POWER WITHOUT ACCOUNTABILITY..HOW ENFORCEMENT IS CHOKING THE SPIRIT OF GST

Eight years have passed since India embraced the Goods and Services Tax (GST) — one of the most transformative tax reforms in our history. Conceived as a “Good and Simple Tax”, the GST framework was built on the pillars of trust, transparency, and cooperative federalism. Yet, it is alarming that even after eight years of implementation, the enforcement arm of the tax administration continues to misinterpret and misuse key provisions such as Sections 129 and 130 of the CGST Act. The original legislative intent — to deter willful evasion — is being turned on its head, as officers increasingly invoke these sections to arm-twist genuine taxpayers and criminalize minor procedural lapses.

A Law Intended for Deterrence, Not Oppression:

Sections 129 and 130 were enacted to deter fraudulent and clandestine movement of goods, not to penalize minor clerical or technical errors. The Hon’ble Supreme Court, in multiple rulings, has categorically stated that enforcement must be guided by proportionality, reasonableness, and bona fide interpretation. In Satyam Shivam Papers Pvt. Ltd. vs. Assistant Commissioner,  the Court upheld that mere technical lapses or clerical errors cannot justify detention or confiscation, emphasizing that “a penalty proceeding cannot be sustained where there is no intent to evade tax.”

Similarly, in Synergy Fertichem Pvt. Ltd. vs. State of Gujarat  the Gujarat High Court — whose observations were later affirmed in spirit by the Supreme Court — clarified that confiscation under Section 130 must be invoked only when there is clear evidence of mens rea (intention to evade). The Court cautioned that these powers cannot be used as instruments of oppression.

Despite these categorical pronouncements, field formations in several states continue to invoke Sections 129 and 130 for frivolous reasons — mismatched e-way bills, minor valuation differences, or clerical errors — without even establishing a prima facie case of evasion. Such actions not only violate judicial discipline but also undermine the constitutional guarantees of fairness and due process.

CBIC’s Own Instructions Ignored :

The Central Board of Indirect Taxes and Customs (CBIC) has, on multiple occasions, issued instructions to ensure restraint and fairness in enforcement. Notably:

Circular No. 41/15/2018-GST dated 13 April 2018: Clearly directed that minor errors in documents should not result in detention or penalty. •

Circular No. 49/23/2018-GST dated 21 June 2018: Reiterated that proceedings under Section 129 are warranted only in cases of intentional tax evasion. 

Circular No. 64/38/2018-GST dated 14 September 2018: Emphasized the need for proportionality in enforcement and protection for bona fide errors.

Despite these unambiguous guidelines, many enforcement officers persist in disregarding them, choosing instead to exploit ambiguities to extract penalties and coercive settlements — a practice that not only hurts honest businesses but erodes faith in the rule of law. Selective Vigilance and Misplaced Priorities Even more disheartening is the selective targeting evident in enforcement actions.

The so-called “sin goods” — such as tobacco, pan masala, and other high-tax commodities — are widely known for rampant evasion and clandestine trade. Yet, these sectors often escape stringent checks for reasons best known to all. In contrast, organized and compliant taxpayers — who file returns, pay taxes on time, and maintain transparent records — are being subjected to punitive detentions for trivial technical lapses. This misplaced zeal not only demoralizes the compliant but also gives undue advantage to habitual evaders.

Erosion of Cooperative Federalism;

The GST Council was designed as a beacon of cooperative federalism, ensuring uniformity and fairness in tax administration across India. However, politically motivated enforcement drives in certain states, sometimes used to project artificial revenue vigilance or justify fiscal gaps arising from freebie-driven governance, have diluted this spirit. The result is a fragmented enforcement landscape where the same law is applied with vastly different interpretations — a situation that goes against the very ethos of “One Nation, One Tax.”

:Eight Years On — Time for Introspection and Accountability:

It is deeply disappointing that after eight years of GST’s journey, many enforcement officers have yet to internalize the sensitive and balanced intent of the law. The GST regime was never designed to function on coercion; it was envisioned as a compliance partnership between the State and the taxpayer. The continued misuse of enforcement powers is not merely a legal issue — it is a policy failure that risks alienating the very community that sustains the economy.

The Way Forward: Concrete Corrective Measures:

To restore balance and integrity to the GST enforcement system, the following steps are imperative:

1. Binding Clarification by CBIC and GST Council: A comprehensive directive reaffirming that detention and confiscation should apply strictly to cases involving intentional evasion, not inadvertent lapses.

2. Accountability of Officers: Introduction of internal review and disciplinary mechanisms against officers who act in contravention of judicial and CBIC instructions.

3. Independent Redressal Mechanism: Establishment of a centralized grievance portal or ombudsman for wrongful detentions, ensuring time-bound resolution.

4. Data-Driven Targeting: Use analytics and risk profiling to focus enforcement on high-risk sectors — especially sin goods — rather than routine or compliant trade.

5. Capacity Building and Sensitization:

Mandatory legal and ethical training for enforcement personnel to ensure alignment with the law’s spirit and constitutional values.

Restoring Faith in the GST Regime:

The success of GST depends not on fear-based enforcement, but on mutual trust and voluntary compliance. The continued misuse of Sections 129 and 130 sends a dangerous message — that honesty is punished while evasion goes unchecked. It is time for the GST Council and CBIC to act decisively — to restore the balance between enforcement and facilitation, and reaffirm that in a modern democracy, good governance is not about wielding power, but about using it lawfully and justly.

If the system continues to alienate honest taxpayers, the “Good and Simple Tax” will remain a hollow slogan, and the credibility of India’s most ambitious tax reform will stand severely diminished.