.(1) Where the goods or things seized are
of perishable or hazardous nature, and if the taxable person pays an amount equivalent to the market price of such goods or things or the amount of tax, interest and penalty that is or may become payable by the taxable person, whichever is lower, such goods or, as the case may be, things shall be released forthwith, by an
order in FORM GST INS05, on proof of payment.”
Subject to compliance of the above provisions of law, the goods so seized may be considered for release
within next one week.
The writ petition is, accordingly, disposed of.”
In the first place, we find force in the submission canvassed
by the State that a complete mechanism is predicated in the Act and
the Rules for release and disposal of the seized goods and for
which reason, the High Court ought to have been loathe to
entertain the Writ Petitions questioning the seizure of goods and
to issue directions for its release.
In the second set of appeal filed by the assessee, the relief
claimed by way of Writ Petitions before the High Court is as under:
(a) issue a suitable writ, order or direction in the
nature of certiorari quashing the seizure order dated 25.7.2019 passed by the respondent No.2 and 3 under Section 67(2) of the Act and the panchnamas dated 19.7.2019 (Annexure – 2 & 3) to the writ petition respectively.
- issue a writ, order or direction in the nature of mandamus/prohibition declaring the search and seizure proceedings dated 25.7.2019, to be void and restraining the respondent authorities from taking any coercive action against the petitioner.
- issue a writ, order or direction in the nature of mandamus commanding and directing the respondents to release the goods of the petitioner forthwith without demanding any security.
- issue any such order and further orders which this Court may deem fit and proper in the facts and circumstances of the case.
- Award the cost of the Writ Petition to the petitioner.
It is broadly agreed that similar relief has been claimed in
all the writ petitions filed before the High Court, including the
one disposed of by the High Court as infructuous or by passing
order which is impugned by the assessee in the second set of appeal
referred to above.
For the sake of consistency, we have no hesitation in
observing that the High Court in all such cases ought to have
relegated the assessees before the appropriate Authority for
complying with the procedure prescribed in Section 67 of the Act
read with Rules as applicable for release (including provisional release) of seized goods.
Section 67 of the Act reads thus:
“Section 67 Power of inspection, search and seizure
67. (1) Where the proper officer, not below the rank of
Joint Commissioner, has reasons to believe that––
(a) a taxable person has suppressed any transaction
relating to supply of goods or services or both or
the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this
Act or has indulged in contravention of any of the
provisions of this Act or the rules made thereunder
to evade tax under this Act; or
(b) any person engaged in the business of transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping
goods which have escaped payment of tax or has kept
his accounts or goods in such a manner as is likely
to cause evasion of tax payable under this Act, he
may authorize in writing any other officer of
central tax to inspect any places of business of
the taxable person or the persons engaged in the business of transporting goods or the owner or the
operator of warehouse or godown or any other place.
(2) Where the proper officer, not below the rank of Joint
Commissioner, either pursuant to an inspection carried out under subsection (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall
be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorize in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things:
Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorized
by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:
Provided further that the documents or books or things so
seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act.
(3) The documents, books or things referred to in sub section (2) or any other documents, books or things produced by a taxable person or any other person, which
have not been relied upon for the issue of notice under
this Act or the rules made thereunder, shall be returned
to such person within a period not exceeding thirty days
of the issue of the said notice.
- The officer authorized under subsection (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied.
- The person from whose custody any documents are seized under subsection (2) shall be entitled to make copies thereof or take extracts therefrom in the presence
of an authorized officer at such place and time as such
officer may indicate in this behalf except where making
such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation.
(6) The goods so seized under subsection (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable,
as the case may be.
(7) Where any goods are seized under subsection ( 2) and no notice in respect thereof is given within six months
of the seizure of the goods, the goods shall be returned
to the person from whose possession they were seized:
Provided that the period of six months may, on sufficient
cause being shown, be extended by the proper officer for
a further period not exceeding six months.
- The Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under subsection (2), be disposed of by the proper officer in such manner as may be prescribed.
- Where any goods, being goods specified under sub section (8), have been seized by a proper officer, or any
- authorized by him under subsection ( 2), he shall
- an inventory of such goods in such manner as may
be prescribed.
- The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that subsection ( 5) of section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the word “Commissioner” were substituted.
- Where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt
for the same, and shall retain the same for so long as
may be necessary in connection with any proceedings under
this Act or the rules made thereunder for prosecution.
(12) The Commissioner or an officer authorized by him may cause purchase of any goods or services or both by any person authorized by him from the business premises of any taxable person, to check the issue of tax invoices or
bills of supply by such taxable person, and on return of
goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.”
(emphasis in italics supplied)
The relevant rules for release of seized goods are Rules 140
and 141 and the same read thus:
“Rule 140 – Bond and security for release of seized
goods
(1) The seized goods may be released on a provisional basis upon execution of a bond for the value of the goods
in FORM GST INR04 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable.
Explanation. For the purposes of the rules under the provisions of this Chapter, the “applicable tax” shall include Central Tax and State Tax or Central Tax and the Union Territory Tax, as the case may be and the cess, if any, payable under the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017)
(2) in case the person to whom the goods were released
provisionally fails to produce the goods at the appointed
date and place indicated by the proper officer, the security shall be encashed and adjusted against the tax,
interest and penalty and fine, if any, payable in respect
of such goods.
Rule 141 – Procedure in respect of seized goods
(1) Where the goods or things seized are of perishable
or hazardous nature, and if the taxable person pays an amount equivalent to the market price of such goods or things or the amount of tax, interest and penalty that is
or may become payable by the taxable person, whichever is
lower, such goods or, as the case may be, things shall be released forthwith, by an order in FORM GST INS05, on proof of payment.
(2) Where the taxable person fails to pay the amount referred to in subrule (1) in respect of the said goods
or things, the Commissioner may dispose of such goods or
things and the amount realized thereby shall be adjusted
against the tax, interest, penalty, or any other amount
payable in respect of such goods or things.”
There is no reason why any other indulgence need be shown to
the assessees, who happen to be the owners of the seized goods.
They must take recourse to the mechanism already provided for in
the Act and the Rules for release, on a provisional basis, upon
execution of a bond and furnishing of a security, in such manner
and of such quantum (even upto the total value of goods involved),
respectively, as may be prescribed or on payment of applicable
taxes, interest and penalty payable, as the case may be, as
predicated in Section 67 (6) of the Act. In the interim orders
passed by the High Court which are subjectmatter of assail before
this Court, the High Court has erroneously extricated the assessees
concerned from paying the applicable tax amount in cash, which is
contrary to the said provision.
In our opinion, therefore, the orders passed by the High Court
which are contrary to the stated provisions shall not be given
effect to by the authorities. Instead, the authorities shall
process the claims of the concerned assessee afresh as per the
express stipulations in Section 67 of the Act read with the
relevant rules in that regard. In terms of this order, the
competent authority shall call upon every assessee to complete the
formality strictly as per the requirements of the stated provisions
disregarding the order passed by the High Court in his case, if the
same deviates from the statutory compliances. That be done within
four weeks without any exception.
We reiterate that any order passed by the High Court which is
contrary to the stated provisions need not be given effect to in
respect of all the cases referred in the affidavit by the State
Government before this Court and fresh cases which may have been
filed or likely to be filed before the High Court in connection
with the subject matter of these appeals, by all concerned and are
deemed to have been set aside/modified in terms of this order.
In view of this order, all the Writ Petitions pending before
the High Court, list whereof has been furnished in the affidavit
are deemed to have been disposed of accordingly. We have passed
this common order to cover all cases of seizure during the
relevant period, to obviate inconsistency in application of Law and
also to do away with multiple appeals required to be filed by the
State/ assessee to assail the unstatable orders/directions passed
by the High Court in subject writ petition(s) referred to in the
affidavit filed by the State before this Court.
Accordingly, the appeals are disposed of in the aforestated
terms. All pending applications are also disposed of.
…………………..J
(A.M. KHANWILKAR)
…………………..J
(DINESH MAHESHWARI)
NEW DELHI;
NOVEMBER 22, 2019.
ITEM NO.299 COURT NO.7 SECTION XI
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition for Special Leave to Appeal (C) No.25291/2019
(Arising out of impugned final judgment and order dated 01082019 in WT No. 866/2019 passed by the High Court of Judicature at Allahabad)
THE STATE OF UTTAR PRADESH & ORS. Petitioner(s)
VERSUS
M/S KAY PAN FRAGRANCE PVT. LTD. Respondent(s)
(FOR ADMISSION and I.R. and IA No.162462/2019EXEMPTION FROM FILING
C/C OF THE IMPUGNED JUDGMENT and IA No.162463/2019EXEMPTION FROM
FILING O.T.[TO BE TAKEN UP AT THE BOTTOM OF THE LIST])
WITH
SLP(C) No. 25292/2019 (XI)
(FOR ADMISSION and I.R. and IA No.162499/2019EXEMPTION FROM FILING
C/C OF THE IMPUGNED JUDGMENT and IA No.162500/2019EXEMPTION FROM
FILING O.T.)
SLP(C) No. 27609/2019 (XI)
(FOR ADMISSION and IA No.178047/2019EXEMPTION FROM FILING O.T.)
Date : 22112019 These petitions were called on for hearing today.
CORAM :
HON’BLE MR. JUSTICE A.M. KHANWILKAR
HON’BLE MR. JUSTICE DINESH MAHESHWARI
For Petitioner(s)
Mr. S.K. Bagaria, Sr. Adv.
Mr. Rupesh Kumar, AOR
Mrs. Pankhuri Shrivastava, Adv.
Mr. Aditya Kumar, Adv.
Ms. Neelam Sharma, Adv.
Mr. Pravesh Bahuguna, Adv.
Ms. Vizokenuo Shua, Adv.
Ms. Vasvi Nagar, Adv.
Ms. Aishwarya Bhati, Sr. Adv.
Mr. Bhakti Vardhan Singh, AOR
Ms. Megha Agrawal, Adv.
Mr. Surjit Singh, Adv.
Mr. Nitin, Adv.
Ms. Chitrangda R., Adv.
Mr. Nithin P., Adv.
For Respondent(s)
Ms. Anubha Agrawal, AOR
UPON hearing the counsel the Court made the following
O R D E R
Special Leave Petition (C) No.25291 of 2019, Special Leave Petition (C) No.25292 of 2019 and Special Leave Petition (C) No.27609 of 2019:
Leave granted.
The Appeals are disposed of in terms of the signed order.
All pending applications are also disposed of.
(VISHAL ANAND) (VIDYA NEGI)
COURT MASTER (SH) COURT MASTER (NSH)
(Signed Order is placed on the file)
