2025 (11) TMI 289 - HC - GST

Respondent must choose within two days to continue proceedings under Section 129 or close and proceed under Section 130

The HC directed the respondent to state within two days whether it will continue proceedings under Section 129 of the CGST Act or close those proceedings ... Detention of Palm nuts - detention on the ground that the commodity does not match with the documents accompanying the goods - initiation of proceedings u/s 130, when the proceedings initiated u/s 129 of the CGST Act - HELD THAT:- As the petitioner is now in possession of the notice issued by the 3rd respondent, proposing confiscation of the goods, it would only be appropriate to permit the petitioner to file his objections to the said show cause notice at the earliest and to direct the 3rd respondent to take appropriate steps at the earliest. As held by this Court, the Detaining Officer can either initiate action under Section 129 or under Section 130 of the CGST Act. Having initiated action under Section 129 of the CGST Act, the 3rd respondent would still have an option of either continuing the proceedings under Section 129 or to give up proceedings under Section 129 and proceed with proceedings under Section 130. In the present case, the 3rd respondent without completing the proceedings under Section 129 has now opted to initiate action under Section 130. In such circumstances, the 3rd respondent would have to take a decision as to whether he will continue under the provisions of Section 129 or take up proceedings under Section 130 by closing the proceedings under Section 129. This view is taken in the light of Section 129(5) of the CGST Act which states that payment of penalty would conclude the proceedings in respect of the goods which are being seized under Section 129. This Writ Petition is disposed of with a direction to the 3rd respondent to indicate to the petitioner within two days, whether the 3rd respondent intends to continue with the proceedings under Section 129 or is proposing to take up proceedings under Section 130 by closing the proceedings under Section 129 of the CGST Act. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether initiation of proceedings under Section 130 of the CGST Act is impermissible if proceedings under Section 129 of the CGST Act have already been initiated but not completed. 2. Whether service of a show-cause notice under Section 130 only on the driver (and not on the consignor/owner) violates the right to be heard and renders the notice invalid or infirm. 3. What procedural steps and timelines should be followed by the Detaining Officer when goods (especially perishable goods) are detained and parallel or successive proceedings under Sections 129 and 130 are contemplated. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Permissibility of initiating Section 130 proceedings before completion of Section 129 proceedings Legal framework: Section 129 empowers detention/seizure of goods in transit and prescribes procedure for imposing and specifying penalty with an opportunity to pay penalty (see Section 129(3) and Section 129(5)). Section 130 provides for confiscation and further consequences where the conditions for penalty or release under Section 129 are not met; it contemplates initiation of confiscation proceedings by issuance of a show-cause notice. Precedent Treatment: Conflicting High Court decisions were cited - some authorities hold that initiation of Section 130 cannot precede completion of Section 129 proceedings; others hold Sections 129 and 130 are independent and separate enabling provisions, permitting initiation under both. Interpretation and reasoning: The Court treated Sections 129 and 130 as distinct but interrelated regimes. The Detaining Officer may initiate action under Section 129 or under Section 130. However, where proceedings under Section 129 have been commenced, the Officer retains the option to either continue with Section 129 or to discontinue/close those proceedings and initiate Section 130. The statutory language of Section 129(5) - which provides that payment of penalty concludes proceedings in respect of seized goods - was read as indicative that the two processes should not be allowed to run concurrently without a clear administrative choice. Thus, initiating Section 130 while Section 129 remains pending without an express decision to close Section 129 is procedurally inappropriate. Ratio vs. Obiter: Ratio - A Detaining Officer who has initiated proceedings under Section 129 must, before proceeding under Section 130, decide whether to continue under Section 129 or to close Section 129 and initiate Section 130; the officer may not concurrently maintain both proceedings without such decision. Obiter - Observations on the independence of the statutory provisions and prior contradictory authorities are explanatory to the principal holding. Conclusion: The Detaining Officer must indicate whether proceedings under Section 129 will be continued or whether those proceedings will be closed and Section 130 proceedings pursued; initiation of Section 130 without such decision (i.e., while Section 129 remains pending and undecided) is unsustainable in the circumstances described and requires administrative clarification. Issue 2 - Validity of service of Section 130 notice solely on the driver and right to be heard Legal framework: Principles of natural justice and statutory procedure require that a person affected by a show-cause notice be given an opportunity of hearing and that notices be served to enable representation. Section 130 proceedings are adjudicatory in nature and impose potential confiscation, engaging the right to be heard. Precedent Treatment: Authorities were cited for the proposition that proper service and an effective opportunity to contest confiscation are essential; specific earlier decisions addressing service on driver alone were relied upon by parties. Interpretation and reasoning: The Court observed that the petitioner had not been served with the Section 130 notice and had only discovered it later. Given the consequential nature of confiscation proceedings and the petitioner's interest in the goods, it would be appropriate to permit the petitioner to file objections and to be heard. The procedural defect in service (as alleged) required remedial direction to ensure that the petitioner receives an opportunity to make representations within an expedited timeframe. Ratio vs. Obiter: Ratio - Where a person entitled to contest confiscation has not been effectively served with the Section 130 notice, the authority must permit representation and consider it within a short, specified period to protect the right to be heard. Obiter - Remarks concerning the adequacy of service on a driver in every circumstance are explanatory rather than determinative. Conclusion: The procedural infirmity in service justified permitting the owner/consignor to file objections to the Section 130 show-cause notice and requires the Detaining Officer to consider any representation within an expedited timeline. Issue 3 - Procedural directions and timelines where goods detained are perishable and both Sections 129 and 130 are in play Legal framework: Section 129(3) requires the Detaining Officer to issue a notice specifying the penalty payable and to permit payment; Section 129(5) contemplates conclusion of proceedings upon payment. General administrative law principles require prompt decision-making, especially where goods are perishable and retention causes prejudice. Precedent Treatment: The Court referenced prior decisions that underscore the need for prompt resolution in detention/confiscation matters and the availability of penalty payment under Section 129 as a means to conclude proceedings. Interpretation and reasoning: Balancing the interests of the consignor and revenue, the Court emphasized expedition: the Detaining Officer must, within a narrowly prescribed period, inform whether Section 129 proceedings will be continued or whether Section 130 will be taken up after closing Section 129. Upon such intimation, the petitioner must be permitted to make representations, which must be considered promptly. These directions were shaped by the perishable nature of the goods and the statutory mechanism allowing penalty payment to terminate Section 129 proceedings. Ratio vs. Obiter: Ratio - Administrative timelines and an obligation to afford an expedited hearing/consideration were imposed as mandatory remedial measures where goods are detained and there is uncertainty as to the operative proceeding. Obiter - Broader policy observations about perishability and optimal administrative practice are ancillary. Conclusion: The Detaining Officer must, within two days, state whether proceedings under Section 129 will be continued or whether Section 129 will be closed and Section 130 proceedings initiated; thereafter the affected person may file representations, which the Officer must consider within three days. These procedural directions are binding in the present context to protect rights and prevent undue detention of perishable goods. Cross-references Issues 1 and 3 are closely linked: the requirement to choose between continuing Section 129 or initiating Section 130 (Issue 1) is the predicate for the accelerated timelines and rights to representation where goods are perishable (Issue 3). Issue 2 (service and hearing) is remedial and is to be addressed by the timelines prescribed under Issue 3.