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TMI Blog2021 (12) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... lieu of confiscation, even before orders of confiscation are issued. In addition, an incidental question that arises is on the quantum payable as fine in lieu of confiscation. 3. The genesis of the dispute emerges from an inspection conducted by the officers of the Kerala State GST Department on 03-08-2021, who seized, as per Rule 139(2) of the Central Goods and Services Tax Rules, 2017, (for brevity 'the Rules'), beedis, stored by the respondent in this review petition in his different godowns. Orders of prohibition were later issued under Rule 140 of the Rules. For easier comprehension, the review petitioners are hereafter referred to as 'Tax Officer', while the respondent will be referred to as the 'dealer'. 4. It is appropriate to mention that beedi is an indigenous smoking product like a cigar or a cigarette, made by rolling a dried leaf filled with flaked tobacco and is undoubtedly perishable in nature, with a limited shelf life. 5. When attempts to obtain release of the seized beedis were unsuccessful, the dealer initially filed W.P.(C) No.17280 of 2021, wherein, by an interim order dated 26-08-2021, this Court observed that the dealer is free to approach the Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interim order dated 07-09-2021 in W.P. (C) No.18169 of 2021. Arguments: 10. The learned Senior Government Pleader Dr.Thushara James, contended that section 130 of the Act does not envisage a provisional release, and the option to pay the fine in lieu of confiscation can arise only after the Tax Officer issues an order of confiscation. The conspicuous absence of the time within which an order to release the goods or conveyance is to be issued, according to the learned Senior Government Pleader, indicated that time was at the discretion of the Tax Officer. According to the learned Senior Government Pleader, the discretion rests upon the Tax Officer to pass an order of confiscation immediately or later, depending upon the circumstances and it is only thereafter that the goods could be released. 10.1. Drawing cue from the concept of provisional release under section 129(6) as well as section 67(6) of the Act, it was also submitted that the absence of a similar provision in section 130 of the Act, indicates the intention of the legislature against a provisional release under the section. After referring to section 125 of the Customs Act, 1962 (for short 'the Customs Act'), it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the review petition. However based upon the contentions raised in the review, the following three issues arise for consideration: Issues (i) Whether the provisions of section 130 of the Act contemplate any provisional release of goods, as directed in the interim order of this Court? (ii) Whether the amount payable for release of the goods under section 130 of the Act is fine alone or is it fine, penalty and tax to be paid together for securing release of the goods? and, (iii) What is the basis or rate for calculating the fine under section 130 of the Act? Issue No. (i) Whether the provisions of section 130 of the Act contemplate any provisional release of goods, as directed in the interim order of this Court? 13. For a better understanding of the disputes raised, it is apposite to extract section 130 of the Act. S.130. Confiscation of goods or conveyances and levy of penalty. (1) Notwithstanding anything contained in this Act, if any person- (i) supplies or receives any goods in contravention of any of the provisions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government." 14. As the subtitle of the section indicates, the provision deals with two facets of penalising evasion or attempt to evade tax - confiscation and penalty. Section 130(1) of the Act stipulates that, if any of the five conditions specified in the said sub-clauses (i) to (v) are satisfied, then, there can be confiscation of goods and conveyances and a further penalty leviable on the person. 15. Confiscation is not defined in the Act. It is a term that has its origin in Roman law meaning 'seizing' or 'taking into the hands of the Emperor and transferring it to the Emperors Fiscus or Treasury'. The essence of the concept of confiscation is that the confiscated goods are taken by the State as its own property, depriving the true owner of the title to the said goods. (See P. Ramanatha Iyer's Advanced Law Lexicon Vol-I, 4th edition). 16. Confiscation is a drastic power. It is no doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely look at what is clearly written. There is no room for any intendment. The Statute is, in fact, a fiat of the Legislature. It should be read as it is, without deforming or distorting its language. There is no latitude, under any circumstances whatsoever, to interpret taxing statutes based upon any assumption or presumption. The approach of the court, while considering the interpretation to be given to the provisions of a taxing statute is to look at each word of the provision in its literal sense, without any addition, deletion, assumption or presumption. Neither hardship nor equity, has any role while considering the meaning to be ascribed to the provisions of a taxing statute. Further, there is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him because the legislature failed to express itself clearly. Reference to the authoritative pronouncements of the Supreme Court in State of West Bengal v. Kesoram Industries Ltd. and Others [(2004) 10 SCC 201], and that in Commissioner of Customs (Import), Mumbai. v. M/s. Dilip Kumar and Company and Others [(2018) 9 SCC 1], alone would suffice to fortify the aforementioned legal propositions. 20. In the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act', 'officer adjudging it' and 'owner of the goods', employed in section 130(2) of the Act are decisive in understanding the meaning of the said statutory provision. Of course, the words 'officer adjudging it' is seen in section 130(6) also. However, when the words 'officer adjudging it', is followed by the words 'owner of the goods' as evident from Section 130(2) of the Act, there cannot be any contrary interpretation. The reason is plain and clear. Once the confiscation order is issued, as mentioned earlier, ownership of the goods, by operation of the statute, vests with the Government. The use of the present continuous words "officer adjudging it" and the words 'owner of the goods' is clearly indicative of the intention behind incorporating section 130(2) of the Act. The intent of section 130(2) of the Act is to provide an option to the owner to redeem the goods before he is divested of his ownership and while the process of adjudication is going on. 25. The provision can be looked at from a different angle also. If section 130(2) of the Act was not there in the statute book, would the option to pay a fine in lieu of confiscation be still available? The answer is evident fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by virtue of section 130(7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily. Thus, in view of the above deliberations, I am of the firm view that section 130(2) of the Act applies before the order of confiscation is issued. 28. The decision relied upon by the learned Senior Government Pleader rendered by the Karnataka High Court in M/s.Meghdoot Logistics case, according to me, can be distinguished. Though the said decision observes in paragraph 21 that there is no provision for a provisional release of the seized goods under section 130 of the Act, this Court is of the considered view that the question of release under section 130(2) of the Act never arose for consideration in that case and the observations were only obiter dicta of the Court. The aforesaid decision arose on an issue under section 129 of the Act and in the process of distinction, a passing reference alone was made to section 130. In such a view of the matter, I am not persuaded to follow the said judgment. 29. In the decision in Special Civil Application No.4043 of 2020 by the High Court of Gujarat in Kannan v. State of Gujarat, though it was observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of legislature when the language is plain and unambiguous. 33. While understanding the scope of Section 130(3), this Court cannot ignore the interplay between section 130(2) and 130(3) of the Act. To enable release of goods under section 130(2) of the Act, fine in lieu of confiscation has to be imposed. When the owner of the goods opts to pay a fine in lieu of confiscation, while the adjudication is continuing, an obligation to pay the tax, penalty and charges for such goods or conveyance, becomes payable in addition to the fine. Thus, when the fine is paid in lieu of confiscation, the tax, penalty and other charges become payable thereon. 34. The words 'be liable' indicates that the tax, penalty and charges will fall due upon the owner of the goods or the person referred in sub-clause (1), at any point of time thereafter, and not necessarily along with the payment of fine in lieu of confiscation. The words 'in addition' 'be liable' and 'payable' in section 130(3) are indicative of the burden of obligation that will befall, over and apart from fine. These words cannot be stretched to mean that the liability will have to be paid immediately. There is a necessity to condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods or conveyance opts to pay fine in lieu of confiscation does not mean that the facts essential for incurring the liability to order confiscation automatically stands proved. That proof has to come out through the process of adjudication, as otherwise, there would be conferment of unbridled powers upon the Proper Officer to coerce every dealer to pay fine, tax, penalty and other charges without even any adjudication. Such a procedure is against fairness and contrary to the principle of rule of law. 39. In the decision in Superintendent and Remembrancer of Legal Affairs to Government of West Bengal v. Abani Maity [(1979) 4 SCC 85], though the words 'be liable' in that decision was held to have a compulsive force, it was observed as follows; "Accordingly, the word "liable" occurring in many statutes, has been held as not conveying the sense of an absolute obligation or penalty but merely importing a possibility of attracting such obligation, or penalty, even where this word is used along with the words 'shall be'. Thus, where an American Revenue Statute declared that for the commission of a certain act, a vessel "shall be liable to forfeiture", it was held that these words do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a preliminary appreciation of the amount payable for goods or services of a like kind or quality, at or about the same time and at the same commercial level, then that shall be the market value. If on the other hand, the tentative amount or the amount assumed to be the market value preliminarily is disputed by the taxpayer, it calls for a determination during adjudication, where an opportunity for showing the true market value of the property will be available to the taxpayer. A reading of the definition, no doubt, reveals that the statute does not reckon MRP as the criteria for determining the fine leviable. The intention and the explicit words used in the statute clearly indicates that the proper officer cannot base the fine on the MRP imprinted on the goods, if there are other materials available to fix the market value. 45. In the instant case, if the taxpayer has a dispute on the value fixed tentatively by the Proper Officer, he can dispute the same and during the course of adjudication, get a determination of the market value also. The amount payable is in the realm of a disputed question of fact and this Court cannot determine, in this proceeding, the quantum payable by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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