
CHENNAI: The Madras High Court has refused to quash the confiscation notice issued by the Tamil Nadu State GST authorities to a gold trading company for transporting gold ornaments worth Rs. 8.37 crore for selling them in the pretext of displaying at an exhibition.
This has been done with a view of evading tax and HC directed the petitioner to file reply to the notice.
Justice Krishnan Ramasamy passed the orders recently dismissing the petition filed by Mukti Gold Private Limited, of Chennai, which prayed for quashing the notice issued for confiscation issued under section 130 of the Tamil Nadu Goods and Service Tax Act, 2017 (TNGST Act) and the Central Goods and Services Tax Act, 2017 by the State Tax Officer, Adjudication (Intelligence), Cuddalore on August 8, 2024.
The vehicle carrying the gold ornaments valued at Rs. 8.37 crore was intercepted by the police at Panuriti in Cuddalore district on July 26, 2024, and seized the ornaments before handing them to the State GST authorities.
After due inquiry process, the authorities issued notice for confiscation of the ornaments after finding a prima facie case for evasion of tax.
Senior counsel Vijay Narayan, representing the petitioner-company, submitted that the ornaments were taken for display to attract potential buyers at an exhibition scheduled to be held in Mumbai and not meant for sale but the State GST authorities have issued the notice for confiscation without ascertaining complete facts of the issue.
The additional government pleader (AGP) C Harsharaj, appearing for the State GST authorities, submitted that the goods were moved with the ‘sole intention’ to evade payment of tax under the pretext of showcasing them for inviting buyers for the exhibition.
He also pointed out that the delivery challan mentioned the weight is 11.840 kg but the government approved weight was 11.991 kg.
Justice Ramasamy, in the order, observed, “The purpose of invoking Section 130 of the Act at the very threshold, the authorities need to make out a very strong case. Merely on suspicion, the authorities may not be justified in invoking Section 130 of the Act straightway. In this case, the officials had formed clear cut prima facie opinion to make out a very strong case in their favour for issuing notice under Section 130 of the TNGST Act.”
The judge noted that it is not only on the ground that the petitioner diverted the regular route but also on many other grounds, based on which, the respondent formed a clear-cut opinion and issued notice.
“When the Officials have raised several issues based on the material evidence collected by them, which are all disclosed in the confiscation notice, this Court, sitting under Article 226 of the Constitution of India, cannot interfere with the said notice issued by the Authorities prior to the filing of any appropriate reply by the petitioner,” he said.
The judge directed the petitioner company to file its reply along with the material evidence by clarifying all the issues raised by the officials and then, the officials shall consider the reply and pass appropriate orders.