Section 129 Detention and Seizure

[VIGNESH]

Sir. Kindly clarrify for imposing penalty under the above section should there be intention to evade tax or non compliance of procedure as given in the section is good enough

[KASTURI SETHI]

Sh.Vignesh Ji,

Penalty is imposable upon the offender tor procedural lapse also. It depends upon the facts and circumstances of each case. There are so many factors involved for imposition of penalty. The department may take lenient view if facts and circumstances prove that the mala fide intention is absent.

[VIGNESH]

Thank u Guruji. To highlight my case there was goods moving to Godown with DC and no eway bill, penalty 200% levied, can i appeal for a lesser penalty in this case?

[KASTURI SETHI]

There is a word, 'shall' used in Section 129(1) (a) so penalty of 200% of tax payable is mandatory. It is not discretionary . Hence no use of filing appeal.

[Padmanathan KV]

Section 129 can be invoked when goods are transported or stored while they are in transit "in contravention of any provisions of the Act or the rules", and unlike section 130, an "intention to evade tax" is not necessary for invoking section 129.

Therefore, when goods are transported without accompanying documents such as e-way bill under rule 138, it is contravention of provisions of the Act or the rules.

The penalty under section 129 is 200% of tax payable thereon and officer does not have discretion to reduce the same.

[Ganeshan Kalyani]

I agree with the views of the experts.

[Shilpi Jain]

A case law which brings out that intent to evade is necessary for S. 129 also

HC: Detention cannot be made without “intent to evade tax”, quashes orders [2023 (10) TMI 416 - ALLAHABAD HIGH COURT]

Allahabad HC holds that “…once the authorities have not observed that there was an intent to evade payment of tax, proceedings u/s 129 of CGST Act (w.r.t. detention) ought not to have been initiated, but it could be done under section 122 of the CGST Act in the facts & circumstances of the present case.”; Thus quashing impugned orders in line with Apex Court’s stance in Satyam Shivam Paper, opines that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act, thus, in the instant case, section 122 could have been invoked; Asserting that Section 129 which deals with detention, seizure and release of goods must be r/w section 130 that pertains to confiscation of goods or conveyance and levy of penalty, which mandates the intention to evade payment of tax, HC envisages that both the sections revolve around a similar issue and provide for the proceedings available at the hands of the proper Officer upon him having found the goods in violation of the provisions of the Act:HC ALL

AI Summary

Detention and seizure may attract mandatory penalty for transport without required documents, though some courts require intent.
Whether detention and seizure are triggered by procedural contravention or require an intention to evade tax is disputed: administrative practice treats detention for transport without prescribed documents as a contravention attracting a mandatory penalty, while some case law holds that intent to evade tax must be established before initiating detention/confiscation proceedings, suggesting alternative penal provisions where intent is absent.