TMI Blog2021 (1) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 07.09.2020) observing that the earlier notice has abated and calling upon the petitioner to show cause against confiscation and why the tax, penalty and other charges payable in respect of such goods and the conveyance should not be paid by the petitioner. The chief contention is that there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under way in accordance with the provisions of Section 129 of the Act in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit. It is settled that a decision is an authority for what it decides. The Hon ble Supreme Court in ROYAL MEDICAL TRUST AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2017 (9) TMI 1849 - SUPREME COURT] has held that every judgement must be read as applicable to the particular fact proved, or assumed to be proved, since the generality of the expressions which may be found are not intended to the expositions of the whole law, but are governed and qualified by the particular fact of the case inwhich such expressions are to be found - When the decision in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] , a Division bench of the Gujarat High Court, whileconsidering the question whether both Sections 129 and 130 of the Act are independent of each other or they could be used interchangeably at the discretion of the authorities, after a conspectus reference to the decisions by the Hon ble Apex Court on different aspects given the specific features of these provisions such as both the provisions beginning with the non-obstante clauses, the cross reference in each of these provisions to the liability to pay the applicable tax, penalty and fine, the conditions attached for initiation of proceedings for confiscation under Section 130 of the Act, the need for restraint in the authorities to initiate proceedings for confiscation for every infraction and to initiate such proceedings only if it could from the circumstances of the case form an informed opinion. Thus, this Court is of the considered view that the it cannot be held that the provisions of Section 130 of the Act could be invoked in cases of conveyance/ goods detained/ seized while in transit only if there is a failure to pay the amount of tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proper officer will have to take and hold possession of the things confiscated subject to consequences as contemplated the re-under. The writ petition is disposed of restoring the Show Cause Notice directing the respondent to decide, in accordance with law, on the proposed levy of tax, penalty and cess as proposed therein with reasonable opportunity of hearing to the petitioner, who shall have the liberty to seek provisional release of goods/conveyance as provided for under sub-clause (2) of Section 129 of the Act. - Writ Petition No. 10832/2020(T-RES) - - - Dated:- 21-12-2020 - Hon ble Mr. Justice B.M. Shyam Prasad For the Petitioner : Sri. Aravind Kamath., Sr. Advocate For Sri. Govindraya Kamath. K., Advocate) For the Respondent : Sri. Dhayan Chinnappa., AAG A/W Sri. Hema Kumar., AGA ) ORDER The petitioner has impugned the Show Cause Notice dated 07.09.2020 bearing No.ADCOM/ENF/SZ/CTO(Enf) 09/VTS/MOV-10/No.8/2020-21 [Annexure-A) issued by the Commercial Tax Officer [Enforcement] South Zone-9, Bengaluru 560 047 - the respondent - under Section 130 of the Central Goods and Services Tax Act, 2017/ the Karnataka Goods and Services Tax Act, 2017 and Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned in the Tax Invoices but the details of discount are not mentioned; the Consignor has procured the Goods from M/s Uttam Corporation, Delhi under [two] 2 Invoices/e-Way Bills but [eight] 8 Invoices/e-Way Bills are generated in favour of the Consignee; the Consignee is recently registered under the GST. The respondent has opined that, in the circumstances of the case, the existence of the Consignor and the Consignee in the declared places of business in the state of Delhi and Tamil Nadu is to be ascertained and there could be violations of the provisions of Sections 138, 138 (A) of the Act and Section 20 of IGST Act. 4.The petitioner responded to the detention order dated 10.08.2020 asserting that the driver of the conveyance was carrying valid documents, the necessary details were available in the Tax Invoices, the price as mentioned in the Tax Invoices was as agreed upon by the Consignor and the Consignee and there was neither contravention of law nor evasion of taxes in the transaction. Thereafter, the Show Cause Notice dated 25.8.2020 is issued in Form GST MOV-07 (Annexure-E) under Section 129(3) of the Act and Section 20 of the IGST Act/Compensation to States Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under the statute. He elaborates that the respondent, who at the first instance issued the earlier Show Cause Notice dated 25.8.2020 (Annexure-E) under Section 129(3) of the Act, has not passed any orders thereon as required despite the petitioner s detailed response; without orders on the petitioner s representations/responses filed in response to such Notice dated 25.08.2020, it would not be permissible in the Scheme of Act for the respondent to issue the impugned Show Cause Notice dated 07.09.2020 under Section 130 of the Act: as such, the impugned Show Cause Notice dated 07.09.2020 is null and void ab initio. In support of this proposition, Sri Arvind Kamath has placed reliance on the decision of this Court in Shree Enterprises and another v. The Commercial Tax Officer (GM) (ENF) (Writ Petition No. 6445/2019 and Writ Petition No. 7370/2019 (T-Res) decided on 14.03.2019) and emphasis is laid on paragraph 11 which reads as follows: In the present set of facts, it is not in dispute that the notice under section 129 (1) (b) of CGST/KGST 2017 was issued by the respondent on 2.01.2019, to which objections were filed by the petitioners. In such circumstances, it was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, or stores any goods while they are in transit, in contravention of the provisions of the Act or the Rules made thereunder, such goods and conveyance would be liable for seizure and detention, but should be released on payment of the applicable tax and penalty as contemplated under 129(1)(a) or 129(1)(b), or under 129(1)(c): subject to the provisions of 129(2) (4) there would be conclusion of such proceedings, as mandated under 129(5) on payment of the applicable tax and penalty as provided under 129(1)(a) or (b). If the mandated applicable tax and penalty as aforementioned are not paid within a period of [fourteen] 14 days of detention or seizure, further proceedings for confiscation, as provided under Section 129(6), shall be initiated in accordance with the provisions of Section 130 of the Act. In the case of interception of goods in transit there cannot be two separate proceedings: one under Section 129 and another under Section 130 of the Act. 9. Sri. Arvind Kamath further contends that the impugned Show Cause Notice dated 07.09.2020 is issued invoking Section 130 of the Act holding that the Show Cause Notice dated 25.08.2020 has abated in the premise that in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29(5). However, in the case of a breach as contemplated under Section 130 of the Act, in lieu of confiscation, penalty under Section 122 of the Act as also a separate fine, in addition to the liability to pay Tax and Charges, are imposed. This wider liability is not postulated when the goods intransit by conveyance are intercepted. Therefore, initiation of confiscation proceedings under Section 130 of the Act when a conveyance in transit is intercepted with the allegations of breach of the provisions of the Act, or the Rules thereunder, would be without jurisdiction and in violation of the Scheme under the Act. 10. Sri. Arvind Kamath submits that it is often reiterated, and it is also reiterated by the Hon ble Supreme Court of India in Mathuram Agarwal v. State of Madhya Pradesh (1999) 8 Supreme Court Cases 667 that in tax matters, the letter of law must prevail however different it might apparently be in terms of the spirit of the law, and interpreting tax statutes beyond the plain language amounts to supplementing by including something which the Legislature has not stated through the provisions. The learned Counsel also places reliance on the decision of the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in Shree Enterprises would not be of any avail to the petitioner. 12. As regards the other contention by Sri Arvind Kamath, Sri Dyan Chinnappa relying upon the decision of the Division Bench of the Gujarat High Court in Synergy Fertichem Pvt. Ltd. v. State of Gujarat (2020) 76 GSTR 81 (Gujarat) , submits that the provisions of Section 129 and Section 130 of the Act are mutually exclusive and independent of each other. There must be a harmonious reading of these two provisions keeping in mind the object and purpose behind the enactment thereof. The proceedings under Section 129 of the Act are to ensure compliance with the provisions of the Act and the Rules made thereunder in the event there is breach thereof by providing for detention and seizure of the conveyance and goods, and the release of the conveyance and goods if the applicable tax and prescribed penalty are paid under Section 129. If the amount of applicable tax and penalty as prescribed under section 129(1)(a) or section 129(1)(b) as determined for the purposes of release of the goods and conveyance are not deposited within the statutory period, then the consequence would be confiscation under Section 130 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities under Act to so initiate proceedings for confiscation under 130 of the Act 15. In Shree Enterprises suprathe order of quantification under Section 130 and penalty under Section 122 of the Act was called in question in the factual matrix of that case where, notice under section 129(3) of the Act was issued calling upon the concerned to show cause against quantification of the applicable Tax and Penalty in terms of Section 129(1) of the Act. Upon receipt of objections/ response, the impugned order in the prescribed Form under Section 130 of the Act was issued. The authorities tried to justify issuance of such order on the ground that there was a bona fide error in mentioning the provisions and the quantification in the impugned order was in effect quantification under section 129 of the CGST Act. 16. This Court, considering these circumstances has opined that it was incumbent on the part of the authority to consider the objections and pass a speaking order quantifying the tax and penalty and thereafter to release the goods subject to payment of tax and penalty or to confiscate the goods: insofar as reference to section 160 of the Act to treat the said order as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions are to be found. When the decision in Sree Enterprisessupra is examined as against this touchstone, this Court must hold that the question which is presented for consideration in the present case did not come up for consideration before this Court in such case and therefore, this decision is not helpful to the petitioner. 19. The merits of the chief contention in this case ( Whether there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under the provisions of Section 129 of the Act, in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit.) will have to be examined not just in the light of the provisions of Section 129 of the Act (about which there is no dispute) but also in the light of the provisions of Section 130 of the Act. If a person transports any goods, or store any goods while they are in transit in contravention of the provisions of the Act or the rules made thereunder consequences would have to follow to ensure there is substantial deterrent in continuing with such contravention. There cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y payable as the case may be. This provision, amongst others, becomes crucial when seen in contradiction with the provisions of section 130 of the Act. 21. Insofar as proceedings for confiscation under Section 130 of the Act, there is no provision for the provisional release of the detained conveyance and seized goods. But, with confiscation, the title to the goods and conveyance vests in the government Section 130 (5) subject to an option to the owner of the goods, as well as the owner of the conveyance, to pay Fine in lieu of confiscation apart from the liability to pay applicable tax and penalty Section 130 (2) and the third proviso . If, after an opportunity of being heard, Fine is determined and such Fineas well as the applicable tax, penalty and charges, are not paid, there will be confiscation of the goods and conveyance with the vesting of title thereto in the government. The proper officer upon adjudging confiscation shall take and hold possession of the goods/conveyance confiscated and every officer of police, on the requisition of such proper officer shall assist him in taking and holding such possession with further recourse as contemplated under sub-clause (7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch penalty and payment of applicable tax. Though, both the owner of the goods and owner of the conveyance, can avoid confiscation by paying different Fine as prescribed, this will be in addition to the liability to pay any tax, penalty and charges payable in respect of such goods/conveyance. The differences in these regards under these two provisions in the tabular columns will be as follows: Section 129 The consequence insofar liability to pay Tax and Penalty Section 130 The consequence insofar liability to pay Tax, Penalty, Fine and other charges Sub-clause (1)(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; Sub-clause (2) a. To the owner of the goods: Option to pay in lieu of confiscation, such Fine as the said officer th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release of the goods and vehicle, the authorities may be justified in issuing notice under section 130 of the Act for the purposes of initiating confiscation proceedings. In other words, at the stage of section 129 of the Act, there may not be sufficient evidence for the purpose of coming to the conclusion that the case is one where the owner of the goods or the driver of the vehicle had the intention to evade payment of tax. Further enquiry in this regard mayreveal such intention to evade tax. In such circumstances also, the authority may be justified in initiating the confiscation proceedings. The Division Bench after a detailed analysis has, amongst others, concluded that: (i) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, theharmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention ofthe provisions of this Act or the rules made thereunder was so used without the knowledge or connivance of the owner himself, 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. If in the use of conveyance for transportation of goods or storing of goods in transit, the contravention of the provisions of the Act/Rules is established, there can be no doubt, with the provisions of Section 130(1)(v) of the Act, the consequence of confiscation would be visited. If the intention to evade payment of tax in transporting the goods by conveyance is establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties may not immediately know whether there is any intent to evade payment of tax. Therefore, on detention conveyance, depending on the circumstances of the case, including the information available to the authorities, proceedings under Section 129 would inevitably follow. However, if during the course of enquiry under Section 129, it comes to the knowledge of the proper officer, as it is asserted in the present case, that the contravention of the provisions of the Act/Rules while transporting goods or in storing goods in transit, is with intent to evade payment of tax, proceedings under Section 130 of the Act would have to follow. It cannot be reasonably opined that the proceedings under Section 129 of the Act [with the liberty to seek provisional release as permissible under Section 129(2)] must first conclude and then the confiscation proceedings under Section 130 of the Act must commence. 28. The provisions of Section 130 of the Act, as Section 129 of the Act, begin non-obstante clause. The Hon ble Supreme Court in Shri Sarwan Singh Anr. v. Shri Kasturi Lal (1977) 1 SCC 750 and referred to by the Division Bench of the Hujarat High Court in Synergy Fertichem P. Ltd., v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the pendency of these proceedings, a request for provisional release as contemplated under sub-clause (3) of Section 129 of the Act, is submitted, the same will have to be considered in the light of the provisions of Section 129 read with sub-clause (6) of Section 67 of the Act. If after adjudging confiscation, the option to pay Fine in addition to the tax payable, penalty and other charges is not exercised despite opportunity under section 130(7) of the Act, the Proper officer will have to take and hold possession of the things confiscated subject to consequences as contemplated the re-under. For the foregoing, the writ petition is disposed of restoring the Show Cause Notice dated 25.08.2020 (Annexure-E) directing the respondent to decide, in accordance with law, on the proposed levy of tax, penalty and cess as proposed therein with reasonable opportunity of hearing to the petitioner, who shall have the liberty to seek provisional release of goods/conveyance as provided for under sub-clause (2) of Section 129 of the Act. The respondent is also directed to contemporaneously decide on the impugned Show Cause Notice dated 07.09.2020 (Annexure-A) in accordance with the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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