TaxTMI 
TaxTMI 
2019 (12) TMI 1213
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....or short "the CGST Act") amidst lot of hue and cry at the instance of the writ applicants (dealers) redressing the grievance that the authorities concerned are invoking the power to confiscate the goods and the conveyance under Section 130 of the GST Act arbitrarily and without any application of mind. In such circumstances, we need to look into the two provisions and try to ascertain whether the two provisions overlap or are independent of each other. We take notice of the fact that both the provisions, i.e., Sections 129 and 130 of the GST Act start with a non-ostante clause. 3. For the sake of convenience, we treat the Special Civil Application No.4730 of 2019 as the lead matter. 4. By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs; "(A) This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ, order or direction quashing and setting aside notice dated 1.3.2009 (annexed at Annexure A) issued by the learned Respondent No.2; (B) This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus....
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....ca group which has its head office at Partida Rambleta, S/N 12191, Pobla Tornesa, Castellon, Spain. The Petitioners are one of the two distributors that the said company has for India. 4. The Petitioners have been importing goods since many years and the imported goods are sold to major tile manufacturing units across the country. The goods are imported through Mundra Port in Kandla and the Ahmedabad Airport. The Petitioners had approximate annual turnover of Rs. 50 crores in the previous financial year and it discharges crores of rupees by way of tax under the GST Acts. 5. In so far as import transactions are concerned, importers such as the Petitioners are required to pay customs duty as well as the IGST payable on such imports before clearance for home consumption. In other words for imports the IGST is paid prior to commencement of movement of goods from the port/airport. 6. The Petitioners had ordered for a consignment of ceramic pigment ink from its principal in Spain. The import took place through the Ahmedabad Airport. The Petitioners duly filed bill of entry for home consumption on 13.2.2019 and paid the applicable customs duty as well as IGST which is payable on imp....
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....arked as Annexure F. 12. On being informed about such detention the Petitioners promptly generated the e-way bill in respect of the transaction. Copy of the e-way bill generated by the Petitioners is annexed herewith and marked as Annexure G. 13. The Petitioners thereafter immediately approached the learned Respondent authorities and gave explanation. It was submitted that the goods being perishable and due to urgency of transporting goods the clearing and forwarding agent had initiated transportation of goods immediately on clearance from customs authorities without waiting for e-way bill from the Petitioners. However the fact is that IGST had been paid on the transaction even before commencement of movement of goods. Bill of entry for home consumption had been duly filed in respect of goods which was admittedly possessed by the transporter. Thus there was no question of the goods being unaccounted or there being any intention of evading payment of tax. In fact tax under the GST Acts had already been paid by the Petitioners. 14. The learned Respondent authorities however refused to release the goods on the ground of absence of e-way bill. The learned Respondent authorities i....
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....the 5 circumstances as envisaged under the said provision which are all pertaining to evasion of tax. Hence for invoking the said provision it has to be primarily alleged and proved that there was intention to evade payment of tax in respect of the goods in question. In the present case admittedly the goods were being accompanied by the bill of entry for home consumption which evidenced payment of IGST on the transaction even before commencement of movement of the goods. Thus there was no question of they being unaccounted goods or there being intention to evade payment of tax. Invoking the provisions of Section 130 of the GST Acts in the facts and circumstances of the case without there being any allegation of evasion of tax and demanding maximum redemption fine equal to the value of goods is wholly without jurisdiction, arbitrary and illegal. 21. Even in so far as Section 129 of the GST Acts is concerned the said provision allows detention of goods and subsequent release thereof on payment of applicable tax and penalty equal to 100% of tax payable on such goods if there is contravention of the provisions of the GST Acts and the rules made thereunder. Thus the provision is also ....
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....stitution of India which requires there to be free flow of trade and commerce across the country." 6. Thus, it appears that the writ applicant No.1 is a Private Limited Company and the writ applicant No.2 is its Director and Authorized Signatory. The Company is engaged in the business of import and sale of Ceramic Pigment Ink which is used as a colouring substance in the manufacturing of the ceramic tiles. The writ applicants had placed an order for a consignment of Ceramic Pigment Ink from its principal operating in Spain. The import took place through the Ahmedabad Airport. The writ applicants duly filed the bill of entry for home consumption and also paid the applicable customs duty as well as the IGST payable on the imports by the importers. It appears that while the goods were being transported from the Ahmedabad Airport to the warehouse of the writ applicants situated in Vadodara, the vehicle was detained by the GST Authorities, more particularly, the respondent No.2. In fact, the truck with the goods was intercepted at the Ahmedabad-Vadodara Express Way. It is the case of the writ applicants that the transporter produced all the documents relating to the goods including the....
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....he integrated goods and services tax has already been paid on the goods in question at the time of import thereof and that the goods in question are perishable goods with a limited shelf-life. 2.Having regard to the submissions advanced by the learned counsel for the petitioners, Issue Notice returnable on 8th March, 2019. Direct Service is permitted today. " 12. Thereafter, on 8th March, 2019, this Court passed the following order; "1. On 06.03.2019 this Court had passed an order in the following terms; "1. Mr. Uchit Sheth, learned advocate for the petitioners invited the attention of the court to the provisions of sections 129 and 130 of the Central Goods and Services Tax Act, 2017, to point out the procedure which is required to be followed by the respondent authorities in case where any goods are in transit in contravention of the provision of the Act or the rules made thereunder. It was pointed out that firstly, under section 129 of the Act, the officer is required to issue a notice as contemplated under subsection (3) thereof and thereafter, after affording an opportunity of hearing to the person concerned, pass an order thereunder. It was submitted that it is on....
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....e, as contemplated under subsections (3) and (4) of section 129 of the CGST Act, has been followed. Thus, prima facie, it appears that the showcause notice under section 130 of the CGST Act has been issued without complying with the requirements of section 129 of the CGST Act. It is also an admitted position that the goods in question are perishable in nature. 6. In the aforesaid premises, in the opinion of this Court, the petitioner has made out a strong prima facie case for the grant of interim relief. By way of interim relief, the respondents are hereby directed to forthwith release the goods in question and the Truck bearing registration no. GJ07UU7250 detained / seized under purported exercise of powers under sections 129 and 130 of the CGST Act. However, the petitioner shall file an undertaking before this Court within a week from today to the effect that in case the petitioner, ultimately, does not succeed in the petition, he shall duly cooperate in the further proceedings. 7. Stand over to 27.03.2019, so as to enable the respondents to file affidavitinreply, if any, in the matter. Direct service is permitted today. " 13. The grounds of challenge to the impugned notic....
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....missing at the time of verification, this would at the most only create a rebuttable presumption that there was intention to evade payment of tax. If the taxable person is able to establish that there was no intention of evading payment of tax then the provisions of Section 129 of the GST Acts is not permissible. D. The contravention of provisions of the GST Acts as contemplated under Section 129 of the GST Acts is a substantial contravention which would have the result of leakage of tax revenue. Hence it is provided that in case of such contravention the goods can be released only on payment of tax and 100% penalty. The said provision cannot be applied to technical contraventions where the taxable person is in a position to establish that the breach is technical in nature with no possibility of tax evasion. E. Section 129 and Section 130 of the GST Acts are provisions enacted to curb evasion of tax under the GST Acts. They are drastic measures whereby goods can be seized en-route and they would be released only on payment of tax, huge penalty and huge redemption fine. Application of such provisions to technical breaches of statutory provisions would render them vulnerable of v....
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....amount of tax and penalty as provided in sub-section (1) within 14 days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of Section 130. Considering such provisions, it is incumbent upon the learned authorities who have detained the goods under Section 129 of the GST Acts to give notice for payment of tax and penalty under Section 129(1) of the GST Acts and it is only if the owner or transporter fails to pay such tax and penalty within 14 days of the detention or seizure that the learned authorities can be permitted to initiate confiscation proceedings under Section 130 of the GST Acts. Detention of goods under Section 129 of the GST Acts and thereafter not following further procedure as stipulated under the said provision and directly issuing notice for confiscation under Section 130 of the GST Acts is wholly without jurisdiction, bad and illegal. (2) Section 129 and Section 130 of the GST Acts are both provisions meant for checking evasion of tax and therefore need to be harmoniously construed It is respectfully submitted that Section 129 as well as Section 130 of the GST Acts are both provisions which are meant for checking....
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....GST Acts are not paid within the stipulated period that resort can be made by the learned authorities to Section 130 of the GST Acts. 3. Any other interpretation will render Section 129 of the GST Acts unconstitutional An interpretation of Section 129 of the GST Acts that it is meant for purpose other than checking evasion will render it unconstitutional. Provisions similar to Section 129 of the GST Acts existed under the sales tax statutes which were challenged before Courts on the ground that they violated the freedom of trade, commerce and inter-course as guaranteed under Article 301 of the Constitution. Legislative competence of enacting such provisions was also challenged. On all such occasions the constitutional validity of the provisions regarding detention of goods in transit have been upheld by Hon. Supreme Court on the ground that they were provisions meant for checking evasion and therefore intra-vires. Reference may be made in this regard to the following judgements of Hon. Supreme Court: (a). Sodhi Transport Co. and Another v/s State of Uttar Pradesh (1986) 62 STC 381 (SC) [1st Compilation - Page 5, Relevant observations on page 11,12] (b). State of Rajasthan and....
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....kat v/s State Tax officer (2019) 61 GSTR 297 (Ker.) (1st Compilation - Page 113, Relevant observation on page 117). 6. If fraud, evasion, etc noticed then even adjudicating authority required to give option to immediately pay tax and concessional rate of penalty to secure closure of proceedings. Section 129 of the GST Acts to be read in light of such legislative policy The Petitioner may point out that in fact if fraud, evasion, etc is alleged during adjudication proceedings, Section 74 of the GST Acts provides for mechanism for adjudicating and demanding tax with penalty. Even under such provision the assessee is given an option by virtue of Section 74(5) of the GST Acts to make payment of tax, interest and 15% penalty before issuance of notice and if such payment is made then no further notice is to be given as per Section 74(6) of the GST Acts. It is further provided in Section 74(8) of the GST Acts that even if notice is issued alleging fraud, evasion, etc and the assessee pays tax, interest and 25% penalty then all proceedings in respect of the said notice shall be deemed to be concluded. Even if the assessee does not avail such option and the learned adjudicating authority ....
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....l mutatis mutandis apply to Section 129 of the GST Acts. A perusal of Section 67(6) of the GST Acts shows that it provides for release of goods in case of seizure during search proceedings. It is respectfully submitted that Section 67(6) of the GST Acts operates in 2 parts viz. the goods can either be released on provisional basis on furnishing bond and providing security as may be prescribed or the goods can be finally released on payment of tax, interest and penalty. Adaptation of such provision for the purpose of interpreting Section 129 of the GST Acts leads to the conclusion that if tax, interest and penalty are paid then the goods are to be finally released while if only security along with bond is provided then the goods are to be released provisionally. 9. Section 67(6) of the GST Acts cannot be interpreted as providing for provisional release in entirety It is respectfully submitted that Section 67(6) of the GST Acts cannot be interpreted as providing for provisional release in entirety. The phrase "on provisional basis" is applicable only in case of release of goods on furnishing security and providing bond. It is not applicable to the 2nd portion of the provision wh....
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....s detained in transit then the goods are required to be finally released and there can be no further proceedings of confiscation under Section 130 of the GST Acts. (10) It is well settled that purposive interpretation to be adopted even in taxing statutes It is respectfully submitted that it is now well settled that principle of purposive interpretation is applicable even to taxing statutes particularly when literal interpretation leads to incongruity or anomaly. Reference may be made in this regard to the judgement of Hon. Supreme Court in the case of State of Kerala & Ors. v. A.P Mammikutty AIR 2015 SC 3009 wherein it was reiterated as under: "16. In Keshavji Ravji and Co. v. CIT (1990) 2 SCC 231 it has been held by this Court that when in a taxation statute where literal interpretation leads to a result that does not sub-serve the object of the legislation another construction in consonance with the object can be adopted." (11) Since both Section 129 and 130 of the GST Acts contain non-obstante clauses, interpretation should be made by deciphering scheme and intention of legislature It is respectfully submitted that since both Section 129 and 130 of the GST Acts contain no....
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....other v/s Hansoli Devi AIR 2002 SC 3240 (2nd Compilation - Page 4). (14) Section 129(6) of the GST Acts cannot be interpreted as a recovery provision Section 129(6) of the GST Acts cannot be interpreted as a provision meant for recovery of unpaid tax and penalty. The Petitioner says that if at all the tax and penalty are not paid then the learned authorities can very well attach the goods under Section 79 of the GST Acts and thereafter sell them off to recover the amount due. In such case however the excess sale proceeds will have to be given to the assessee. Per contra in case of confiscation the title of the goods itself will vest with the Government. Thus for confiscation the learned authorities will necessarily have to establish intention to evade payment of tax. It is therefore respectfully submitted that the only possible effect of Section 129(6) of the GST Acts is to act as a threat to the assessee that if he fails to forthwith pay the tax, interest and penalty then he will risk loosing the goods in its entirety. Hence confiscation proceedings can be initiated only if tax and penalty are not paid within 14 days of detention and seizure. Any other interpretation will necess....
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.... also detained the goods under Section 129 of the GST Acts on the ground of under-valuation. It is respectfully submitted that the learned authority checking goods in transit has no jurisdiction to go into the valuation of the goods. All that he needs to ensure is that the goods are accompanied by requisite documents. This is the only jurisdiction he has by virtue of Section 68(3) of the GST Acts. Valuation is a matter of adjudication. Presuming that the learned authority suspects that the goods have been undervalued, even then he can at best forward such information to the concerned adjudicating authority of the supplier who can thereafter adjudicate the issue after following due process of law. Detention of goods on the ground of under-valuation is wholly without jurisdiction and illegal. Reliance is placed in this regard on the judgement of Hon. Gauhati High Court in the case of Shri Kamal Kumar Sharma v/s State of Assam (2006) 144 STC 458 (Gau.) (2nd Compilation - Page 11, Relevant Observations - Page 16, Para 4). Reference may also be made to the judgement of Hon. Madras High Court in the case of Jeyyam Global Foods (P) Ltd. v/s Union of India (2019) 64 GSTR 129 (Mad.) (2nd Co....
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....e and in the alternative at the most the learned authority intercepting the vehicle can demand tax and penalty under Section 129 of the GST Acts on the enhanced value which according to him is the correct value. In any case under-valuation cannot be used as pretext for direct invocation of Section 130 of the GST Acts. (20) There is no question of invoking provisions of Section 130 of the GST Acts in case of imported goods. In fact in such case there is no requirement of payment of tax or penalty under Section 129 of the GST Acts as tax is paid in advance In Special Civil Application No. 4730 of 2019 the goods in transportation are imported goods. The goods were being transported from airport to the premises of the Petitioner. Admittedly while e-way bill was not there the goods were accompanied by bill of entry for home consumption which showed that IGST had already been paid by the Petitioner before commencement of movement of goods. Thus there cannot be any question of intention to evade payment of tax since tax was already paid in advance on the imported goods at the time of clearance for home consumption at the airport. In fact since the applicable tax had already been paid....
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....rstand the Scheme of the Act. S. 122 is penalty section for certain offences enumerated therein, violation whereof attracts penalty of Rs. 10,000 or an amount equivalent to the tax evaded i.e. 100% of the tax evaded, Whichever is higher. All the offences enumerated in S.122 are the examples of contraventions of the provisions of this Act or the Rules made thereunder. S. 129 talks about detention, seizure and release of goods and conveyances in transit. As per the section which begins With non-obstante clause, any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the Rules made thereunder, such goods and conveyance shall be liable to detention or seizure and shall be released upon payment of applicable tax and 100% penalty on such tax. The examples of contraventions of the provisions of this Act or the Rules made thereunder are enumerated in S. 122 of the Act. S. 130 talks about confiscation of goods or conveyances and levy of tax, penalty and line thereon. The section also begins with non-obstante clause and states amongst other things that if any person "contravenes any of the provisions of this Act or ....
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....ked without having to satisfy any of the preconditions as stated under the said section. These conditions are sine qua non for invoking the provisions of S.130 of the Act. CBEC circular dated 13/04/2018 clauses (k) supports this interpretation inasmuch as the said clause contemplates issuance of Notice in Form GST MOV-10 which is a SCN to be issued upon the person for getting his response. If the proceedings are automatic and compulsory no such notice is required CBEC circular dated 13/04/2018 clause (1) also supports this interpretation as the said clause talks about opinion of the proper officer about the movement of goods being effected to evade payment of tax. Such opinion has to be objective opinion based on hard evidences and not merely on conjecture, surmises and presumptions. If the proceedings are automatic and compulsory no such opinion is required. S.130 applies to 5 kinds of offences enumerated in sub-section (1). The fundamental difference between language of S.129 and S.130 of the Act is the phrase with intent to evade payment of tax'. This phrase inherently carries with it the element of 'mens rea'. It is implicit in the phrase 'with intend to eva....
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....of action. Under the Scheme of the Act, there is a clear distinction between various contraventions of the provisions of this Act or the Rules made thereunder which are accidental, technical or inadvertent as against contraventions which are willful, fraudulent or with an intent to evade payment of tax. For the former, penalty is light whereas for the later penalty is heavy and in a given case may be followed by prosecution. Provisions of S. 73 and 74 are one such example. S. 129 and 130 are another example. However, Act does not contemplate consecutive proceedings under both the sections for the very same contravention. If a contravention is penalized under S.129, the same contravention cannot be once again penalized u/s 130. Without there being a different cause of action or something more to the contravention, proceedings u/s 129 cannot be succeeded by S.130. As regards the argument that if a person does not pay the necessary tax and penalty as demanded u/s 129(1) r/w S. 129 (3) of the Act, revenue has no option but to initiate proceedings u/s 130 as prescribed u/s 129(6) of the Act because then revenue is left remedy less as no further proceedings are prescribed u/ s 129 of....
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....he penalty is paid under Section 129 of the Act, then the authority has no power to proceed further under Section 130 of the Act for the purpose of confiscation of the goods and the conveyance. In other words, the confiscation proceedings under Section 130 would be permissible only if the dealer fails to pay the applicable tax and penalty imposed by an order under Section 129(3) of the Act. Confiscation is a coercive measure to ensure payment of tax and penalty levied on a dealer who, otherwise, is at a threat of loosing the goods itself. The vociferous argument is that the confiscation is not an automatic consequence ensuing from the detention and seizure. It is only when the applicable tax and penalty that may be levied under Section 129 is not paid, there could be proceedings initiated under Section 130 which would lead to confiscation of the goods itself. The argument is that the provisions of Section 130 are applicable only in the event of failure on the part of the dealer to pay the applicable tax and penalty. The principal argument of all the learned counsel appearing for the writ applicants is that the concerned authorities have not been able to understand the true purport ....
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....onveyance while in transit. Section 130 deals specifically with the confiscation of such goods/conveyance. (III) According to Mr. Trivedi, for invocation of Section 129 of the Act all that is necessary is "contravention of the provisions of the Act or the Rules", whereas Section 130 of the Act prescribes specific circumstances for the purpose of invoking the provisions relating to confiscation. It is pointed out that Section 130 of the Act specifically talks about the intention, i.e., mens rea. Both the sections are independent of each other. (IV) It is further submitted that it is preposterous on the part of the writ applicants to contend that Section 130 of the Act can be made applicable only if Section 129(6) of the Act is not complied with. It is submitted that the provisions of Section 130 are independent of the provisions of Section 129 of the Act and that the same can be invoked by the department at any stage i.e. (i) after concluding the proceedings initiated under Section 129 of the Act, or (ii) after issuing notice under Section 129(3) of the Act, or (iii) directly after detaining the goods under Section 129(1) of the Act. Thus, there cannot be any straight jacket proce....
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....partment to hold a full~fledged inquiry before invoking the provisions of Section 130 of the Act inasmuch as, there can be a situation like supplying the goods without getting registered under the Act, which directly triggers Section 130(1)(iii) of the Act, for which, no inquiry is required. Thus, in such similar situations, there may not be any inquiry, and directly on that ground alone. the provisions of Section 130 of the Act proposing confiscation of goods/conveyance can be invoked by the department. This apart, in the above-referred situation, it may also happen that considering the same as contravention of the provisions of the Act, the concerned officer may inadvertently issue notice under Section 129(3) of the Act. However, thereafter it may be realised by the concerned officer that the said contravention directly triggers the provisions of Section 130(1)(iii) of the Act and that the said goods are liable for confiscation. Hence. under such circumstances, the authorities would like to proceed further by issuing a notice under Section 130(1) read with 130(4) of the Act for the proposed confiscation. Therefore. it is incorrect to contend that there has to be 'anything mor....
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.... argument falls flat on the basic ground that the provisions of Sections 129 and 130 of the Act themselves refer to the provisions of Section 122 of the Act, so as to decide/compute the amount of penalty to be imposed upon the Assessees. Thus. once there is no conflict between the provisions of Section 122 of the Act on one hand and Sections 129 and 130 of the Act on the other, there arises no question of invocation of 'non-obstante' clause in such a situation. (XI) It is submitted that the provisions of sections 73 and 74 of the Act deal with the 'demands and recovery' to be made by the assessing officer based upon the assessment, whereas the provisions of Section 129 of the Act deal with the 'detention/ seizure'. While assessing the returns, if the assessing officer finds that the amount of tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for any reason, either with mala fide intention or without the same, as the case may be, the provisions of Section 73/74 of the Act would be invoked. However, the provisions of Section 129 of the Act deal with situation where the evasion of tax/co....
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.... all the incidental powers to prevent the evasion of such tax. The power to seize and confiscate the goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and is intended to operate as a deterrent against the tax-evaders and are, therefore, ancillary or incidental to the power to levy tax on the goods and thus, fall within the ambit and scope of the legislative powers. He submitted that it is not correct on the part of the writ applicants to contend that the imposition of penalty is arbitrary and unconstitutional inasmuch as, the same is only levied in case where the owner of the goods is not coming forth and the goods are not being accounted for by any one and hence, with a view to safeguard the revenue's interest, such a measure/yardstick is incorporated in the provisions of Section 129(1)(b) of the Act. for which, the aforesaid two Sections 129 and 130 of the Act cannot be faulted. (XV) Mr. Trivedi further, very elaborately, explained the different eventualities for the purpose of taking recourse of Sections 129 and 130 respectively of the CGST Act as under; 1st Eventuality 2nd Eventuality 1. Section 129(1)- Detention/Seizure O....
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....sions. Submissions on behalf of the Union of India; 23. Mr. P.Y. Divyeshvar, the learned standing counsel appearing for the Union of India in one of the petitions has tendered his written submissions. The written submissions are as under; "THE POWER OF CONFISCATION IS BEYOND THE POWER TO LEVY GST. THEREFORE SECTION 130 OF CGST ACT, 2017 IS ULTRA VIRES PROVISIONS OF THE CONSTITUTION is not correct as GST Act brought in the Constitution by way of The Constitution (One Hundred and First Amendment) Act, 2016. According to which the Parliament has power to make laws with respect to GST. Further, there is no physical control on such supply of goods and services. The control is effected through documents. For regulation of the activities of supply certain documents have been prescribed. The scheme of levy and collection of GST envisages compliance of applicable law inter alia through these documents. The entire mechanism is meant to ensure that there is no leakage of revenue by way of supply/movement of goods and are devised to thwart any unscrupulous move of using the same e-way bill twice. The system is devised in such a way to self-sufiiciently proceed on the basis of claimed infor....
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..... There is no physical control on such supply of goods and services. The control is effected through documents. For regulation of the activities of supply certain documents have been prescribed. The scheme of levy and collection of GST envisages compliance of applicable law inter alia through these documents. There may be major or minor violations relating to the documents. Board vide Circular No. 64/38/2018GST dated 14.09.2018 has clarified the situations of minor violations pertaining to invoice/e-way bills/any other documents accompanying the consignment where proceedings under section 129 of the CGST Act, 2017 may not be initiated. The lapse/violation involved in the instant case does not appear minor in nature as elaborated in the Board circular No 64/38/2O18-GST dated 14.09.2018. The entire mechanism is meant to ensure that there is no leakage of revenue by way of supply/movement of goods. It appears that in the instant case there was an attempt to violate the provision of law, which if undetected, could have resulted in defrauding government revenue. 0n interception of the vehicle and ascertaining commitment of violations by the concerned persons, mandatory penal provisions ....
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....s is to be fulfilled before commencement of the act of transportations. Law does not provide any relaxation as may be claimed by the petitioner. It was incumbent upon the petitioner to ensure that all the requirements are duly met with. His claims appear after thought and the rationale put forth by him is not potent enough to alter the legal position. The provisions regarding quantum of mandatory penalty are legal and in accordance with the spirit and intent of the Act. Thus it appears that no unconstitutionality is involved in the mechanism of provisions relating to release of goods as contained in section 129 of the CGST. In case of R.K. Gar: v. Union of India and Others reported in 1981 4 SCC 675 the Constitution Bench of the Hon'ble Supreme Court held that every legislation particularly in economic matters is essentially empiric and it is based on experimentation. It was further held and observed as under :-"7. Now while considering the constitutional validity of a statute said to be violative of Article 14, it is necessary to bear in mind certain well established principles which have been evolved by the courts as rules of guidance in discharge of its constitutional func....
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....constitutional powers and no valid ground has been mentioned by the petitioner holding the enacted law as invalid. Mere ground of quantum of fine is no basis for holding it to be violative of the referred articles of the Constitution. Thus it appears that no unconstitutionality is involved in the mechanism of provisions relating to release of goods as contained in section 129 of the CGST Act, 2017. From the above, it is clear that penalty is less where the owner of the goods comes forward and penalty is higher where the owner of the goods doesn't come forward. In the GST matrix the supplier is the fulcrum for any supply and therefore the penal provisions are less harsh for any violation of the provisions of the said Act committed by the supplier/owner of the goods. However, where the supplier of the goods is non-traceable or obscure, there appears to be more stronger apprehension of intention of evasion and therefore the penal provisions are much more onerous. As stated above, CGST Act, 2017 is a complete code in itself and a Special Act. Having envisaged the relevant situations a mechanism has been devised in law and wherein, depending upon the concomitant factors, penalties....
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....ents have demarcated spheres of legislation and governance. With Clearly delineated legislative fields, neither can trespass upon the other's legislative territory-the residuary powers lying with the Union, though. The division of powers is zealously guarded in no other sphere than fiscal. Taxation as the backbone of a welfare nation, which India is; the legislative fields are as distinct, yet interconnected, as the spinal segments do. 26. That said, 101st Constitutional Amendment is the epoch-making federal feat unparalleled in constitutional democracies-almost. It is, I may say, a constitutional coup de gracedelivered against the fiscal confusion compounded by conflicting taxation regimes. This amendment, perhaps, marks the crest of cooperative federalism. It has created even a constitutional institution-GST Council. 27. As constitutional democracies have gained experience, Utopian vision of justice has given way to utilitarian view. Material comfort or upliftment has become the hallmark of good governance. So economic analysis of law substitutes the notion of simple justice with that of economic efficiency and wealth maximisation. True, nations like France successfully emb....
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....ment to introduce GST. It noted that while the Centre is empowered to tax services and goods up to the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a tax on the supply of services while the Centre does not have the power to levy a tax on the sale. Thus, it suggested for a constitutional amendment that would contain a mechanism for a harmonious structure of GST that would not affect the federal fabric. 34. Then, with the deliberations between the Centre and States, aided by the Empowered Committee, the constitutional amendment process to usher in GST began. It resulted in the "Constitution (One Hundred and Fifteenth Amendment) Bill, 2011" After that one got lapsed, came the 2014 Amendment Bill (as passed by Parliament). Passed on 8 September 2016, this Bill became "the Constitution (One Hundred and First Amendment) Act, 2016". 35. The GST Council, constituted in September 2016, is a constitutional institution comprising as its members the Finance Ministers of the Union and the SMteS3 including Union Territories with Legislatures. It has the authority "to recommend to the Union and the States on various facets of GST, i....
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....that GST would be levied at four rates viz. 5%, 12%, 18% and 28%. The schedule or list of items that would fall under each slab has been worked out. Besides these rates, a cess would be imposed on "demerit" goods to raise resources for compensating States as States may lose revenue owing to implementing GST. (vii) GST will apply to all goods and services except Alcohol for human consumption. (viii) GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural Gas) be applicable from a date to be recommended by the GSTC. (ix) Tobacco and tobacco products would be subject to GST. Besides, the Centre will have the power to levy Central Excise duty on these products. (x) A common threshold exemption would apply to both CGST and SGST. Taxpayers with an annual turnover not exceeding Rs. 20 lakh (Rs. 10 Lakh for special category States) would be exempted from GST. For small taxpayers with an aggregate turnover in a financial year up to 50 lakhs, a composition scheme is available. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a State during the year without the benefit of Input Tax Credit. This scheme will be optional. (xi) The list of ....
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.... (GSTN). It will provide front end services and will also develop back end IT modules for States who chose the same. Constitutional Amendment Act, An Overview: 42. As we shall see, the CA Act inserts, repeals, and amends certain parts of the Constitution. Inserted are the Articles 246A, 269A, and 279A; repealed is the Article 268A; amended are Articles 248, 249, 250, 268, 269, 270, 271, 286, 366, and 279A. Besides that the Sixth and the Seventh Schedules, too, have been amended. 43. Article 246A, inserted through Section 2 of the Amendment Act, is a marvel of the federal fiscal mechanism. By this Article, the State Legislatures now have the power to make laws regarding GST tax imposed by the Union or by that State and to implement them in intra-state trade. The Centre, of course, continues to have exclusive power to make GST laws regarding inter-state trade. Both the Union and States in India now have simultaneous powers to make law on the goods and services. 44. Article 269A, inserted through Section 9 of the Act, deals with levy and collection of goods and services tax in the course of inter-State trade or commerce. That is, in case of inter-state trade, the amount collected ....
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.... have been removed from the ambit of GST and have been subjected to Union jurisdiction. Newspapers advertisements, and Service Tax have been brought under GST (entries 84, 92, 92C). Similarly, in the State List, petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel, and alcoholic liquor for the human consumption have been included, unless the sale is in the course of inter-State or International trade and commerce. Entry tax and Advertisement taxes have been removed. Taxes on entertainment are only to be included to the extent of that imposed by local bodies. (entries 52, 54, 55, 62). 48. To be explicit, in Article 366 of the Constitution, after clause (12), clause (12A) Was inserted: "goods and services tax" means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption. After clause (26), clauses (26A) and (26B) were inserted: "Services" means anything other than goods; "Staten with reference to Articles 246A, 268, 269, 269A and Article 279A includes a Union territory with Legislature. 49. Section 18 of the Amendment Act provides for compensation to States f....
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....Emergency is in operation Amended It has a similar impact as does the amended Article 249. 268 Duties levied by the Union but collected and appropriated by the States Amended Additional Duties of Excise (Medicinal and toilet preparations) Stand subsumed into GST. 268A Service tax levied by Union and Collected and appropriated by the Union and the States: Omitted Service tax has been subsumed into GST. So Entry No. 92C of List-I too stands omitted. 269 Taxes levied and collected by the Union but assigned to the States Amended The arrangement under Article 269 is subjected to Article 269A, a new provision. 269A Not existing Inserted Levy and collection of goods and services tax during inter-State trade or commerce. The power to levy and collect GST during inter-State trade or commerce is vested with the Government of India. The taxes so collected will be apportioned between the Union & the States in manner prescribed. 270 Taxes levied and distributed between the Union and the States. Amended Now Article 268A an Entry No. 92C of List-I stand omitted; so service tax is subsumed under GST. So in Article 270, a reference to Article 268A has been omitted, and a new r....
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....hed. Omitted Now, taxes on the sale or purchase of newspapers and on advertisements published therein have been subsumed into GST. Entry 92C Taxes on services Omitted Service tax has also been subsumed into GST. List II Entry 52 Taxes on the entry of goods into a local area for consumption, use or sale therein. Omitted Purchase tax, too, has been subsumed into GST. Entry 54 Taxes on the sale or purchase of goods other than Amended Now the taxes are confined to the sale of petroleum crude, high speed diesel, motor spirit (petrol), natural newspapers, subject to the provisions of entry 92A of List I. (Entry 92A of List I concern inter-State trade or commerce.) gas, aviation turbine fuel, and alcoholic liquor for human consumption. But excluded is the sale in the course of inter-State trade or commerce. (Now the sale or purchase of goods stands subsume by GST) Entry 55 Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television. Omitted Taxes on advertisements other than advertisements broadcast by radio or television has also been subsumed into GST. Entry 62 Taxes on luxuries....
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....oods and conveyances in transit. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-- (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such t....
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....self, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122. (2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon: Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. (3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in add....
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....ious. 62. In Union of India v. G.M. Kokil, AIR 1984 SC 1022, the Supreme Court, at Paragraph 10, held as follows: "It is well-known that a non-obstante clause is a legislative device which is usually employed to give overriding effect to certain provision over some contrary provision that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions." 63. In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, [1986] 4 SCC 447, at Paragraph 67, the Supreme Court held as follows: "67. A clause beginning with the expression "notwithstanding any thing contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract" is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the nonobstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the nonobstante clause or any contract or document mentioned the en....
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....ention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law and the setting in which the clause to be interpreted occurs." 68. In Madhav Rao Jivaji Rao Scindia v. Union of India and another [(1971) 1 SCC 85], Hidayatullah, C.J. observed that - "..the non obstante clause is no doubt a very potent clause intended to exclude every consideration arising from other provisions of the same statute or other statute but "for that reason alone we must determine the scope" of that provision strictly. When the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all alone by itself. A search has, therefore, to be made with a view to determining which provision answers the description and which does not. " 69. In R.S. Raghunath v. State of Karnataka and another, [(1992) 1 SCC 335], a threeJudge Bench referred to the earlier judgments in Aswini Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369], ....
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....impediment for the operation of the enactment or the provision in which the nonobstante clause occurs. [See: 'Principles of Statutory Interpretation', 9th Edition by Justice G.P. Singh Chapter V, Synopsis IV at pages 318 & 319] 72. When two or more laws or provisions operate in the same field and each contains a non-obstante clause stating that its provision will override those of any other provisions or law, stimulating and intricate problems of interpretation arise. In resolving such problems of interpretation, no settled principles can be applied except to refer to the object and purpose of each of the two provisions, containing a non obstante clause. Two provisions in same Act each containing a non obstante clause, requires a harmonious interpretation of the two seemingly conflicting provisions in the same Act. In this difficult exercise, there are involved proper consideration of giving effect to the object and purpose of two provisions and the language employed in each. [See: for relevant discussion in para 20 in Shri Swaran Singh & Anr. v. Shri Kasturi Lal; (1977) 1 SCC 750] 73. Normally the use of the phrase by the Legislature in a statutory provision like 'no....
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.... and efficacy is to be preferred to the one which would render it otiose or sterile. 23. Further a Division Bench of the Karnataka High Court in N.V. Bagi vs. Commissioner of Commercial Taxes in Karnataka, [1991] 83 STC 449 has held "in matters which deal with provisions to prevent evasion of tax which is due to the State the construction of the provision must be strict and in favour of the enforcement of the provision". 34. The scheme of the Act is that either ST-1 Form should be available or tax should be collected. If a dealer shows such indulgence as to delivery of ST-1 Forms for a particular period, he takes the risk. It would have been further the best advised to insist on their supply even for the transaction intended to be completed by them. 35. This Court in A.V. Fernandez vs. The State of Kerala, AIR 1957 SC 657 opined that, however great the hardship may appear to the judicial mind, "In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substances of the law. If the revenue satisfies the Court that the case falls strictly within th....
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....rom the Court's construction." 76. In R. V. National Asylum Support Services [(2002) 4 All ER 654], LORD STEYN observed "the starting point is that language in all legal texts conveys meaning according to the circumstances in which it was used. It follows that context must always be identified and considered before the process of construction or during it. It is, therefore, wrong to say that the court may only resort to the evidence of contextual scene when an ambiguity has arisen." 77. In V.L.S.Finance Ltd., v. Union of India, reported in 2013 (6) SCC 278, at Paragraph 18, the Hon'ble Supreme Court, held as follows: "As is well settled, while interpreting the provisions of a statute, the court avoids rejection or addition of words and resort to that only in exceptional circumstances to achieve the purpose of Act or give purposeful meaning. It is also a cardinal rule of interpretation that words, phrases and sentences are to be given their natural, plain and clear meaning. When the language is clear and unambiguous, it must be interpreted in an ordinary sense and no addition or alteration of the words or expressions used is permissible. As observed earlier, the aforesa....
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....stitute of Chartered Accountants of India v. M/s.Price Waterhosue & Anr., AIR 1998 SC 74; and The South Central Railway Employees Co-operative Credit Society Employees Union, Secundrabad v. The Registrar of Co-operative Societies, AIR 1998 SC 703)." 79. At Paragraph 45, the Hon'ble Supreme Court considered the decision made in Rohitash Kumar v. Om Prakash Sharma reported in 2013 (11) SCC 451, wherein, the Hon'ble Supreme Court, at Paragraphs 27 to 29, held as follows: "27. The Court has to keep in mind the fact that, while interpreting the provisions of a Statute, it can neither add, nor subtract even a single word A section is to be interpreted by reading all of its parts together, and it is not permissible, to omit any part thereof. The Court cannot proceed with the assumption that the legislature, while enacting the Statute has committed a mistake; it must proceed on the footing that the legislature intended what it has said; even if there is some defect in the phraseology used by it in framing the statute, and it is not open to the court to add and amend, or by construction, make up for the deficiencies, which have been left in the Act 28. The Statute is not to b....
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....and has no application to all provisions in a taxing statute. It does not, for example, apply to a provision not creating a charge for the tax but laying down the machinery for its calculation or procedure for its collection. The provisions in a taxing statute dealing with machinery for assessment have to be construed by the ordinary rules of construction, that is to say, in accordance with the clear intention of the legislature which is to make a charge levied effective." In deciding Gursahai Saigal's case (supra) the Court followed the observations made by the Privy Council in Commissioner of Income-tax v. Mahaliram Ramjidas and by the House of Lords in Whitney v. Commissioners af Inland Revenue. In the case of Mahaliram Ramjidas (supra) the Privy Council observed: "The section, although it is a part of a taxing Act, imposes no charge on the subject, and deals merely with the machinery of assessment. In interpreting provisions of this kind the rule is that construction should be preferred which makes the machinery workable utres valeatpotius quam Pereat." In Whitney's case (supra), Lord Dunedin made the following observations: "My Lords, I shall now permit myself ....
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....ontravention of the Act or rules made thereunder 83. In all the aforesaid eventualities, the goods or conveyance shall be liable for confiscation. However the conveyance shall not be confiscated where the owner of the conveyance proves that it is without the connivance of owner himself, his agent or person in charge of the conveyance. Further, the person shall be liable to pay penalty under section 122 of the Act. 84. If the goods or conveyance are liable to be confiscated under the provisions of this Act, the proper officer shall give the owner of the goods an option to pay fine in lieu of confiscation. 85. The amount of fine shall not exceed the market value of goods as reduced by the amount of tax payable thereon. However, at the same time, the aggregate of fine and penalty leviable shall not be less than the amount of penalty as leviable under section 129(1) While section 129 is applicable on transporters, section 130 primarily covers the owner. 86. Where the conveyance is used for transportation of goods or passenger on hire, the owner of the conveyance shall be given an option to pay in lieu of confiscation of the conveyance a fine equal to amount of tax payable on the go....
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....ke in documentation which is easily rectifiable and made without fraudulent intent or gross negligence. Explanation.--For the purpose of this sub-section,-- (a) a breach shall be considered a 'minor breach' if the amount of http://www.judis.nic.in tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record. (2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach. (3) No penalty shall be imposed on any person without giving him an opportunity of being heard. (4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified. (5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the b....
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....in case a consignment of goods is accompanied by an invoice or any other specified document and not an e-way bill, proceedings under section 129 of the CGST Act may be initiated. 5. Further, in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations: a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct; b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill; c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct; d) Error in one or two digits of the document number mentioned in the e-way bill; e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct; f) Error in one or two digits/characters of the vehicle number. 6. In case of the above si....
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....sions of the Act or the Rules for the purpose of detention and seizure of the goods and conveyances in transit. The contravention could be trivial or it may be quite serious sufficient enough to justify the detention and seizure. This litigation is nothing but an outburst on the part of the dealers that practically in all cases of detention and seizure of goods and conveyance, the authorities would straightway invoke Section 130 of the Act and thereby would straightway issue notice calling upon the owner of the goods or the owner of the conveyance to show-cause as to why the goods or the conveyance, as the case may be, should not be confiscated. Once such a notice under Section 130 of the Act is issued right at the inception, i.e, right at the time of detention and seizure, then the provisions of Section 129 of the Act pale into insignificance. The reason why we are saying so is that for the purpose of release of the goods and conveyance detained while in transit for the contravention of the provisions of the Act or the rules, the section provides for release of such goods and conveyance on payment of the applicable tax and penalty or upon furnishing a security equivalent to the am....
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....y justifiable grounds or reasons to believe, the authorities may not be justified to straightway issue a notice of confiscation under Section 130 of the Act. For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e,. at the stage of Section 129 of the Act itself, the case has to be of such a nature that on the face of the entire transaction, the authority concerned is convinced that the contravention was with a definite intent to evade payment of tax. We may give one simple example. The driver of the vehicle is in a position to produce all the relevant documents to the satisfaction of the authority concerned as regards payment of tax etc., but unfortunately, he is not able to produce the e-way bill , which is also one of the important documents so far as the Act, 2017 is concerned. The authenticity of the delivery challan is also not doubted. In such a situation, it would be too much for the authorities to straightway jump to the conclusion that the case is one of confiscation, i.e, the case is of intent to evade payment of tax. 103. We take notice of the fact that practically in all cases, after the detention and seizure of the goods ....
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....is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act. Any opinion of the authority to be formed is not subject to objective test. The language of Section 130 of the Act leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act or proceed for the purpose of confiscation at the very threshold. But, at the same time, there must be material based on which alone the authority could form its opinion in good faith that it has become necessary to call upon the owner of the goods as well as the owner of the conveyance to show-cause as to why the goods and the conveyance should not be confiscated under Section 130 of the Act. The notice for the purpose of confiscation must disclose the materials, upon which, the belief is formed. It could be argued that it is not necessary for the authority under the Act to state reas....
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....curing release of the vehicle in question, the second respondent has proceeded to pass the impugned order without hearing the petitioner on the question of confiscation of the goods and conveyance. 9. As can be seen from the impugned order, it is in the format provided therefor, viz. in FORM GST MOV-11. In paragraph 1 of the impugned order all the blanks have been filled up which indicate the registration number of the conveyance and the time, place and date and by whom the conveyance came to be intercepted. Paragraphs 3 and 4 thereof do not contain any details in the blank spaces meant to be filled in. One of the significant paragraphs in the statutory form is paragraph 5, which reads thus: "The person in charge has not filed any objections/the objections filed were not acceptable for the reasons stated below: a)... b).... Thus, in terms of the statutory format provided for passing an order under section 130 of the CGST Act, the officer adjudging is required to provide the reasons for confiscating the goods and conveyance. Reference may also be made to paragraph 6 of the statutory form, which reads thus: "6. In view of the above, the following goods and conveyance are co....
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.... Act and the rules made thereunder with the intent to evade payment of tax respectively. Insofar as clauses (ii) and (iii) are concerned, the very fact that the person does not account for the goods on which he is liable to pay tax under the Act; or supplies any goods which are liable to tax under the Act without having applied for registration, would be sufficient for ordering confiscation of the goods. Therefore, while making an order of confiscation under section 130 of the CGST Act, the officer adjudging it will have to state as to which clause of sub-section (1) of section 130 of the CGST Act is attracted in the facts of the said case. If it is the case of the officer adjudging it that the case falls under clauses (i) or (iv) of sub-section (1) of section 130 of the CGST Act, then for the purpose of making an order of confiscation, he will have to come to the conclusion that the goods were supplied or received in contravention of the provisions of the Act or the rules made thereunder with the intent to evade payment of tax. In other words, the officer adjudging the case, while making an order of confiscation under clauses (i) or (iv) of sub-section (1) of section 130 of the CG....
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....hall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon." Thus, sub-section (2) of section 130 of the CGST Act provides that the fine leviable shall not exceed the market value of the goods, less the tax chargeable thereon. It is, therefore, clear that the fine provided under the first proviso to sub-section (2) of section 130 of the CGST Act is the maximum fine leviable. Consequently, the proper officer adjudging the case is required to examine the seriousness of the contravention and impose fine accordingly. It is not as if in every case the proper officer should levy the maximum fine. The order of confiscation should, therefore, reflect due application of mind on the part of the proper officer to the quantum of fine imposed by him. 15. A perusal of the impugned order reveals that the proper officer has levied more than the maximum fine leviable in terms of the first proviso to sub-section (2) of section 130 of the CGST Act, inasmuch as, he has levied fine equal to the market value of the goods without deducting the tax chargeable thereon. Moreover, there is nothing in the order to refle....
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.... be equated with a valid decision-making (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor.) (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg See Ruiz Torija v. Spain, (1994) 19 EHRR 553 and Anya v. University of Oxford, 2001 EWCA Civ 405 (CA), wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process"." 17. In CCT v. Shukla & Bros.,(2010) 4 SCC 785, the Supreme Court held thus: "14. The principle of natural jus....
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....t least sufficient to indicate an application of mind to the matter before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. 20. Thus, the Supreme Court has consistently held that a quasi-judicial authority must record reasons in support of its conclusions and that reasons are an indispensable component of a decision making process. In CCT v. Shukla & Bros (supra) the Supreme Court has held that giving reasons in support of the conclusions arrived at is an ingredient of the principles of natural justice. 21. Viewed in the light of the principles enunciated in the decisions referred to hereinabove, the impugned order is in breach of the principles of natural justice on two counts: firstly, that though the matter was kept for hearing on 28.08.2019, the second respondent passed the impugned order on 24.08.2019 without affording any opportunity of hearing to the petitioner; and secondly, because the impugned order is a totally non-speaking order which does not reflect the reason as to why the proper off....
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.... talks about penalty under Section 122 of the Act, the order for confiscation and penalty cannot be imposed without recording the finding of fact that the person concerned intended to avoid tax as mens rea was suggested to be an essential ingredient for imposing penalty. In other words, penalty being penal in nature, cannot be imposed unless mens rea is established by adducing necessary evidence. On the other hand, the learned Advocate General would submit that mens rea cannot be read into Section 130 of the Act. 108. In the Divisional Personnel Officer, Southern Railway and Anr. v. T.R. Challappan, AIR 1975 SC 2216, the Hon'ble Supreme Court considered the meaning of "penalty" in departmental proceedings against the employees. As the argument had been advanced that the expression "penalty" referred to in Rule 14 of the Railway Servants (Discipline and Appeal) Rules 1968, which provided for imposition of penalty of dismissal or removal in respect of a railway servant, stood confirmed by the Court holding as under:- "The word 'penalty' imposed on a railway servant, in our opinion, does not refer to a sentence awarded by the Court to the accused on his conviction, but ....
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....to both criminal and civil liability, being denied as penal retribution, punishment for crime of offence, the suffering in person, rights or property which is annexed by law of judicial decision to commission of a crime or public offence. The term 'penalty' embraces all consequences visited by law on heads of those who violate police regulations and extends to all penalties whether eligible by State in interest of community or by private persons in their won interest, even when statute is remedial as well as penal. The word 'penalty' is not confined to punishment or crime; it has a broader meaning in law of contracts; it is used as contradistinguished from liquidated damages. It is also used to indicate the sum to be forfeited on breach of a bond, and in common parlance it expresses any disadvantage resulting from an act." 110. And held that in view of the definition it was not possible to hold that the said provisions were not applicable in case of exempted establishments for the reason that some more provisions, legal or penal, were also made applicable to exempted establishments with a view to make to penal provisions more stringent with a view to check the ....
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....9;accused' for commission of an 'offence' in a criminal Court. Therefore, merely because penalty clause exists in Section 23 (1) (a), the nature of the proceedings under the Section is not changed from 'adjudicator' to 'criminal' prosecution. An order made by an adjudicating authority under the Act is not that of conviction but of determination of the breach of the civil obligation by the offender. .......A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is for different from the penalty for a crime or a fine of forfeiture provided as punishment for the violation of criminal laws. We are in agreement with the aforesaid view and in our opinion, what applies to 'tax delinquency' equally holds good for the 'blameworthy' conduct for contravention of the provisions of FERA, 1947. We, therefore, hold that mens-rea (as understood in criminal law) is not an essential ingredient for holding a delinquent liable to pay penalty under Section 23(1) of FERA 1947 for contravention of the provisions of Section 10 of FERA, 1947 and that penalty is attracted under Section 23 (1)(a) as soon as contravent....
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....nces are defined with sufficient accuracy.... Mens rea is an essential ingredient of an offence. However, it is a rule of construction. If there is a conflict between the common law and the statutory law, it has always been held that it is a sound rule to construe a statute in conformity with the common law. But it cannot be postulated that statute cannot alter the course of the common law. The parliament, in exercise of its constitutional powers makes statutes and in exercise of those powers it can affirm, alter or take away the common law altogether. Therefore, if it is plain from the statute that it intends to alter the course of the common law, then the plaint meaning should be accepted. The existence of mens rea as an essential ingredient of an offence has to be made out by the construction of the statute." 114. While deciding the said case, the Full Court placed reliance upon a judgment by Wright, J. in Sherras v. De Ruten, 1985-1 QB 918, wherein it was observed as under:- "There is a presumption that mens rea, an evil intention or a knowledge of the wrongfulness of the act, is an essential ingredient in every offence, but that presumption is liable to be displaced either....
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....r:- "Although penalty has been regarded as an additional lax in a certain sense and for certain purpose, it is not possible to hold that penalty proceedings are judicial and essentially a continuation of the proceedings relating to assessment where a return has been filed." 117. In Commissioner of Income Tax v. Kalyan Das Rastogi, 1993 (Suppl) 1 SCC 663, the Hon'ble Supreme Court placed reliance upon, approved and followed the judgment in Gujarat-Travancore Agency (supra) and reiterated the same view. 118. In Commissioner of Income Tax, Gujarat v. I.M. Patel & Co., 1993 (Suppl) (1) SCC 621, the Hon'ble Supreme Court considered a large number of its earlier judgments, including Gujarat Travancore Agency (supra) and Kalyan Das Rastogi (supra) and categorically held that in a lax liability, the plea of mens rea cannot be taken. 119. In Income Tax Commissioner, Andhra Pradesh, Hyderabad v. Bhikaji Dadabhai & Co., AIR 1961 SC 1265, the Apex Court held that penalty is an additional tax imposed upon a person in view of his dishonesty or contumacious conduct. 120. In Corpus Juris Secundum, 85 580, it has been stated as under:- "A penalty imposed for a tax delinquency is a ....
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....ould be that even if the assessee raises a bonafide contention that a particular item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the Court to be not acceptable. 123. In Om Prakash Sheo Prakash and Ors. etc. etc. v. Union of India Anr., AIR 1984 SC 1194, the Hon'ble Supreme Court considered the provisions of the Amending Sales Tax Act, made applicable retrospectively imposing the penalty also, and examined its validity on the touch-stone of provisions of Article 19(1)(f) & (g) and Article 21 of the Constitution of India, as Article 21 of the Constitution of India, as Article 20 of the Constitution guarantees the protection in respect of conviction for the offence under any law for the time-being in force unless the other conditions provided therein are complied with. The Hon'ble Apex Court considered a large number of its earlier judgments, including the meaning and definition of "penalty" and reached the conclusion that "a penalty imposed by the Sales Tax Authority is only a civi....
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....are inclined to the view that forfeiture has a punitive impact. Black's legal Dictionary states that 'to forfeit' is 'to lose, or lose the right to, by some error, fault, offence or crime, 'to incur a penalty.' 'Forfeiture', as judically annotted, is 'a punishment annexed by law to some illegal act or negligence....', something imposed as a punishment for an offence of delinquency. The word, in this sense, is frequently associated with the word "penalty." According to Black's Legal Dictionary, 'the terms 'fine', 'forfeiture' and 'penalty' are often used loosely, and even confusedly, but when a discrimination is made, the word 'penalty' is found to be generic in its character, including both fine and forfeiture. A 'fine' is a pecuniary penalty, and is commonly (perhaps always) to be collected by suit in some form. A 'forfeiture' is a penalty by which one loses his rights and interest in his property. ......The word 'forfeiture' must bear the same meaning of a penalty for breach of a prohibitory direction. The fact that there is arithmetical identity, assuming it to be so, betwe....
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.... to in Section 78 (2)(a) exist or can exist. Such submission of false or forged documents or declaration at any check post or even thereafter can safely be presumed to have been motivated by desire to mislead the Authorities. Hiding the truth and tender falsehood would per se, so existence of mens-rea even if required. Similarly, where despite opportunity having been granted under Section 78(5), if the requisite documents referred to in Clause (a) of Sub-section (2) are not produced, even though the same are existing, would clearly prove the guilty intent. It is not possible to agree with the learned counsel for respondents that the breach referred to in Section 78(5) can be regarded as technical or venial. Once the ingredients of Section 78(5) are established after giving a hearing and complying with the principles of natural justice, there is no discretion not to levy or levy lesser amount of penalty." 128. In Bengal Iron Merchant Association and Anr. v. Commissioner, Commercial Tax and Anr., 1996(7) SCC 537, the Hon'ble Supreme Court examined the provisions of Rule 89-A (2) of the Bengal Sales Tax Rules, 1941, and held that the said provisions of Rule 89-A (2) of the sa....
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....: - "The statements made by the dealers were, therefore, untrue but the penalty has been quashed on the ground that there was no mens rea in making the wrong averments in Form C." 132. The Court further came to the conclusion that the word 'falsification' might have slightly different interpretation if the criminal prosecution was launched, but it was a case of penalty, which was levied to compensate the Revenue and to cause the delinquent to comply with the law; therefore, mens rea was not at all attracted in the case. 133. The Division Bench of the Madras High Court in Vijaya Electricals v. State of Tamil Nadu, 1991 82 STC 268, while interpreting the analogous provisions of Section 10-A read with Section 10(b) of the Act, held that mens rea need not be established and if representation is found to be false, it is sufficient to levy the penalty. 134. Similar view was reiterated by the Division Bench of the Madhya Pradesh High Court in Central India Motors v. C.L. Sharma, Assistant Commissioner of Sales Tax, Indore Region, Indore and Anr., 1980 46 STC. 135. In State of Madhya Pradesh v. Narain Singh and Ors., 1983 (3) SCC 596, the Hon'ble Supreme Court considered....
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....reiterated in M/s. Bhikaji Dadabhai & Co. (supra),. 138. Similarly, in Commissioner of Sales Tax v. Parson Tools & Plants, AIR 1975 SC 1039, the Apex Court observed as under:- "Where the legislature clearly declares its intent in the scheme and language of a statute, it is the duty of the Court to give effect to the same without scanning its wisdom or policy, and without engrafting, adding or implying anything which is not congenial to or consistent with such expressed intent of the law-giver; more so if the statute is a taxing statute." Relevant provisions of Section 22-A of the Act reads as under:- "(3) The owner or person in charge of a vehicle, boat or animal shall carry with him a goods vehicle record, trip sheet or a log book, as the case may be, and (such other documents) as may be prescribed in respect of the goods carried in or on the vehicle, boat or animal, as the case may be, and produce the same before any officer in charge of check-post or barrier or any other officer as may be empowered by the Government in that behalf. The owner or person in charge of a vehicle, boat or animal entering the State limits or leaving the State limits shall also give a declaratio....
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.... 140. Similar view has been reiterated in Assistant Commercial Tax Officer, Flying Squade v. Voltas Ltd., 2000 (120) STC 270. While deciding the said case, reliance has been placed upon the earlier judgments in Mahaveer Conductors (supra) and Hindustan Steel Ltd. (supra). 141. A Division Bench of the Rajasthan High Court in Lalji Moolji Transport Company v. State of Rajasthan, DBCWP No. 324/2002., decided on 10.4.2002, considering the judgments of the Hon'ble Supreme Court in R.S. Joshi and M/s. D.P. Metal (supra) and M/s. D.P. Metals (supra) etc., has taken a view that it would not be correct to protect a tax evader saying that there was absence of mens rea. The submission of false of forged document of declaration at the check post or even thereafter, can safely be presumed to have been motivated by desire to mislead the authorities. Thus, it is not always necessary that the doctrine of mens rea is attracted in every fiscal statute in all situations. The Court further held as under:- "The requirement of law is meant to be strictly construed, particularly in areas of evasion of tax. We cannot lose sight of the fact that of the there are attempts to avoid statutory obligati....
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....aterial. It was an inference drawn for which there was no basis." 143. Confiscation proceeding is a quasi judicial proceeding and not a criminal proceeding. Ordinarily, proof beyond reasonable doubt and proof of mens rea are foreign to the scope of the confiscation proceeding. However, the language of the statute should be read closely. Sometimes, the language of the statute may indicate the need to establish the element of mens rea. It is true that mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. However, applying the dictum of the Supreme Court as laid in Tamil Nadu Housing Board (supra), the provisions of Section 130 of the Act is made more stringent by use of the word "intent". When the law requires intention to evade payment of duty, then it is not mere failure to pay duty. It must be something more. This something more should not be construed as obligatory on the part of the Revenue to establish or prove the necessary mens rea for the purpose of confiscation and penalty. 144. When it comes to confiscating the vehicle, the consideration would be altogether different. The idea is to confiscate the vehicle, irrespective....
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....sited, then the obvious consequence of the same would be forfeiture of the goods and the vehicle with the Government. The authorities are not expected to keep the goods or the vehicle in their possession for an indefinite period of time. Clause (5) of Section 130 makes it clear that where the goods or conveyance are confiscated under the Act, the title of such goods or conveyance would vest in the Government. 147. However, even in case of failure to comply with clause (6) of Section 129 of the Act, the confiscation would not be automatic but a notice will have to be issued, calling upon the owner of the goods to show-cause as to why the goods should not be confiscated. 148. However, in the aforesaid context, we would like to clarify something. If a situation arises wherein after the determination of the tax and penalty in accordance with the provisions of Sections 129(2) and (3) respectively, if the person, transporting any goods, or the owner of the goods, fail to pay the amount of tax and penalty within 14 days of such detention or seizure, then further proceedings would be initiated in accordance with the provisions of Section 130, i.e, for the purpose of confiscation. However....
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....e occupier (if any) of such land and on all such persons known or believed to be interested therein, or to be entitled to act for persons so interested, as reside or have agents authorized to receive service on their behalf, within the revenue district in which the land is situate" 14. Section 9 of the Act provides for an opportunity to the "person interested" to file a claim petition with documentary evidence for determining the market value of the land and in case a person does not file a claim under Section 9 even after receiving the notice, he still has a right to make an application for making a reference under Section 18 of the Act. Therefore, scheme of the Act is such that it does not cause any prejudicial consequence in case the notice under Section 9(3) is not served upon the person interested. 15. While determining whether a provision is mandatory or directory, in addition to the language used therein, the Court has to examine the context in which the provision is used and the purpose it seeks to achieve. It may also be necessary to find out the intent of the legislature for enacting it and the serious and general inconveniences or injustice to persons relating ther....
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....r. 19. In Sharif-Ud-Din Vs. Abdul Gani Lone AIR 1980 SC 303, this Court held that the difference between a mandatory and directory rule is that the former requires strict observance while in the case of latter, substantial compliance of the rule may be enough and where the statute provides that failure to make observance of a particular rule would lead to a specific consequence, the provision has to be construed as mandatory. 20. Similar view has been reiterated by this Court in Balwant Singh & Ors. Vs. Anand Kumar Sharma & Ors. (2003) 3 SCC 433; Bhavnagar University Vs. Palitana Sugar Mill Pvt. Ltd. & Ors. AIR 2003 SC 511; and Chandrika Prasad Yadav Vs. State of Bihar & Ors., AIR 2004 SC 2036. 21. In M/s. Rubber House Vs. M/s. Excellsior Needle Industries Pvt. Ltd. AIR 1989 SC 1160, this Court considered the provisions of the Haryana (Control of Rent & Eviction) Rules, 1976, which provided for mentioning the amount of arrears of rent in the application and held the provision to be directory though the word "shall" has been used in the statutory provision for the reason that non-compliance of the rule, i.e. non-mentioning of the quantum of arrears of rent did involve no inval....
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....n the opening words of Section 5 is not directory,as has been sought to be argued, but mandatory and non-fulfilment thereof would not permit a marriage under the Act between two Hindus. Section 7 of the 1955 Act is to be read along with Section 5 in that a Hindu Marriage, as understood under Section 5, could be solemnised according to the ceremonies indicated therein" 25. The law on this issue can be summarised to the effect that in order to declare a provision mandatory, the test to be applied is as to whether non-compliance of the provision could render entire proceedings invalid or not. Whether the provision is mandatory or directory, depends upon the intent of Legislature and not upon the language for which the intent is clothed. The issue is to be examined having regard to the context, subject matter and object of the statutory provisions in question. The Court may find out as what would be the consequence which would flow from construing it in one way or the other and as to whether the Statute provides for a contingency of the non-compliance of the provisions and as to whether the non-compliance is visited by small penalty or serious consequence would flow therefrom and as ....
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....ty. The dealer has also furnished a security equivalent to the value of the goods. There is, hence, no question of the applicable tax and penalty being not paid, since at any time the bank guarantee could be enforced." 152. A close reading of para-7 of the Kerala High Court decision, referred to above, would indicate that the same, on the contrary, supports the view we have taken. In para-7, the relevant observations are "we would not look at other situations wherein confiscation is mandated which is not relevant for the purpose of detention simplicitor under Section 129". The other situations which the Kerala High Court is talking about are the situations as envisaged in Section 130 of the Act. In our opinion, para-7 of the Kerala High Court judgment does not lay down a proposition of law that the proceedings under Section 130 of the Act can be initiated only in the event of the applicable tax and penalty not paid. 153. It has also been argued before us by the learned counsel appearing for the petitioners by placing reliance on the explanation (1) to the provisions of Section 74 of the Act that Section 130 of the Act cannot be invoked by the department for the transaction with ....
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....no conflict between the provisions of Section 122 of the Act on one hand and Sections 129 and 130 of the Act on the other, there arises no question of invocation of 'non-obstante' clause in such a situation. 156. We are also at one with Mr. Trivedi that reference to Sections 73 and 74 of the Act is not warranted for interpreting Sections 129 and 130 of the Act, more particularly, when they all are independent of each other. The provisions of Sections 73 and 74 of the Act are similar to the provisions of Section 11A of the Central Excise Act and Section 28 of the Customs Act, which deal with the adjudication proceedings. Despite this, Section 110 is present in the Customs Act, which speaks about seizure and similarly, Section 129 is present in the Act for detention/seizure. Therefore, Sections 129 and 130 of the Act have non-obstante clauses, whereby they can be operated upon in spite of Sections 73 and 74 of the Act. 157. In the aforesaid context, we may look into the decision of the Supreme Court in the case of Salex Tax Officer & Ors. vs. Dutta Traders, (2007) 14 SCC 215, upon which strong reliance has been placed by Mr. Trivedi, more particularly, the observations made....
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....16-D where the assessee offers to pay the tax on the spot for release of his goods/vehicle, the Sales Tax Officer (Vigilance) is required to calculate/compute the tax and, on payment of tax, he allows the goods/truck to be released. In our view, this computation undertaken by the Sales Tax Officer (Vigilance) on the spot is also an assessment. However, that assessment (computation) of the tax has nothing to do with the regular assessment under Section 12 of the Act. " 158. In many matters of the present type, we have noticed that the goods are detained on the ground that the tax paid on the product was less. In such matters, although the documents were found to be in order and the description of the product also accorded with the relevant declaration, still the consignment were detained on the ground that the tax paid was less. 159. In our opinion, the detention and seizure of goods on such ground cannot be justified. In such an eventuality, the correct procedure which the inspecting authority is expected to follow is to alert the Assessing Authority to initiate the proceedings "for assessment of any alleged sale at which the dealer will have his opportunities to put forward his....
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....nd those trading in the same product--betel nut--have had many rounds of litigation. Eventually, as seen from the Exts.P1 to P5 proceedings, this Court and the Revenue accepted that the product is not supari and it attracts lesser tax. The Exts.P6, P6(a), P7, and P7(a) are the first petitioner's purchase and supply invoices. 28. The Exts.P8 and P8(a) are important; they are the first petitioner's recent GST returns for June and August, 2018. In those returns, the first petitioner has assigned the same HSN Code, as he did reflect in the Ext.P9 invoice. He paid tax only at 5%. Thus the documents before the assessing authority and those that accompanied the consignment accord with one another. 29. In this context, we may examine J.K. Synthetics Limited v. Commercial Taxes Officer, (1994) 4 SCC 276. On how to interpret Tax Statutes, the Supreme Court has held that charging provisions must be construed strictly, but not the machinery provisions, "which should be construed like any other statute". It has also held that "the power to levy and collect interest is substantive law though part of machinery provision". 30. In J.K. Synthetics Limited the issue was whether the appe....
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....gedly attempted to evade the sales tax. The petitioner's producing all the documents had no impact. Instead, the detaining officer insisted on the petitioner's furnishing bank guarantee for certain sum as a condition for release of the goods, pending enquiry. 34. The order in enquiry affirmed that the Enquiry Officer was "satisfied" that there was attempt at evasion of tax. So the penalty followed. In this context, a learned Single Judge of this Court has observed that when there is scope for a genuine dispute regarding any liability for tax, the question of detaining the goods at the check-post or imposing penalty under Section 29A does not arise. There is a ground for a genuine dispute whether there was any taxable sale at all. Rams, then, further observes: "In such cases it is not for the check-post authority to act on mere suspicion and to find that there is any attempt at evasion of payment of tax, which alone vests him with the jurisdiction to act under S. 29A. At best, he can only alert the assessing authority in Ernakulam to initiate proceedings for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his picas o....
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....open to the Squad Officer to detain the goods beyond a reasonable period. The process can, at best, take a few hours. It goes without saying that the person, who is in charge of transportation, will have to necessarily cooperate with the Squad Officer for preparing the relevant papers. [See Jeyyam Global Foods (P.) Ltd. vs. Union of India & Ors., (2019) 64 GSTR 129 (Mad.)] 161. In the course of the hearing of these matters, an attempt was also made on behalf of the learned counsel appearing for the petitioners to compare the provisions of the Customs Act/Excise Act with the provisions of the Act, 2017, more particularly, Section 129 of the Act. 162. Section 110(1) of the Customs Act cannot be compared with Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. 163. The provisions of Sections 110(2) and 124 respectively of the Customs Act do not contemplate that the goods whic....
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.... Mr. Dave, in support of the aforesaid submission, has placed reliance on the following decisions; "(1) In the case of Commissioner of Customs (import), Mumbai vs. Finesse Creation Inc., reported in 2009 (248) ELT 122 (Bom.); (2) Commissioner of Customs, Amritsar vs. Raja Impex (P.) Ltd., 2008 (235) ELT 623 (Tri.-LB) 166. In Finesse Creation Inc. (supra), the Bombay High Court held as under; "4. CESTAT in its order relied on the judgment of the Punjab & Haryana High Court in the case of Commissioner of Customs, Amritsar Vs. Raja Impex (P) Ltd. 2008 (229) ELT 185 (P & H). The learned Division Bench amongst others, was considering the substantial question of law, namely whether redemption fine under section 125 of the Customs Act, 1962 can be imposed even if the goods are neither available for confiscation nor cleared on undertaking/bond. After considering the various contentions and judgments relied upon, the learned Division Bench of the Punjab & Haryana High Court upheld the order of the tribunal that in the absence of the goods being available no fine can be imposed. Revenue had relied on the judgment of the Supreme Court in Weston Components Ltd. Vs. Commissioner of Cus....
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....Act and imposed redemption fine and penalty. Since the goods had been released unconditionally and were not available, those could not be confiscated. The Commissioner of Customs found that proceedings for the confiscation of goods were invalid as they had been initiated by issuing show cause notice after clearance of the goods and there is no averment in the show cause notice, which may show that the appellants were the owners of the goods at the time of issuing of the show cause notice. The Commissioner of Customs also found that the goods were not available and no undertaking had been obtained by the department at the time of release of goods and therefore, confiscation of the goods, cannot be maintained and no fine in lieu of confiscation can be imposed especially where the goods were neither seized nor cleared on undertaking. While passing the said order, the Commissioner of Customs has relied upon the observations of Hon'ble Apex Court in the case of M/s Weston Components Ltd. Vs. Commissioner of Customs, New Delhi (supra ), Ram Khazana Electronic vs. CC ( AIR Cargo ) Jaipur reported as 2003 (156) ELT 122 (Indel) and Chinku Exports vs. CC, Calcutta reported as 1999(112) E....
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....ubstantial question of law arises for our determination in the present appeal and the same is hereby dismissed.." 168. The principle discernible from the aforesaid two decisions is that the redemption cannot be imposed if the goods are not available. Redemption can be imposed provided the goods were handed over to the owner upon execution of any bond/undertaking. 169. In the Supreme Court decision, the goods were released on execution of bond. However, later, when the said goods became liable for confiscation, and the goods were available, it has been held that the power of the Customs Authority to confiscate the goods, or in lieu thereof, to release the same on payment of redemption fine is not taken away merely because the goods were initially released on execution of bond/undertaking. In the two High Court decisions, the goods were not available for confiscation, and in such circumstances, there was neither a question of confiscation of goods nor redemption thereof. According to Mr. Trivedi, if the goods are under seizure, or they were cleared on understanding that the same would be made available in case of order of confiscation thereof, then in that case, the goods can eithe....
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....unt of penalty leviable under sub-section (1) of section 129: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon." 173. The meaning of the noun "redemption" as found in the "Compact Oxford Dictionary, Thesaurus and Wordpower Guide", (Ninth impression - 2004) (Dictionary Editor: Catherine Soanes)", which means, "the action of redeeming or the state of being redeemed". Thus, any redemption is not necessarily confined to the goods in question, but the redemption is with regard to the conduct as well. 174. The per-requisite for making an offer of fine under Section 130 of the Act is pursuant to the finding that the goods are liable to be confiscated. In other words, if there is no authorisation for confiscation of such goods, the question of making an offer by the proper officer to pay the "redemption fine", would not arise. Therefore, the basic premise upon which the citadel of Section 130 of the Act rests is that the goods in question are liable to ....
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....question No. (iii). " 175. We would like to follow the dictum as laid down by the Madras High Court in para-23, referred to above. 176. We may also refer to and rely upon a Supreme Court decision in the case of M. G. Abrol vs M/S. Shantilal Chhotalal & Co, AIR 1965 SC 197, wherein the Supreme Court dealt with the very same issue and held as under; "Another contention raised for the respondent is that the Additional Collector could not confiscate the goods after they had left the country and that therefore his order of confiscation of the scrap which according to him was not steel skull scrap was bad in law. The affidavit filed by the Additional Collector, appellant No. 1, mentions the circumstances in which the scrap exported by respondent was allowed to leave the country. It was allowed to leave the country after the Collector had formally seized it and after the agents of the shipping company had undertaken not to release the documents in respect of the cargo to its consignees. This undertaking meant that the cargo would remain under the control of the customs authorities as seized cargo till further orders from the Additional Collector releasing the cargo and making it avai....
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.... the Courts and Tribunals throughout the territories in relation to which any High Court exercises its jurisdiction. It is an acknowledged position of law that the powers of the High Court under Articles 226 and 227 of the Constitution of India cannot be curtailed under any circumstance as the power flows from the Constitution itself. No statutory bar can effect the power of the High Court under Articles 226 and 227 of the Constitution of India. 178. Despite such wide and untrammeled powers, the Courts have evolved certain self-imposed limits while exercising these powers. The High Courts, normally, would not go beyond the justified inhibitions under any Statute except where there is a complete jettisoning of the rule of law or under exceptional circumstances which demand timely judicial interdict. This inhibition is basically ordained, keeping in mind that there is a national weal behind any valid piece of Legislation incorporating and inhering in itself the social objective behind any Legislation. Though, no limitations or fetters have been put on the powers of the High Court under Articles 226 and 227 of the Constitution of India, as the High Courts perform as sentinel on the q....
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....ct assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word "evade" in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word "intent". The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mens rea cannot be read into Section 130 of the Act. (iii) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway. (iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshol....
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....ns 129 and 130 of the Act have non-obstante clauses, whereby they can be operated upon in spite of Sections 73 and 74 of the Act. (x) The provisions of sections 73 and 74 respectively of the Act deal with the 'demands and recovery' to be made by the assessing officer based upon the assessment, whereas the provisions of Section 129 of the Act deal with the 'detention/ seizure'. While assessing the returns, if the assessing officer finds that the amount of tax has not been paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilized for any reason, either with mala fide intention or without the same, as the case may be, the provisions of Section 73/74 of the Act would be invoked. However, the provisions of Section 129 of the Act deal with situation where the evasion of tax/contravention of the Act/Rules is detected during transit itself, requiring the adoption of summary like proceedings. Therefore, the said provisions operate in different spheres. (xi) The comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not....
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....the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate proceedings "for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially concerning the exigibility of tax and, more particularly, the rate of that tax. (xv) Even in the absence of the physical availability of the goods or the conveyance, the authority can proceed to pass an order of confiscation and also pass an order of redemption fine in lieu of the confiscation. In other words, even if the goods or the conveyance has been released under Section 129 of the Act and, later, confiscation proceedings are initiated, then even in the absence of the goods or the conveyance, the payment of redemption fine in lieu of confiscation can be passed. (xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations a....
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.... long drawn litigation. The Government should strive hard to ensure that the litigation arising from the new tax regime gets minimized over a period of time. 186. We clarify that we have, otherwise, not gone into the merits of the petitions. All the petitions are at the stage of notice for the purpose of confiscation. In all the cases, this Court has ordered interim release of the goods as well as the conveyance. This release is subject to the final outcome of the confiscation proceedings. We have not examined individual petition for the purpose of finding out whether the notice for confiscation under Section 130 of the Act is justified in the facts and circumstances of the case or not. We have laid down general principles with regard to the applicability of Sections 129 and 130 of the Act. Let these matters now be notified before the Hon'ble Court taking up tax matters for the purpose of deciding whether the confiscation notice deserves to be quashed and set aside or not. (J. B. PARDIWALA, J) (A. C. RAO, J) (PER : HONOURABLE MR.JUSTICE A.C.RAO) 187. I have had the benefit of going through the final conclusion drawn by my Learned Brother Justice J.B. Pardiwala in the jud....