Owner of goods and conveyance are separate entities under Section 130 CGST Act, vicarious liability cannot extend indefinitely

The Punjab and Haryana HC allowed a petition seeking release of a conveyance along with goods. The petitioner argued that under Section 130 of the Central Goods and Services Act, 2017, the owner of goods and owner of conveyance are separate entities, and one's liability cannot be imposed on the other. The HC, relying on precedent, held that vicarious liability cannot be extended indefinitely. The court rejected the state's argument and directed immediate release of the conveyance, while allowing confiscation and disposal of goods in accordance with law.

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Issues:
Challenge to action of respondents in not releasing conveyance despite payment of fine under Section 130 (2) proviso of the Central Goods and Services Act, 2017.

Analysis:
1. The petitioner challenged the respondents' action of not releasing the conveyance despite paying the fine under Section 130 (2) proviso of the Act. The petitioner argued that Section 129 and 130 of the Act establish the separation of liability between the owner of goods and the owner of the conveyance. Section 129 deals with detention and release of goods and conveyances in transit, while Section 130 pertains to confiscation of goods or conveyance and levy of penalty. The petitioner contended that the conveyance owner should not be held liable for the goods' penalty. The petitioner filed a writ petition seeking the release of the conveyance.

2. The State counsel argued that under Section 129 (1) of the Act, goods and conveyance can only be released upon payment of applicable tax and penalty. She contended that Section 130 does not absolve the liability imposed under Section 129. The State counsel emphasized that the owner of the conveyance is also responsible for paying the tax, penalty, and fine for both goods and conveyance. She asserted that the proviso in Section 130 (2) does not alter this fundamental provision.

3. The Court referenced a previous judgment in a similar case where it was held that Section 130 is a penal clause and more stringent compared to Section 129. The Court emphasized that the intent to evade tax must be directly linked to the trader's activity, and vicarious liability cannot be extended indefinitely. The Court highlighted the legal principle that the law does not compel a person to perform the impossible. The Court concluded that forcing the conveyance owner to pay for the goods' penalty would impose vicarious liability unjustly.

4. Consequently, the Court rejected the State counsel's argument and directed the immediate release of the conveyance. The Court ruled that the goods would be confiscated and disposed of by the respondents as per the law. The petition was allowed, and any pending applications were disposed of accordingly.

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