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TMI Blog2024 (7) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... sale to a dealer in Telangana State. The vehicles in which this scrap iron was being transported was stopped for verification and inspection on 27.04.2024 by the Deputy Assistant Commissioner (ST)-2, Office of the Regional Vigilance & Enforcement Department, Kadapa. He is arrayed as the 1st respondent in both the Writ Petitions. 4. After verifying the documents available with the driver of the conveyance, the 1st respondent issued a notice in Form GST MOV-10, under Section 130 of the Central Goods and Service Tax Act, 2017 [for the short "the CGST, Act"], on 01.05.2024 calling upon the petitioners to show-cause why the goods under transport and as well as the vehicle in which the goods have been transported should not be confiscated. These notices were served on the driver of the vehicle. 5. Thereafter, the petitioners have filed their objections dated 08.05.2024, setting out the grounds why the proposed action should be dropped. After receipt of these objections, the 1st respondent passed orders, in both cases, dated 25.05.2024, confiscating the goods as well as the vehicle under Section 130 of the CGST, Act, Section 130 of the State Goods and Services Act /Section 21 of the Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to show that the said statements may not be correct. He would also contend that the show-cause notices as well as the orders of detention show that the some kind of an inquiry was conducted by the authorities and the report of such inquiry was not furnished to the petitioners even after a specific request was made in the reply to the show-cause notices. 10. He would contend that any detention of goods or conveyance can only be done on issuance of Form MOV-6 under Section 129 of the CGST Act and there is no provision under Section 130 of the CGST Act for detention of the goods. He would submit that detention of the goods without issuance of such Form MOV-6 is clearly impermissible and beyond of the jurisdiction and authority of the 1st respondent. 11. He would also contend that Central Board of Indirect Taxes and Customs had issued a circular bearing No. 128/47/2019-GST, dated 23.12.2019 instructing all officials of the respective GST Departments that all communications/orders should contain Document Identification Numbers so as to authenticate the issuance of such communications/orders. He would further submit that in the present case no such DIN is available on the order of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are uploaded on the portal of the department, it is not necessary to affix any DIN number on such orders. 17. V. Bhaskar Reddy, learned Senior Counsel, in reply, would submit that there is no distinction between orders uploaded on the portal of the department and the orders which are served directly on the dealers. He would submit that the circular clearly covers both kinds of orders and there can no order without a DIN number. 18. Both sides have relied upon the Judgment of the High Court of Gujarat at Ahmedabad, in the case of Siddhbali Stone Gallery Vs. State of Gujarat, which had followed its own Judgment in the Case of Synergy Fertichem Pvt. Ltd Vs. State of Gujarat [Special Civil Application No.4730 of 2019]. Consideration of the Court: 19. The contentions raised on both sides gives rise to the following issues. 1) Whether action can be taken under Section 30 of the CGST Act only after action had been initiated under Section 129 of the CGST Act? 2) Whether action taken under Section 130 of the CGST Act, without a prior invocation of Section 129 of the Act would render the proceedings under Section 130 of the CGST Act invalid? 3) Whether non affixture of DIN Number o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of being heard. (5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3): Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less; Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer. 130. Confiscation of goods or conveyances and levy of penalty: (1) Where any person - (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. 22. Sri V. Bhaskar Reddy, the learned Senior Counsel contends that authorities would have to first initiate action under Section 129 of the Act in the event of any prima facie contravention of the provisions of Act or Rules in transporting goods. Thereafter, opportunity is to be given to the dealer or the person in-charge of the conveyance to show that there has been no contravention of the Act or Rules. The provisions of Section 130 would also be invoked, in the event of the detaining authority, coming to a further conclusion that there has been a contravention of the Act and Rules in the transport of the concerned goods on account of the attempt of the dealer to evade tax. The learned Senior Counsel would show that any other interpretation would not be in accordance with the scheme of Section 129 and 130 of the Act. He would submit that the conditions for invocation of Section 129 and 130 are essentially the requirement that there has been a contravention of the provisions of the Act or the Rules. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operate in two separate fields and that provisions of Section 130 can always be invoked directly without a prior invocation of Section 129 of the CGST Act. 25. The question of the interplay between Section 129 and 130 of the CGST Act was considered, by a Division Bench of the High Court of Gujarat and Ahmadabad, in a case of Synergy Fertichem Pvt. Ltd Vs. State of Gujarat [Special Civil Application No.4730 of 2019]. This judgment was followed by the High Court of Gujarat in the case of Siddhbali Stone Gallery Vs. State of Gujarat in Special Civil Application No.17533 of 2019. In Synergy Fertichem Pvt. Ltd Vs. State of Gujarat, the Division Bench of the Hon'ble High Court of Gujarat was considering a similar question of whether proceedings under Section 130 of the CGST Act can be initiated without any prior proceedings under Section 129 of the CGST Act. The view taken by the Hon'ble High Court of Gujarat has been summarised in paragraphs 101 and 102 of the said Judgment which are extracted. 101. We are of the view that at the time of detention and seizure of goods or conveyance, the first thing the authorities need to look into closely is the nature of the contravention of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, in contravention of the Provisions of the Act or the Rules made there under. In the case of Section 130 confiscation of goods or conveyances and levy of penalty can be done subject to any of the five conditions enumerated in Section 130 (1) being available. Section 131(v) provides for confiscation of a conveyance where goods are being transported in such conveyance, in contravention of the Act or the rules. This would mean that invocation of Section 129 will not precede all cases where Section 130 is invoked. 27. The Division Bench of the Hon'ble High Court of Gujarat, after observing, as extracted above, had cautioned that a simple statement that the goods were being transported with an intention to evade tax, in notices of confiscation would not be sufficient and there would have to be specific reasons, recorded in writing as to why Section 130 of the Act is being invoked at the very threshold and that there must be material based on which alone the authority could have formed such an opinion and invocation of Section 130 becomes necessary. 28. In the present case, the conveyances and goods were stopped and detained on 27.04.2024. Thereafter, a statement was taken from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners in the show cause notices of 01.05.2024. The 2nd respondent did not choose to respond to the request of the petitioners for supply of the material on the basis of which the show cause notice has been issued would also amount further violation of the principles of natural justice. 31. The requirement of every order or communication of the tax authorities to contain a DIN number is found in Central Board of Indirect Taxes and Customs circular bearing No. 128/47/2019-GST, dated 23.12.2019. This circular does not make any distinction between proceedings/orders communicated directly to the dealers and proceedings which are uploaded on the portal. The non mention of DIN militates against the validity of the proceedings, dated 25.05.2024. 32. Accordingly, these writ petitions are allowed and the confiscation order in FORM GST MOV-11 dated 25-05-2024 issued by the 2nd respondent vide Ref.No.ZD370524023072S and confiscation order in FORM GST MOV-11 dated 25-05-2024 issued by the 2nd respondent vide Ref.No ZD370524023029J are set aside and the matters are remanded back to the 2nd respondent for proper adjudication following principles of natural justice. There shall be no orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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