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2019 (12) TMI 1213
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.... Central Goods & Services Tax Act, 2017 (for short "the CGST Act") amidst lot of hue and cry at the instance of the writ applicants (dealers) redressing the grievance that the authorities concerned are invoking the power to confiscate the goods and the conveyance under Section 130 of the GST Act arbitrarily and without any application of mind. In such circumstances, we need to look into the two provisions and try to ascertain whether the two provisions overlap or are independent of each other. We take notice of the fact that both the provisions, i.e., Sections 129 and 130 of the GST Act start with a non-ostante clause. 3. For the sake of convenience, we treat the Special Civil Application No.4730 of 2019 as the lead matter. 4. By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs; "(A) This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ, order or direction quashing and setting aside notice dated 1.3.2009 (annexed at Annexure A) issued by the learned Respondent No.2; (B) This Hon'ble Court may be pleased ....
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....he tiles manufacturing industry. The Petitioners are authorized agents/distributors of Esmalglass - Itaca group which has its head office at Partida Rambleta, S/N 12191, Pobla Tornesa, Castellon, Spain. The Petitioners are one of the two distributors that the said company has for India. 4. The Petitioners have been importing goods since many years and the imported goods are sold to major tile manufacturing units across the country. The goods are imported through Mundra Port in Kandla and the Ahmedabad Airport. The Petitioners had approximate annual turnover of Rs. 50 crores in the previous financial year and it discharges crores of rupees by way of tax under the GST Acts. 5. In so far as import transactions are concerned, importers such as the Petitioners are required to pay customs duty as well as the IGST payable on such imports before clearance for home consumption. In other words for imports the IGST is paid prior to commencement of movement of goods from the port/airport. 6. The Petitioners had ordered for a consignment of ceramic pigment ink from its principal in Spain. The import took place through the Ahmedabad Airport. The Petitioners duly filed ....
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....otices in Form GST MOV-1 and GST MOV-6 were served to the transporter of the goods. Copies of such notices served to the transporter are annexed herewith and marked as Annexure F. 12. On being informed about such detention the Petitioners promptly generated the e-way bill in respect of the transaction. Copy of the e-way bill generated by the Petitioners is annexed herewith and marked as Annexure G. 13. The Petitioners thereafter immediately approached the learned Respondent authorities and gave explanation. It was submitted that the goods being perishable and due to urgency of transporting goods the clearing and forwarding agent had initiated transportation of goods immediately on clearance from customs authorities without waiting for e-way bill from the Petitioners. However the fact is that IGST had been paid on the transaction even before commencement of movement of goods. Bill of entry for home consumption had been duly filed in respect of goods which was admittedly possessed by the transporter. Thus there was no question of the goods being unaccounted or there being any intention of evading payment of tax. In fact tax under the GST Acts had already been paid b....
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....Article 14 of the Constitution of India. 20. At the outset the provisions of Section 130 of the GST Acts are ex-facie not applicable to the facts of the present case. Section 130 of the GST Acts can be invoked in the 5 circumstances as envisaged under the said provision which are all pertaining to evasion of tax. Hence for invoking the said provision it has to be primarily alleged and proved that there was intention to evade payment of tax in respect of the goods in question. In the present case admittedly the goods were being accompanied by the bill of entry for home consumption which evidenced payment of IGST on the transaction even before commencement of movement of the goods. Thus there was no question of they being unaccounted goods or there being intention to evade payment of tax. Invoking the provisions of Section 130 of the GST Acts in the facts and circumstances of the case without there being any allegation of evasion of tax and demanding maximum redemption fine equal to the value of goods is wholly without jurisdiction, arbitrary and illegal. 21. Even in so far as Section 129 of the GST Acts is concerned the said provision allows detention of goods and ....
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....d only on payment of tax, huge penalty and huge redemption fine. Application of such provisions to technical breaches of statutory provisions would render them vulnerable of violating Article 14 of the Constitution of India as well as Article 301 of the Constitution of India which requires there to be free flow of trade and commerce across the country." 6. Thus, it appears that the writ applicant No.1 is a Private Limited Company and the writ applicant No.2 is its Director and Authorized Signatory. The Company is engaged in the business of import and sale of Ceramic Pigment Ink which is used as a colouring substance in the manufacturing of the ceramic tiles. The writ applicants had placed an order for a consignment of Ceramic Pigment Ink from its principal operating in Spain. The import took place through the Ahmedabad Airport. The writ applicants duly filed the bill of entry for home consumption and also paid the applicable customs duty as well as the IGST payable on the imports by the importers. It appears that while the goods were being transported from the Ahmedabad Airport to the warehouse of the writ applicants situated in Vadodara, the vehicle was detained by the GST Auth....
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....d show cause notice dated 1.3.2019, to submit that the same seeks to impose penalty, redemption fine and confiscation under section 130 of the Act without initiating any proceedings under section 129 of the Act, which is not permissible in law. It was further submitted that the integrated goods and services tax has already been paid on the goods in question at the time of import thereof and that the goods in question are perishable goods with a limited shelf-life. 2.Having regard to the submissions advanced by the learned counsel for the petitioners, Issue Notice returnable on 8th March, 2019. Direct Service is permitted today. " 12. Thereafter, on 8th March, 2019, this Court passed the following order; "1. On 06.03.2019 this Court had passed an order in the following terms; "1. Mr. Uchit Sheth, learned advocate for the petitioners invited the attention of the court to the provisions of sections 129 and 130 of the Central Goods and Services Tax Act, 2017, to point out the procedure which is required to be followed by the respondent authorities in case where any goods are in transit in contravention of the provision of the Act or the rules made....
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....section 130 of the CGST Act calling upon the petitioner to show cause as to why the goods in question as well as the vehicle should not be confiscated for nonpayment of an amount of Rs. 60,72,639/, as detailed therein. On a query by the Court, the learned Assistant Government Pleader is not in a position to point out that the procedure, as contemplated under subsections (3) and (4) of section 129 of the CGST Act, has been followed. Thus, prima facie, it appears that the showcause notice under section 130 of the CGST Act has been issued without complying with the requirements of section 129 of the CGST Act. It is also an admitted position that the goods in question are perishable in nature. 6. In the aforesaid premises, in the opinion of this Court, the petitioner has made out a strong prima facie case for the grant of interim relief. By way of interim relief, the respondents are hereby directed to forthwith release the goods in question and the Truck bearing registration no. GJ07UU7250 detained / seized under purported exercise of powers under sections 129 and 130 of the CGST Act. However, the petitioner shall file an undertaking before this Court within a week from today ....
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....ce of the goods for home consumption, the said provision is inapplicable the facts of the Petitioners. Purposive interpretation of Section 129 of the GST Acts requires its application only to cases where it is established that there was intention or in any case possibility of evasion of tax in respect of the goods being transported. Even if some document such as e-way bill is missing at the time of verification, this would at the most only create a rebuttable presumption that there was intention to evade payment of tax. If the taxable person is able to establish that there was no intention of evading payment of tax then the provisions of Section 129 of the GST Acts is not permissible. D. The contravention of provisions of the GST Acts as contemplated under Section 129 of the GST Acts is a substantial contravention which would have the result of leakage of tax revenue. Hence it is provided that in case of such contravention the goods can be released only on payment of tax and 100% penalty. The said provision cannot be applied to technical contraventions where the taxable person is in a position to establish that the breach is technical in nature with no possibility of tax e....
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....l to 5% of the value of goods or Rs. 25,000 whichever is less. Section 129(5) of the GST Acts specifically provides that 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. It is further provided in Section 129(6) of the GST Acts that where the person transporting the goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within 14 days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of Section 130. Considering such provisions, it is incumbent upon the learned authorities who have detained the goods under Section 129 of the GST Acts to give notice for payment of tax and penalty under Section 129(1) of the GST Acts and it is only if the owner or transporter fails to pay such tax and penalty within 14 days of the detention or seizure that the learned authorities can be permitted to initiate confiscation proceedings under Section 130 of the GST Acts. Detention of goods under Section 129 of the GST Acts and thereafter not following further procedure as stipulated under the said prov....
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....ts which are admittedly invocable in cases of evasion. Collective reading of all such provisions shows that Section 129 of the GST Acts is enacted for curbing evasion of tax. Thus the contention of the Respondents that Section 130 of the GST Acts is a special provision enacted for checking evasion of tax is contrary to the scheme of the provisions of the GST Acts. It is only if the tax and penalty under Section 129 of the GST Acts are not paid within the stipulated period that resort can be made by the learned authorities to Section 130 of the GST Acts. 3. Any other interpretation will render Section 129 of the GST Acts unconstitutional An interpretation of Section 129 of the GST Acts that it is meant for purpose other than checking evasion will render it unconstitutional. Provisions similar to Section 129 of the GST Acts existed under the sales tax statutes which were challenged before Courts on the ground that they violated the freedom of trade, commerce and inter-course as guaranteed under Article 301 of the Constitution. Legislative competence of enacting such provisions was also challenged. On all such occasions the constitutional validity of the provisions regarding ....
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.... Acts allows the assessee to get the goods released on immediate payment of tax and penalty failing which he is under threat of loosing the goods under Section 130 of the GST Acts. Per contra under section 129 of the GST Acts the authorities are also saved from establishing intention to evade payment of tax which is a pre-requisite for Section 130 of the GST Acts. Such view has already been taken by Hon. Kerala High Court in the case of Noushad Allakkat v/s State Tax officer (2019) 61 GSTR 297 (Ker.) (1st Compilation - Page 113, Relevant observation on page 117). 6. If fraud, evasion, etc noticed then even adjudicating authority required to give option to immediately pay tax and concessional rate of penalty to secure closure of proceedings. Section 129 of the GST Acts to be read in light of such legislative policy The Petitioner may point out that in fact if fraud, evasion, etc is alleged during adjudication proceedings, Section 74 of the GST Acts provides for mechanism for adjudicating and demanding tax with penalty. Even under such provision the assessee is given an option by virtue of Section 74(5) of the GST Acts to make payment of tax, interest and 15% penalty before ....
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....d in entirety. Refusal on the part of the learned authorities to follow Section 129 of the GST Acts in entirety even though detention/seizure is made under such provision is wholly without jurisdiction and illegal. 8. Section 129(2) of the GST Acts which adopts Section 67(6) also gives a clue regarding interpretation of the provision It is further pertinent to note that Section 129(2) of the GST Acts provides that the provisions of Section 67(6) of the GST Acts shall mutatis mutandis apply to Section 129 of the GST Acts. A perusal of Section 67(6) of the GST Acts shows that it provides for release of goods in case of seizure during search proceedings. It is respectfully submitted that Section 67(6) of the GST Acts operates in 2 parts viz. the goods can either be released on provisional basis on furnishing bond and providing security as may be prescribed or the goods can be finally released on payment of tax, interest and penalty. Adaptation of such provision for the purpose of interpreting Section 129 of the GST Acts leads to the conclusion that if tax, interest and penalty are paid then the goods are to be finally released while if only security along with bond i....
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....see. It can never be the intention of the legislature that while for perishable commodities they are satisfied if tax, interest and penalty are paid, in so far as non-perishable commodities are concerned, even if tax, interest and penalty are paid there can be further proceedings of confiscation. (Thus Section 67(6) of the GST Acts provides for final release of goods on payment of tax, interest and penalty and since this provision has been mutatis mutandis applied to Section 129, if tax, interest and penalty are paid in respect of goods detained in transit then the goods are required to be finally released and there can be no further proceedings of confiscation under Section 130 of the GST Acts. (10) It is well settled that purposive interpretation to be adopted even in taxing statutes It is respectfully submitted that it is now well settled that principle of purposive interpretation is applicable even to taxing statutes particularly when literal interpretation leads to incongruity or anomaly. Reference may be made in this regard to the judgement of Hon. Supreme Court in the case of State of Kerala & Ors. v. A.P Mammikutty AIR 2015 SC 3009 wherein it was reiterate....
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....ion 129(6) of the GST Acts redundant. The legislature was aware that Section 130 of the GST Acts contains a non-obstante clause. Even then it was provided in Section 129(6) of the GST Acts that provisions of Section 130 of the GST Acts will be invoked only if the owner or transporter fails to make payment of tax and penalty within 14 days of detention ort seizure. It is well settled that an interpretation which will render any part of the statute otiose is to be avoided. Reliance is placed in this regard on the judgement of Hon. Supreme Court in the case of Union of India and Another v/s Hansoli Devi AIR 2002 SC 3240 (2nd Compilation - Page 4). (14) Section 129(6) of the GST Acts cannot be interpreted as a recovery provision Section 129(6) of the GST Acts cannot be interpreted as a provision meant for recovery of unpaid tax and penalty. The Petitioner says that if at all the tax and penalty are not paid then the learned authorities can very well attach the goods under Section 79 of the GST Acts and thereafter sell them off to recover the amount due. In such case however the excess sale proceeds will have to be given to the assessee. Per contra in case of confiscation the t....
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....uthorities in straightaway resorting to the provisions of Section 130 of the GST Acts without completing procedure as stipulated under Section 129 of the GST Acts is wholly without jurisdiction, arbitrary and illegal. In any case refusal to release the goods and conveyance even though tax and penalty as determined under Section 129 of the GST Acts is fully paid is wholly without jurisdiction and illegal. (17) Authority intercepting goods in transit cannot go into the issue of valuation of goods In one of the case the learned Respondent authorities have disputed valuation of the goods and therefore also detained the goods under Section 129 of the GST Acts on the ground of under-valuation. It is respectfully submitted that the learned authority checking goods in transit has no jurisdiction to go into the valuation of the goods. All that he needs to ensure is that the goods are accompanied by requisite documents. This is the only jurisdiction he has by virtue of Section 68(3) of the GST Acts. Valuation is a matter of adjudication. Presuming that the learned authority suspects that the goods have been undervalued, even then he can at best forward such information to the concer....
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....n the facts and circumstances. In fact for the same goods the value would be different depending on the stage of supply of such goods. In other words while the value of goods moving from manufacturer to wholeseller will be lower, the value of the same goods moving from retailer to end consumer will be much higher. Adhoc enhancement of value of the goods by the learned authority intercepting the goods is therefore wholly without jurisdiction, arbitrary and illegal. (19) In the alternative the learned Respondent authorities can at the most demand tax and penalty on the enhanced value Without prejudice to the above and in the alternative at the most the learned authority intercepting the vehicle can demand tax and penalty under Section 129 of the GST Acts on the enhanced value which according to him is the correct value. In any case under-valuation cannot be used as pretext for direct invocation of Section 130 of the GST Acts. (20) There is no question of invoking provisions of Section 130 of the GST Acts in case of imported goods. In fact in such case there is no requirement of payment of tax or penalty under Section 129 of the GST Acts as tax is paid in advance ....
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....se of Mohinder Singh Gill v/s Chief Election Commissioner AIR 1978 SC 851." 16. We also heard Mr. Tushar Hemani, the learned senior counsel appearing for the writ applicants of the Special Civil Application No.10018 of 2019. Broadly, the submissions of Mr. Hemani are as under; "Sections 129 & 130 of The Central Goods and Services Tax Act, 2017 (hereinafter referred to as 'CGST Act' for the sake of brevity) are materially different and operate in different situations. They cannot be used interchangeably, at the discretion of the authorities. In order to understand the differences between S..129 & 130 of the Act, it is beneficial to understand the Scheme of the Act. S. 122 is penalty section for certain offences enumerated therein, violation whereof attracts penalty of Rs. 10,000 or an amount equivalent to the tax evaded i.e. 100% of the tax evaded, Whichever is higher. All the offences enumerated in S.122 are the examples of contraventions of the provisions of this Act or the Rules made thereunder. S. 129 talks about detention, seizure and release of goods and conveyances in transit. As per the section which begins With non-obstante clause, any ....
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.... is only after exhausting this remedy of S.129 that recourse can be had to S.130. Provisions of S.129(6) leave little doubt about this legislative intent. As per S.129(6) if the amount demanded u/s 129(1) is not paid within 14 days, further proceedings shall be initiated in accordance with the provisions of S.130. Thus Proceedings are to be initiated as per law and in accordance with conditions of S.130. Here, proceedings u/s 130 can only be initiated if conditions stated under the said section are satisfied. It cannot be interpreted in a manner so as to hold that once tax and penalty as demanded u/s 129 is not paid within a period of 14 days, S.130 automatically gets invoked without having to satisfy any of the preconditions as stated under the said section. These conditions are sine qua non for invoking the provisions of S.130 of the Act. CBEC circular dated 13/04/2018 clauses (k) supports this interpretation inasmuch as the said clause contemplates issuance of Notice in Form GST MOV-10 which is a SCN to be issued upon the person for getting his response. If the proceedings are automatic and compulsory no such notice is required CBEC circular dated 13/04/2018 cl....
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....3 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded." A bare perusal of the explanation reveals that once a person pays the tax and penalty as contemplated u/s 73 or 74, all proceedings except as prescribed u/s 132 come to an end. Even if main persons pays such tax and penalty, proceedings u/s 129 and 130 come to an end against other persons. Therefore, the intention behind these provisions is clear that so long as a person pays tax, interest and penalty of upto 50% of the tax involved, no actions are required u/s 129 or 130. In other words, legislature does not want to take multiple actions for the same contravention or default or cause of action. Under the Scheme of the Act, there is a clear distinction between various contraventions of the provisions of this Act or the Rules made thereunder which are accidental, technical or inadvertent as against contraventions which are willful, fraudulent or with an intent to evade payment of tax. For the former, penalty is light whereas for the later penalty is heavy and in a given case may be followed by prosecution. Provisions of S.....
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.... amount of tax and penalty?. In other words, once the goods and the conveyance is released, then the authority could not be said to be in physical possession of both, and in the absence of the goods or conveyance, there cannot be any confiscation of the same. To put it more simply, the physical availability of the goods and the conveyance will have significance for imposition of redemption fine under Section 130 of the Act." 18. Thus, the sum and substance of the submissions canvassed on behalf of the writ applicants is that the proceedings for confiscation of goods or conveyance cannot be initiated under Section 130 of the Act without first complying with the procedure as prescribed under Section 129 of the Act and the second limb of the submission is that once the tax and the penalty is paid under Section 129 of the Act, then the authority has no power to proceed further under Section 130 of the Act for the purpose of confiscation of the goods and the conveyance. In other words, the confiscation proceedings under Section 130 would be permissible only if the dealer fails to pay the applicable tax and penalty imposed by an order under Section 129(3) of the Act. Confiscation is a....
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....f interpretation of any ordinary provisions where the stress is on the strict letter of law rather than the substance of philosophy of the law. In other words, according to Mr. Trivedi, in a taxing statute, it is the literal interpretation rather than the supposed intendment which is a key to the tool of interpretation. (II) The non-obstante clause used in any legal provision seeks to provide the same, a sweeping overriding effect over any other legal provisions operating in the same or similar field. Since both the provisions, i.e., Sections 129 and 130 contain a non-obstante clause, they are required to be interpreted harmoniously while keeping in mind the object and purpose behind the enactment. It is argued that Section 129 of the Act deals with the detention/seizure of the goods/conveyance while in transit. Section 130 deals specifically with the confiscation of such goods/conveyance. (III) According to Mr. Trivedi, for invocation of Section 129 of the Act all that is necessary is "contravention of the provisions of the Act or the Rules", whereas Section 130 of the Act prescribes specific circumstances for the purpose of invoking the provisions relating to confiscation. ....
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....#39;main person' would be deemed to be concluded, nor that the confiscation proceedings against 'all other persons' would be deemed to be concluded. As against this, it merely stipulates that the proceedings related to 'penalty' under the provisions of Sections 122, 125. 129 and 130 of the Act would be deemed to be concluded. Therefore, the said explanation would not be helpful to the writ applicants and thus. as aforesaid, the provisions of Section 130 of the Act can also be invoked in cases where the amount of tax and penalty is paid in terms of the provisions of Section 129 of the Act, in cases where the said case is falling in any of the five eventualities prescribed in Section 130(1) of the Act. (VII) It is further submitted that it is not necessary on the part of the department to hold a full~fledged inquiry before invoking the provisions of Section 130 of the Act inasmuch as, there can be a situation like supplying the goods without getting registered under the Act, which directly triggers Section 130(1)(iii) of the Act, for which, no inquiry is required. Thus, in such similar situations, there may not be any inquiry, and directly on that ground alone.....
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....ningless. (X) It is submitted that it is incorrect on the part of the writ applicants to contend that the provisions of Sections 129 and 130 of the Act are sub-sets of Section 122 of the Act. Rather. the said Sections 129 and 130 of the Act can be invoked for eventualities which are not mentioned in Section 122 of the Act and hence. the same cannot be said to be related to the provisions of Section 122 of the Act, except for quantification of the amount of penalty. In addition to this, it is also not correct on the part of the writ applicants to contend that the provisions of Section 122 of the Act are general in nature and the provisions of Sections 129 and 130 are specific in nature and hence, non-obstante clauses of the said sections would override the provisions of Section 122 of the Act. The said argument falls flat on the basic ground that the provisions of Sections 129 and 130 of the Act themselves refer to the provisions of Section 122 of the Act, so as to decide/compute the amount of penalty to be imposed upon the Assessees. Thus. once there is no conflict between the provisions of Section 122 of the Act on one hand and Sections 129 and 130 of the Act on the other, ther....
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.... addition to the above, even otherwise, the provisions of Section 110A of the Customs Act, which deal with the 'provisional release' of the goods, do not contemplate the release of the goods only on payment of penalty and interest but the proposed amount of fine is also to be included for provisional release of the goods. In view of this, the amount of fine should be taken into account while directing the provisional release of the goods/ conveyance as per Section 129(2) read with Section 67(6) of the Act read with Rule 140 of the Rules. (XIV) In the last, Mr. Trivedi submitted that as such there is no serious challenge to the constitutional validity of the provisions of Sections 129 and 130 of the Act is concerned. He submitted that it is a settled principle of law that the power to levy tax includes all the incidental powers to prevent the evasion of such tax. The power to seize and confiscate the goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and is intended to operate as a deterrent against the tax-evaders and are, therefore, ancillary or incidental to the power to levy tax on the goods and thus, fall within the ambi....
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....0, 21. Mr. Trivedi, in support of his submissions, has placed reliance on the following decisions; "(1) In Commissioner of Sales Tax, Delhi and Others v. Shri Krishna Engg. Company and Others, (2005) 2 SCC 692; (2) In Sanwarmal Kejriwal vs. Vishwa Cooperative Housing Society Ltd. & Ors, 1990 (2) SCC 288; (3) In Shri Swaran Singh & Anr. v. Shri Kasturi Lal; (1977) 1 SCC 750; (4) In State Of Bihar & Others vs Bihar Rajya, (2005) 9 SCC 129; (5) In Iolidaire India Ltd. v. Fairgrowth Financial Services Ltd. and Others, (2001) 3 SCC 71; (6) In Union of India & Ors. vs. A.K. Pandey, (2009) 10 SCC 552; (7) In Sales Tax Officers & Ors. vs. Dutta Traders, (2007) 14 SCC 215.; 22. In such circumstances, referred to above, Mr. Trivedi submits that this Court may interpret the two provisions bearing in mind the aforesaid submissions. Submissions on behalf of the Union of India; 23. Mr. P.Y. Divyeshvar, the learned standing counsel appearing for the Union of India in one of the petitions has tendered his written submissions. The written submissions are as under; "THE POWER OF CONFISCATION IS BEYOND THE POWER TO LE....
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....DS IS ILLEGAL, ARBITRARY AND UNWARRANTED; and (ii) SECTION 129(1)(B) OF GST ACT IS VIOLA'I'IVE OF ARTICLE 14 AND 19(1) (G) OF THE CONSTITUTION OF INDIA is not correct considering the fact that In terms of rule 129(1) of the CGST Act, 2017 where any goods are transported in contravention of the provision of the CGST Act, 2017 or the rules made there under all such goods and conveyance used as a means of transport for carrying the said goods and conveyance shall be liable to seizure and shall be released in terms of provisions contained in the rule. The averment of petitioner that it is only a minor interaction and does not warrant action in terms of section 129 of the CGST Act is not on the lines of the settled legal position. The requirement of transportation of goods under the cover of valid specified documents is to be mandatorily followed. Non compliance of the same is to be processed as per law. There is no physical control on such supply of goods and services. The control is effected through documents. For regulation of the activities of supply certain documents have been prescribed. The scheme of levy and collection of GST envisages compliance of applicable law inter ....
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....and classify persons and properties and make machinery provisions for that purpose. Thus the requirements of compliance of procedure are not a less important aspect but a condition sine qua non for the purpose involved. This ratio of the case cited above appears to be analogously applicable in the instant case. Further, CGST Act, 2017 is a complete code in itself and a Special Act. Having envisaged the relevant situations a mechanism has been devised in law and wherein, depending upon the concomitant factors, penalties commensurate with the role and responsibility have been prescribed. The provisions relating to mandatory requirement of movement of the goods under the cover of valid e-way bill are duly specified in the Rule 138 of the CGST Rules, 2107. Non compliance of the legal requirements of the law renders the goods/vehicle liable to penal action as enumerated in the law. The requirement of proper documents is to be fulfilled before commencement of the act of transportations. Law does not provide any relaxation as may be claimed by the petitioner. It was incumbent upon the petitioner to ensure that all the requirements are duly met with. His claims appear after though....
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....ion of India {2018) (19) GSTL 430 (Guj.) the Hon'ble High Court of Gujarat at Ahmedabad in the case of dispute to certain provisions of CGST Act has inter alia held in para 25 of the order that "under the circumstances we do not find that the statute in an manner violates Article 14 or 19 1(g) of the Constitution" (relevant part mentioned and emphasized).} Furthermore, it is to mention that previously also certain provisions of GST laws have been challenged. In a recent case of Union of India Versus Mohit Mineral Pvt. Ltd. {2018 (17)GSTL(561)} Hon'ble Supreme Court while deciding the issue related to legislative competence of state to enact law relating to compensation to states has inter alia elaborately discussed the relevant provisions validating the enactment. In view of the above settled legal position, clear view emerges that Legislation has the right to levy taxes and penalties under CGST Act, 2017 which emanates from constitutional powers and no valid ground has been mentioned by the petitioner holding the enacted law as invalid. Mere ground of quantum of fine is no basis for holding it to be violative of the referred articles of the Constitution. Thus it appears th....
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....ing to mandatory requirement of movement of the goods under the cover of valid e-way bill as specified in the Rule 138 of the CGST Rules, 2107, are legal and in accordance with the spirit and intent of the Act. Thus the requirements of compliance of procedure is not a less important aspect but a condition sine qua non for the purpose involved. This ratio of the case cited above appears to be analogously applicable in the instant case. " DISCUSSION 24. As we are looking into two important provisions of a new tax regime, we must look into the salient features of the GST. The salient features of the GST have been very exhaustively looked into and discussed by the Kerala High Court in the case of Sheen Golden Jewels (India) Pvt. Ltd. vs. State Tax Officer, reported in (2019) 62 GSTR 207. GST - Introduction: 25. In a federal constitutional set up, coordination rather than subordination as the guiding spirit, the States and the Union as the constituents have demarcated spheres of legislation and governance. With Clearly delineated legislative fields, neither can trespass upon the other's legislative territory-the residuary powers lying with the Union, though. The division....
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.... than a decade. Its need as a harmonised indirect tax, encompassing all goods and services was documented as early as in 2004. That year the Task Force on Implementation of the Fiscal Responsibility and Budget Management in its Report stressed the need. The first official announcement for a transition to GST, though, was made by the Government of India in 2006-07 (the Budget Speech). The Government's commitment stood reiterated in the Budget Speech of 2008-09, too. But the Government of India took the first step towards the transition to GST when it announced certain policy changes in the 2009-10 budget. 32. The next major landmark was the "First Discussion Paper on Goods and Services Tax in India" released by the Empowered Committee in November 2009. This was the first official document publicly delineating the contours of the proposed reform and nuances of the GST Model. 33. The First Discussion Paper, in fact, explained the rationale for a constitutional amendment to introduce GST. It noted that while the Centre is empowered to tax services and goods up to the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a ....
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....principle of destination-based consumption taxation as against the present principle of origin-based taxation. (iii) It is a dual GST with the Centre and the States simultaneously levying a tax on a common base. GST to be levied by the Centre is called Central GST(CGST) and that to be levied by the States called State GST (SGST). (iv) An Integrated GST (IGST) is levied on inter-state supply (including stock transfers) of goods or services. This shall be levied and collected by the Government of India, and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by Law on the recommendation of the GST Council. (v) Import of goods or services is treated as inter-state supplies and is subject to IGST, besides the applicable customs duties. (vi) CGST, SGST & IGST are levied at rates to be mutually agreed upon by the Centre and the States. The rates would be notified on the recommendation of the GST Council. To begin with, the GST Council has decided that GST would be levied at four rates viz. 5%, 12%, 18% and 28%. The schedule or list of items that would fall under each slab has been worked out. Besides these rates, a ces....
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....ssible. 39. GST replaces these taxes currently levied and collected by the Centre: (a) Central Excise Duty, (b) Duties of Excise (Medicinal and Toilet Preparations), (c) Additional Duties of Excise (Goods of Special Importance), (d) Additional Duties of Excise (Textiles and Textile Products), (e) Additional Duties of Customs (commonly known as CVD), (f) Special Additional Duty of Customs(SAD), (g) Service Tax, (h) Cesses and surcharges, in so far as they relate to the supply of goods and services. 40. State taxes that get subsumed within the GST are: (a) State VAT, (b) Central Sales Tax, (c) Purchase Tax, (d) Luxury Tax, (e) Entry Tax (All forms), (f) Entertainment Tax and Amusement Tax (except those levied by the local bodies), (g) Tax on advertisements, (h) Tax on lotteries, betting and gambling, (i) State cesses and surcharges in so far as they relate to the supply of goods and services, 41. To have the whole GST system backed by a robust IT system, Parliament has set up the Goods and Services Tax Network (GSTN). It will provide front end services and will also develop back end IT modules for States who chose the same. ....
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....ticle 268 has been amended so that excise duty on medicinal and toilet preparation are omitted from the State List and are subsumed in GST. And Article 269 would empower the Parliament to make GST related laws for inter-state trade or commerce. Article 270 now provides for collection and distribution of tax to be done according to Article 246A. Then, under Article 271, GST has been exempted from being part of the Consolidated Fund of India. The amended Article 286 includes the supply of goods and services under its ambit, rather than just sale or purchase of goods; Article 366 now includes the definitions of Goods and Service Tax, Services and State. And finally, Article 279A has also been brought under the ambit of Article 368. 47. As with the Schedules, the Sixth Schedule has been amended to give power to the District Councils to levy and collect taxes on entertainment and amusements. And the Seventh Schedule has also been amended. In the Union List, petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel, tobacco and tobacco products have been removed from the ambit of GST and have been subjected to Union jurisdiction. Newspapers adve....
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....s with the Legislature's taxing power though. In List I, principal among the Entries concerning taxes are Articles 41, 42, 83, 84, 87 to 92, 92A, 92B, 92C, 97; and in List II are Entries 26, 45, 47 to 61 and 63. 52. The CA Act has brought drastic changes in the federal taxing powers of the State; it has introduced a couple of Articles, amended a few, and done away with a few more. At a glance we can appreciate the changes:- Before Amendment After Amendment Impact 246A Not existing Introduced Special provision on goods and services tax conferring simultaneous legislative powers on both the Union and the States. 248 Residuary power Amended The Union's residuary legislative power is subjected to Article 246A. 249 Power of Parliament to legislate regarding a matter in the State List in the national interest Amended It gives power to the Parliament to enact any law applicable to states on the matters mentioned even in states list. GST, no mentioned in States list, now explicitly mentioned. 250 Power of Parliament to legislate regarding any matter in the State List if a Proclamation of Emergency is in operation Amended It ha....
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.... 368 Power of Parliament to amend the Constitution and procedure therefore Amended As regards provisions and laws regarding GST Council, Parliament has been vested with the power to amend the Constitution. Sixth Schedule Provisions on the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura, and Mizoram 8. Powers to assess and collect land revenue and to impose taxes. Amended It concerns powers to assess and collect land revenue and to impose taxes in the Tribal Areas of a few States. Seventh Schedule List I : Entry 84 Barring those excluded, the Union could levy excise duty on all other goods, including tobacco, manufactured or produced in India. The excluded ones are these: (a) alcoholic Amended • Now excise duty is levied only on the enumerated items: petroleum crude; high-speed diesel; motor spirit (commonly known as petrol); natural gas; aviation turbine liquors for human consumption; (b) opium, Indian hemp, and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance in sub-paragraph (b). fuel; and f) tobacco and tob....
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....tax on Intra-State supply of goods or services, or both by the State of Gujarat. As it is in pari materia with the Central Goods and Services Tax Act, it needs no much elaboration. 55. To sum it up, the GST is a discretion based tax on consumption of goods and services. The taxable event under the GST regime is the supply of goods or services or both. Section 2(107) of the CGST and SGST Acts, which are identical, defines "taxable person" as a person who is registered or liable to be registered under the said statutes. Section 2(108) of the CGST and SGST Acts, which are identical, defines "taxable supply" as a supply of goods or services, or both which is chargeable to goods and services tax under the said statutes. Chapter XIX of the GST:- 56. Chapter XIX of the statutes containing Sections 122 to 138 deals with the offences and penalties. Among the said provisions, Sections 122 to 128 deal with the imposition of penalties. Section 129 deals with detention, seizure and release of goods and conveyances in transit. Sections 130 and 131 deal with confiscation of goods or conveyances and levy of penalty and Sections 132 to 138 deal with the various offences under the Act. Amon....
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.... concluded. (6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130: Provided 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 seven days may be reduced by the proper officer." 57. Section 130 of the statute, dealing with the confiscation of goods or conveyances, reads thus : "130. (1) Notwithstanding anything contained in this Act, if any person-- (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or ....
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....h goods or conveyance and deposit the sale proceeds thereof with the Government. " 58. We take notice of the fact that both the sections, i.e., Sections 129 and 130 respectively of the Act start with a non-obstante clause. The first question we need to consider is whether both the sections are independent of each other or they can be used interchangeably at the discretion of the authorities. In other words, is Section 130 of the Act, which provides for confiscation of goods or conveyances and levy of penalty, subject to Section 129 of the Act. As noted above, the two provisions under the same enactment have a non-obstante clause "not withstanding anything contained in this Act." 59. As regard the non-obstante clause, this Court deems it fit to consider few decisions: 60. In State of West Bengal v. Union of India, AIR 1963 SC 1241, it is observed as under; "The Court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law and the setting in which the clause to be interpreted occurs." 61. In Union of India v. Maj I.C. ....
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....t to showing that the Act shall be no impediment to measure intended. To attract the applicability of the phrase, the whole of the section, the scheme of the Act and the objects and reasons for which such an enactment is made has to be kept in mind." 65. In ICICI Bank Ltd. v. SIDCO Leathers Ltd., [2006] 67 SCL 383 (SC), the Supreme Court, at Paragraphs 34, 36 and 37, held as follows: "34. Section 529A of the Companies Act no doubt contains a non obstante clause but in construing the provisions thereof, it is necessary to determine the purport and object for which the same was enacted.... 36. The nonobstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy.... 37. A nonobstante clause must be given effect to, to the extent the Parliament intended and not beyond the same." 66. The Supreme Court, in the case of Central Bank of India v. State of Kerala, [2009] 4 SCC 94, held as follows; "103. A non-obstante clause is generally incorporated in a statute to give overriding effect to a particular section or the statute as a whole. While interpreting non-obst....
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....s clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules." 70. In A.G. Varadarajulu v. State of Tamil Nadu [(1998) 4 SCC 231], the Supreme Court relied on Aswini Kumar Ghose's case. The Court while interpreting the non - obstante clause contained in Section 21A of Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 held : "It is well settled that while dealing with a nonobstante clause under which the legislature wants to give overriding effect to a section, the court must try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. In Aswini Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369], Patanjali Sastri, J. observed: "The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously;" 71. A non-obstante clause is generally appended to a section ....
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....athumma & Ors. v. Mariam Bibi; 1966(1) Mysore Law Journal page 162, at page 165] Construction of the provisions of a taxing statute: 74. As we are looking into the provisions of a taxing statute, the construction of the provisions must be strict and in favour of the enforcement of the provision. In the aforesaid context, we may refer to and rely upon a decision of the Supreme Court in the case of Commissioner of Sales Tax, Delhi & Anr. vs. Shri Krishna Engg. Co. & Ors., (2005) 2 SCC 692. We quote the relevant paras; "21. The undisputed objective of the Act is to levy and collect tax on the sale of goods in the National Capital Territory of Delhi. Levy to tax is meaningless if the tax is not collected. It can never be the intention of the lawmakers to keep on levying tax without any effort to collect the tax so levied. This Court in Indo International Industries vs. Commissioner of Sales Tax, Uttar Pradesh [1981] 47 STC 359 held that "It is well settled that in interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary stipulated object is to raise revenue." Needless to stress that the object of every taxing statute is t....
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.... observed, "that interpretation is best which makes the textual interpretation match the contextual." Speaking for the Court, Chinappa Reddy, J. noted the importance of rule of contextual interpretation and held:- "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit in....
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....egislature. The court has to proceed on the footing that the legislature intended what it has said and even if there is some defect in the phraseology etc., it is for others than the court to rectify that defect. The statute requires to be interpreted without doing any violence to the language used therein. The court cannot re-write, recast or reframe the legislation for the reason that it has no power to legislate. 44. No word in a statute has to be construed as surplusage. No word can be rendered ineffective or purposeless. Courts are required to carry out the legislative intent fully and completely. While construing a provision, full effect is to be given to the language used therein, giving reference to the context and other provisions of the Statute. By construction, a provision should not be reduced to a dead letter or useless lumber. An interpretation which renders a provision an otiose should be avoided otherwise it would mean that in enacting such a provision, the legislature was involved in an exercise in futility and the product came as a purposeless piece of legislation and that the provision had been enacted without any purpose and the entire exercise to enact....
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....oresaid context, we should also remind ourselves of the fine distinction explained by the Supreme Court in the case of Associated Cement Co. Ltd. vs. Commercial Tax Officer, Kota & Ors., reported in AIR 1981 SC 1887 as regards the charging provisions of a taxing statute and the machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. We quote the relevant observations; "It is settled law that a distinction has to be made by court while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The courts are expected to cons true the machinery sections in such a manner that a charge to tax is not defeated. The above rule of construction of a taxing statute has been adopted by this Court in India United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay in which section 15 of the Exc....
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....nt. That, exhypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay," Sections 129 and 130 of the Act:- 81. The plain reading of Section 129 of the Act would indicate that the same talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyances and levy of tax, penalty and fine thereon. Both the sections, therefore, should be interpreted harmoniously keeping in mind the object and purpose behind the enactment thereof. For the purpose of invoking Section 129 of the Act, all that is required is "contravention of the provisions of the Act or the Rules", whereas specific circumstances are set out in sub-section (1) of Section 130 for invoking the provisions relating to confiscation which are basically related to "intent to evade payment of tax". Thus, we are clear about one thing in our mind that both these sections are independent of each other. 82. Section 130 of the Act provides for specific situations or causes leading to the confiscation of....
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....possession. 90. If the proper officer is satisfied that the confiscated goods/conveyance are not required for any proceedings under the Act, then he shall after giving reasonable time not exceeding 3 months to pay fine in lieu of confiscation, dispose the goods and deposit the sale proceeds with the Government. 91. Our attention has also been drawn to the provisions of Section 122, that prescribes penalties for certain offences, Section 125, that provides for levy of general penalty and Section 126 of the Act, which sets out certain general disciplines relating to the imposition of penalties. 92. The provisions of Section 122 of the Act envisage various offences for which penalty is leviable and in terms of Section 122 (2) of the Act, the maximum penalty would be a sum of Rs. 10,000/- or 10% of the tax due from such person, whichever is higher. In the case of wilful mis-statement or suppression of facts to evade tax, such penalty would be equal to Rs. 10,000/- or the tax due, whichever is higher. In terms of Section 125 of the Act, extracted below, the maximum penalty shall not exceed to Rs. 25,000/-:- 'General penalty 125. Any person, who contravenes....
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....in the 'Interception of conveyances for inspection of goods in movement and detention, release and confiscation of such goods and conveyances'. 95. Our attention is drawn to paragraphs 3, 4, 5 and 6 of the said Circular, extracted below:- ".... 3. Section 68 of the CGST Act read with rule 138A of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as 'the CGST Rules') requires that the person in charge of a conveyance carrying any consignment of goods of value exceeding http://www.judis.nic.in Rs. 50,000/- should carry a copy of documents viz., invoice/bill of supply/delivery challan/bill of entry and a valid e-way bill in physical or electronic form for verification. In case such person does not carry the mentioned documents, there is no doubt that a contravention of the provisions of the law takes place and the provisions of section 129 and section 130 of the CGST Act are invocable. Further, it may be noted that the non-furnishing of information in Part B of FORM GST EWB-01 amounts to the e-way bill becoming not a valid document for the movement of goods by road as per Explanation (2) to rule 138(3) of the CGST Rules, except in the ....
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....r on a weekly basis......'he questions to be determined in these cases relate to the release of consignment and the quantum of penalty, if any, to be levied at this stage, and pending adjudication." 96. As far as the determination of penalty is concerned, it is the Assessing Officer / State Tax Officer who is the competent and proper person for such determination/quantification. However, a holistic reading of the statutory provisions and the Circular noted above, indicates to me that the Department does not paint all violations/transgressions with the same brush and makes a distinction between serious and substantive violations and those that are minor/procedural in nature. 97. The questions whether the movement of the consignments sans valid E-way bills constitutes a substantive error or a mere technical breach are to be considered by the Assessing Officer, having regard to the provisions of Sections 122, 125 and 126 of the Act as well all relevant Instructions and Circulars issued by the Board, including the Circular extracted above. 98. A Division Bench of the Kerala High Court in the case of Assistant State Tax Officer & Anr. vs. M/s. Indus Towers Limited, 2018 (3)....
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....ecurity, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be." 100. Section 129 further provides that the proper officer, detaining or seizing the goods or conveyances, is obliged to issue a notice, specifying the tax and penalty payable and, thereafter, pass an order for payment of such tax and penalty. Clause (4) provides that no tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. Clause (5) provides that on payment of the amount, referred to in sub-section (1) of the proceedings in respect of the notice, specified in sub-section (3) are deemed to be concluded, and in the last, clause (6) provides that if the tax and penalty is not paid within 14 days of detention or seizure, then further proceedings would be initiated in accordance with the provisions of Section 130. 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 provisions of the Act or the Rules. The ....
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....ce is presumed to have contravened the provisions of the Act or the Rules with an intent to evade payment of tax. This, in our opinion, is not justified. The resultant effect of such issue of confiscation notice at the very threshold, without any application of mind or without there being any foundation for the same, renders Section 129 of the Act practically otiose. We take cognizance of the fact that once the notice under Section 130 of the Act is issued, then the vehicle is not released even if the owner of the goods is ready and willing to pay the tax and the penalty that may be determined under Section 129 of the Act. Such approach leads to unnecessary detention of the goods and the conveyance for an indefinite period of time. Therefore, what we are trying to convey is that all cases of contravention of the provisions of the Act or the Rules, by itself, may not attract the consequences of such goods or the conveyance confiscated under Section 130 of the Act. Section 130 of the Act is altogether an independent provision which provides for confiscation in cases where it is found that the intention was to evade payment of tax. Confiscation of goods or vehicle is almost penal in c....
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.... 2451]. In Sheonath Singh (supra), the Supreme Court held that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court. The formation of the opinion by the authority that the goods and the conveyance are liable to be confiscated should reflect intense application of mind. We are saying so because it is not any or every contravention of the provisions of the Act or the Rules which may be sufficient to arrive at the conclusion that the case is one of an intention to evade payment of tax. In short, the action must be held in good faith and should not be a mere pretence. 105. We would like to remind the Revenue of the observations made by this Court in the case of Sitaram Roadways vs. State of Gujarat, Special Civil Application No.15107 of 2019, decided on 10th October, 2019. We quote the observations; "8. Section 130 of the CGST Act provides for confiscation of goods or conveyances and levy of penalty. Sub-section (4) thereof provides that no order for confiscation of goods or conveyance or for imposit....
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.... 10. In this regard a perusal of the impugned order of confiscation, shows that column 5 wherein the officer adjudging it is required to set out the reasons for concluding that the goods and conveyance are required to be confiscated, is totally blank. As a necessary corollary it follows that the goods and conveyance have been ordered to be confiscated without disclosing the reasons therefor. The impugned order is, therefore, a non-speaking order, which is totally bereft of any reasons whatsoever. 11. At this stage, it may be apposite to refer to the legislative scheme contained in section 130 of the CGST Act. Sub-section (1) of section 130 thereof, reads thus: 130. Confiscation of goods or conveyances and levy of penalty.-- (1) Notwithstanding anything contained in this Act, if any person-- (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or ....
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....intent to evade payment of tax. Therefore, in a case falling under clauses (i) and (iv) of sub-section (1) of section 130 of the CGST Act, the proper officer is required to record a specific finding as to why he has come to the conclusion that the contravention is with the intent to evade payment of tax. In cases falling under clause (ii) of sub-section (1) of section 130 of the CGST Act, the proper officer will be required to record a finding that the person concerned has not accounted for the goods in respect of which is he liable to pay tax; and in cases falling under clause (iii) thereof, he would be required to record a finding that the person concerned has supplied goods which are liable to tax under the Act without having applied for registration. 13. In the present case, the impugned order is totally silent as regards which provision of the Act or the rules has been contravened; which clause of sub-section (1) of section 130 of the CGST Act is attracted in the present case; and as to why the officer adjudging it has come to the conclusion that there is contravention of the provisions of the Act and the rules made thereunder with the intent to evade payment....
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....context of necessity to give reasons, has held thus: "47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries comm....
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....e authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the court should meet with this requirement with higher degree of satisfaction. The order of an administrative authority may not provide reasons like a judgment but the order must be supported by the reasons of rationality. The distinction between passing of an order by an administrative or quasi-judicial authority has practically extinguished and both are required to pass reasoned orders." 18. In Tata Engineering & Locomotive Co. Ltd. v. Collector of Central Excise, Pune, 2006 (203) ELT 360 (SC), the Supreme Court was dealing with a case where by a cryptic and non-speaking order, the Tribunal had upheld the order passed by Commissioner by applying the ratio of the decision of the Larger Bench in TISCO Ltd., without recording any fin....
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....to be confiscated, which renders the order unsustainable. The impugned order, therefore, deserves to be set aside and the matter is required to be remitted to the proper officer to decide the matter afresh in accordance with law, keeping in mind the principles discussed herein above, after affording reasonable opportunity of hearing to the petitioner." The phrase "with intent to evade payment of tax", the word "penalty" and the element of mens rea in Section 130 of the Act:- 106. When the statute talks about intent to evade payment of tax, the same could be co-related with the term "willful attempt". For the purpose of evading tax, and that too, with the necessary intention, there is always a willful attempt. In other words, the attempt to evade should be "willful". The term "willful" has not been defined under the Act. Under the common legal columns, the word "willful" suggests the guilty mind of the assessee. In other words, the assessee has consciously or knowingly attempted to thwart the chargeability or payment of tax. Further, such willful attempt should be to "evade" the chargeability or imposition or payment of tax etc. The word "evade" has also not been defined in th....
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....e penalty imposable by the disciplinary authority if the delinquent employee has been found guilty of conduct which has led to his conviction on a criminal charge ...... The words "where any penalty is imposed' in Rule 14 (i) should actually be read as 'where any penalty is imposable' because so far as the disciplinary authority is concerned it cannot impose a penalty on the basis of the conviction and sentence passed against the delinquent employee by a competent court. Furthermore, the rule empowering the disciplinary authority to consider circumstances of the case and make such orders as it deems fit clearly indicates that it is open to the disciplinary authority to impose any penalty as it likes. In this sense, therefore, the word 'penalty' used in Rule 14 (i) of the Rules of 1968 is relatable to the penalties to be imposed under the Rules rather than a penalty given by a criminal court." 109. In N.K. Jain and Ors. v. C.K. Shaw and Ors., AIR 1991 SC 1289, the Supreme Court considered the nature of expression "penalty" used in Section 14(2A) of the Provident Fund and Miscellaneous Provisions Act, 1952, wherein it considered the definition of the Word "pena....
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.... Enforcement v. MCTM Corporation Pvt. Ltd. and Ors., AIR 1996 SC 1100, the Hon'ble Supreme Court considered as issue as to whether ingredients of mens rea was necessary in case of a person who is found violating the provisions of the Foreign Exchange Regulations Act, 1947. The Court observed as under:- "Mens rea' is a state of mind. Under the criminal law, mens rea is considered as the 'guilty intention' and unless it is found that the 'accused' had the guilty intention to commit the 'crime', he cannot be held 'guilty' of committing the crime. An 'offence' under Criminal Procedure Code and the General Clauses Act, 1897 is defined as 'any act or omission 'made punishable by any law for the time being in force.' The proceedings under Section 23(1) (a) FERA, 1947 are 'adjudicatory' in nature and character and are not 'criminal proceedings.' The officers of the Enforcement Directorate and other administrative authorities are expressly empowered by the Act to 'adjudicate' only. Indeed they have to act 'judicially' and follow the rules of natural justice to the extent applicable but, they....
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....contemplated by Section 10(1) (a) is established. The High Court apparently fell in error in treating the 'blameworthy conduct' under the Act as equivalent to the commission of a 'criminal offence', overlooking the position that the 'blameworthy conduct' in the adjudicatory proceedings is established by proof only of the breach of a Civil obligation under the Act, for which the defaulter is obliged to make amends by payment of the penalty imposed under Section 23 (1)(a) of the Act irrespective of the fact whether he committed the breach with or without any guilty intention. Our answer to the first question formulated by us above is, therefore in the negative." 112. In Commissioner of Sales Tax v. Rama and Sons, General Merchant, Ballia, 1999 UPTC 25, the Allahabad High Court observed as under:- "The principle of mens rea comes from English Criminal Law from times when the law was not codified. It was said that actus non facit reum nisi mens sit rea (the intent and act must both concur to constitute the crime). But this principle has lost much of its significance owing to greater precision of modern statutes. The nature of intent or the ingredient....
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....words of the statute creating the offence or by the subject matter with which it deals, and both must be considered....... In order to find out whether mens rea i.e. a guilty mind is an ingredient or not, reference has to be made to the language of the enactment, the object and subject matter of the statute and the nature and character of the Act sought to sought to be punished." 115. The Hon'ble Supreme Court in Gujarat Travancore agency v. Commissioner of Income Tax, AIR 1989 SC 1971, wherein the Court considered the provision of Section 271(1)(a) of the Income Tax Act and held that the element of mens rea is not involved because the penalty imposed in civil matters is always of a civil nature and it is misnomer to treat such proceedings as quasi-criminal merely because penalty is imposed, and observed as under:- "In most cases of criminal liability, the intention of legislature is that penalty should serve as a deterrent. The creation of an offence by the statute proceeds with a presumption that society suffers injury by the act or omission of defaulter and that a deterrent sentence must be imposed to discourage the repetition of the offence. In a case of proceed....
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.... tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime of a fine or forfeiture provided as punishment for the violation of criminal or penal laws." 121. In M/s. Hindustan Steel Ltd. v. The State of Orissa, AIR 1970 SC 253, the Hon'ble Supreme Court considered the provisions of the Orissa Sales Tax act, 1947, particularly the provisions relating to imposition of penalty imposed for default in registering as a dealer under Section 9(1) read with Section 25(1) (a) of the said Act, and held as under:- "But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An Order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform....
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....ales Tax Authority is only a civil liability, though penal in nature, and it can be imposed provided the default committed by the dealer is established at an inquiry after giving the dealer concerned an opportunity of being heard. Moreso, the degree of remissness involved in the default is a relevant factor to be taken into account while levying penalty. As the Act provides both the minimum and the maximum amount of penalty leviable and it is corelated to the amount of tax which would have have been avoided if the turnover returned by such dealer had been accepted as correct. The order levying penalty is quasi-judicial in character and involves exercise of judicial discretion. 124. A Constitution Bench of the Hon'ble Supreme Court, in Khemka and Co. (Agencies) Pvt. Ltd. v. State of Maharashtra, AIR 1975 SC 1549, considered the provisions of the Central Sales Tax act, 1956 in a case of default in payment of tax in respect of Central Act within the prescribed time, and held as under:- "Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and....
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....that there is arithmetical identity, assuming it to be so, between the figures of the illegal collections made by the dealers and the amounts forfeited to the State cannot create a conceptual confusion that what is provided is not punishment but a transference of funds. If this view be correct, and we hold so the legislature, by inflicting the forfeiture, does not go outside the crease when it hits out against the dealer and deprives him, by the penalty of the law, of the amount illegally gathered from the customers. The Criminal Procedure Code, Customs and Excise Laws and several other penal statutes in India have used diction, which accepts forfeiture as a kind of penalty. When discussing the relings of this Court we will explore whether this true nature of 'forfeiture' is contradicted by anything we can find in Section 37(1), 46 or 63. Even here we may reject the notion that a penalty or a punishment cannot be cast in the form of an absolute or no fault liability but must be proceeded by mens rea. The classical view that 'no mens rea, no crime' has long ago been eroded and several laws in India, and abroad, especially regarding economic crimes and departmental pe....
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....es Tax Rules, 1941, and held that the said provisions of Rule 89-A (2) of the said Rules, 1941 required that any consignment of notified goods shall be accompanied by a declaration by the consignor or his authorised agent in relation to the consignment or to comply with them. The rule squarely placed an obligation upon the consignor/vendor to issue such a declaration and the consignee/purchasers to carry the declaration. The consignees were not entitled to complain that because iron and steel were taxable only at the first point of sale, the sellers (manufacturers) were not issuing the declaration as contemplated by Rule 89-A(2) and they were, therefore, not in a position to produce the declaration when demanded by the authorities, in case of failure to produce the said declaration form, they were liable to pay the penalty, as per the said Rules, 1941. 129. In Kishori Lal Rakesh Kumar Mandi v. Commissioner of Sales Tax, 1985 UPTC 211, a Division Bench of the Allahabad High Court, while deciding a reference on interpretation of Section 15-A(a)(g) of the Uttar Pradesh Sales Tax Act, 1948, which referred to renewal of registration and for default, whether penalty can be imposed wit....
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.... In State of Madhya Pradesh v. Narain Singh and Ors., 1983 (3) SCC 596, the Hon'ble Supreme Court considered as case where two trucks carrying fertilizers were intercepted by the Madhya Pradesh Authorities under the Essential Commodities Act and the accused did not deny the transport of fertilizer bags or interception of its lorries or seizure of fertilizer bags and the only defence taken therein was than they were not aware of the contents of the documents seized from them and they were not engaged in exporting the fertilizer bags from Madhya Pradesh to Maharashtra in conscious violation of provisions of the Fertilizer Movement Control Order, 1973 read with Sections 3 and 7 of the Essential Commodities Act, 1955. The Hon'ble Supreme Court, reversing the order of acquittal, held that mens rea was not at all attracted as the provisions of Section 7(1) of the Essential Commodities act required to be interpreted in true perspective and it provided tat if any person contravenes, whether knowingly, intentionally or otherwise any order made under Section 3, he will be punished under the F.M.C.O. The Court held that the element of mens rea in export of fertilizer bags without a va....
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.... owner or person in charge of a vehicle, boat or animal entering the State limits or leaving the State limits shall also give a declaration containing such particulars as may be prescribed of the goods carried in or on the vehicle, boat or animal, as the case may be, before the officer in charge of the check post r barrier or the officer empowered as aforesaid and give one copy of the declaration to such officer, and keep one copy with him. (7) (a) The officer incharge of the check post or barrier or any other officer not below the rank of an Assistant Commercial Taxes Officer, empowered in this behalf may, after giving the owner or person incharge of the goods reasonable opportunity of being heard and after holding such further enquiry as he may deem fit, impose on him for possession of goods not covered by goods vehicle record, any other documents prescribed under Sub-section (3) or for sub mission of false declaration or documents, a penalty equal to five times of the rate of tax notified under Section 5 of the Act, for such goods or 30% of the value of such goods, as may be determined by such officer which ever is less. Provided that where the goods are being carried w....
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....ant to be strictly construed, particularly in areas of evasion of tax. We cannot lose sight of the fact that of the there are attempts to avoid statutory obligation or requirement of oblique reason. An undue indulgence and leniency in favour of the tax-evaders on technical or misplaced sympathetic grounds leads to serious consequence's affecting the revenue, and as such, development and security of the State. We are not oblivious of the fact that the penalty provisions cannot be used as a revenue-yielding provision. The object to the penalty provision is to ensure compliance in the larger public interest." 142..Finally in the aforesaid context, we may refer to a decision of the Supreme Court in the case of Tamil Nadu Housing Board vs. Collector of Central Excise, reported in 1994 Supp. 4 SCR 62, wherein the Supreme Court, while dealing with the scope of the proviso to Section 11A of the Central Excise & Salt Act, 1944, observed as under; "When the law requires an intention to evade payment of duty then it is not mere failure to pay duty, It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it....
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....iscation and penalty. 144. When it comes to confiscating the vehicle, the consideration would be altogether different. The idea is to confiscate the vehicle, irrespective of its ownership or participation of the owner in the actual transport of the goods in contravention of the provision of the Act or the Rules. It is what is called a provision of law "to condemn the vehicle". In other words, because the vehicle carried the goods in contravention of the provisions of the Act or the Rules with an intent to evade the payment of tax, it had become tainted and is, therefore, liable to be confiscated. Of course, Section 130 provides that the owner of the vehicle may pay redemption fine in lieu of confiscation. The owner of the conveyance can also prove that the vehicle was used without his knowledge or connivance or his agent or the person in charge of the conveyance. 145. In an appropriate case, even after determining the amount of tax and penalty under Section 129 of the Act and release of the goods and vehicle, the authorities may be justified in issuing notice under Section 130 of the Act for the purpose of initiating confiscation proceedings. In other words, at the stage of S....
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....hin 14 days of such detention or seizure, then further proceedings would be initiated in accordance with the provisions of Section 130, i.e, for the purpose of confiscation. However, in such an eventuality, it would not be necessary for the department to establish any intention to evade payment of tax. Sub-clause (6) of Section 129 provides an eventuality, by which, it would be open for the authority to put the goods and the conveyance to auction and deposit the sale proceed thereof with the Government. 149. It was also sought to be argued on behalf of the petitioners that once there is detention and seizure of goods and conveyance, then it is mandatory for the proper officer, detaining or seizing goods or conveyance to issue a notice specifying the tax and penalty payable and, thereafter pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). The emphasis is sought to be placed on the word "shall" in clause (3) of Section 129. The argument proceeds on the footing that without any notice, as contemplated under Section 129(3) of the Act, there is no scope for the authority to straightway proceed to Section 130 of the Act for the purpose of confi....
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....n is used and the purpose it seeks to achieve. It may also be necessary to find out the intent of the legislature for enacting it and the serious and general inconveniences or injustice to persons relating thereto from its application. The provision is mandatory if it is passed for the purpose of enabling the doing of something and prescribes the formalities for doing certain things. 16. In Dattatraya Moreshwar Vs. The State of Bombay & Ors., AIR 1952 SC 181, this Court observed that law which creates public duties is directory but if it confers private rights it is mandatory. Relevant passage from this judgment is quoted below:- "It is well settled that generally speaking the provisions of the statute creating public duties are directory and those conferring private rights are imperative. When the provision of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of legislature, it has been the practice of the C....
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.... of arrears of rent in the application and held the provision to be directory though the word "shall" has been used in the statutory provision for the reason that non-compliance of the rule, i.e. non-mentioning of the quantum of arrears of rent did involve no invalidating consequence and also did not visit any penalty. 22. In B.S. Khurana & Ors. Vs. Municipal Corporation of Delhi & Ors. (2000) 7 SCC 679, this Court considered the provisions of the Delhi Municipal Corporation Act, 1957, particularly those dealing with transfer of immovable property owned by the Municipal Corporation. After considering the scheme of the Act for the purpose of transferring the property belonging to the Corporation, the Court held that the Commissioner could alienate the property only on obtaining the prior sanction of the Corporation and this condition was held to be mandatory for the reason that the effect of non-observance of the statutory prescription would vitiate the transfer though no specific power had been conferred upon the Corporation to transfer the property. 23. In State of Haryana & Anr. Vs. Raghubir Dayal (1995) 1 SCC 133, this Court has observed as under:- "Th....
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.... as what would be the consequence which would flow from construing it in one way or the other and as to whether the Statute provides for a contingency of the non-compliance of the provisions and as to whether the non-compliance is visited by small penalty or serious consequence would flow therefrom and as to whether a particular interpretation would defeat or frustrate the legislation and if the provision is mandatory, the act done in breach thereof will be invalid. 26. The instant case is required to be examined in the light of the aforesaid settled legal provision. In fact, failure of issuance of notice under section 9(3) would not adversely affect the subsequent proceedings including the Award and title of the government in the acquired land. So far as the person interested is concerned, he is entitled only to receive the compensation and therefore, there may be a large number of disputes regarding the apportionment of the compensation. In such an eventuality, he may approach the Collector to make a reference to the Court under section 30 of the Act. " 151. However, to say that confiscation is permissible only in the event of failure to comply with Section 129(6) of ....
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....n the event of the applicable tax and penalty not paid. 153. It has also been argued before us by the learned counsel appearing for the petitioners by placing reliance on the explanation (1) to the provisions of Section 74 of the Act that Section 130 of the Act cannot be invoked by the department for the transaction with respect to which the the assessee has already paid the amount of tax and penalty in terms of Section 129 of the Act. 154. We are not impressed by such submission. In our opinion, the explanation neither provides that the confiscation proceedings against the person concerned would be deemed to be concluded nor that the confiscation proceedings against "all other persons" would be deemed to be concluded. It merely stipulates that the proceedings related to the "penalty" under the provisions of Sections 122, 125, 129 and 130 of the Act would be deemed to be concluded. In our opinion, the explanation is not helpful to the petitioners in any manner. We are of the view that Section 130 of the Act can be invoked even in cases where the amount of tax and penalty is paid in terms of the provisions of Section 129 of the Act. This would be provided, the case is falling ....
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....by they can be operated upon in spite of Sections 73 and 74 of the Act. 157. In the aforesaid context, we may look into the decision of the Supreme Court in the case of Salex Tax Officer & Ors. vs. Dutta Traders, (2007) 14 SCC 215, upon which strong reliance has been placed by Mr. Trivedi, more particularly, the observations made in paras-16 and 17. We quote paras-16 and 17 as under; "16. It is well settled that the concepts of chargeability, assessment, quantification and recovery of tax are independent concepts under any taxing law. Section 12 of the Act refers to assessment whereas provisions after Section 15 of the said Act refers to recovery and collection of tax. The scheme of the Act, therefore, is based on the dichotomy between assessment on one hand and recovery of tax on the other hand. Under Section 12, the assessing officer has to examine the returns. He may accept the returns. If he finds that the returns are not in order, subject to giving notice to the assessee, he is entitled to pass appropriate assessment orders. However, in cases falling under Section 16-D where evasion is detected at the check-post by the Sales Tax Officer (Vigilance) and in order to ....
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.... our opinion, the detention and seizure of goods on such ground cannot be justified. In such an eventuality, the correct procedure which the inspecting authority is expected to follow is to alert the Assessing Authority to initiate the proceedings "for assessment of any alleged sale at which the dealer will have his opportunities to put forward his pleas on law and on fact. What we want to convey is that the process of detention of the goods cannot be resorted to when the dispute is bona fide especially concerning the exigibility of tax and, more particularly, the rate of that tax. In the aforesaid context, we may refer to and rely upon a decision of the Kerala High Court in the case of N.V.K. Mohammed Sulthan Rawtger & Sons Dindigul, Tamil Nadu, Represented by Managing Partner, Raja Mohammed & Ors., vs. Union of India & Ors., reported in (2019) 61 GSTR 307, wherein a learned Single Judge of the Kerala High Court observed as under; "24. Detention under the KSGST Act has an elaborate remedial mechanism. Now, we focus on the release of the product, and it lies in narrow confines. Suffice it for me to examine this singular issue: Can the State Tax Officer invoke Section 129 o....
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....SCC 276. On how to interpret Tax Statutes, the Supreme Court has held that charging provisions must be construed strictly, but not the machinery provisions, "which should be construed like any other statute". It has also held that "the power to levy and collect interest is substantive law though part of machinery provision". 30. In J.K. Synthetics Limited the issue was whether the appellant should pay interest on the additional sales tax. The Revenue, as it has done here, contended that when the law enjoins on the Assessee to files a 'return', it can only mean a true and correct return, that is, a return which reflects the tax due on final assessment. The Supreme Court in that context has held that the information to be furnished in the return "must be 'correct and complete', that is, true and complete to the best of knowledge and belief, without the dealer being guilty of willful omission." The dealer, according to J. K. Synthetics Limited, must deposit the full tax due, based on the information furnished. And that information must be correct and complete to the best of the dealer's knowledge and belief. If the dealer has furnished full particulars reg....
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....ves: "In such cases it is not for the check-post authority to act on mere suspicion and to find that there is any attempt at evasion of payment of tax, which alone vests him with the jurisdiction to act under S. 29A. At best, he can only alert the assessing authority in Ernakulam to initiate proceedings for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his picas on law and on fact. The process of detention of the goods at the check post, cannot be resorted to in such cases when there is a bona fide dispute regarding the very existence of a sale and exigibility for tax. S. 29A is not intended to subserve such an object. 35. I may examine the impugned Ext.P11 notice, or in other words the act of detention, in the light of the dicta in J.K. Synthetics Limited and Rams. In the former, the Supreme Court has emphatically held that if the dealer furnishes all particulars about his business, assesses the tax as he honestly believes to be correct, and pays it; his conduct cannot be faulted as mala fide or as an effort to evade tax. Here, the Exts.P8 and P8(a) are the returns for two recent months. The first petitione....
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....much as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. 163. The provisions of Sections 110(2) and 124 respectively of the Customs Act do not contemplate that the goods which are seized are to be released in a specific time limit, much less, within a period of six months. Apropos this, the said sections merely cast a duty on the department to issue a show cause notice within a period of six months from the date of the seizure of the goods, but the same does not contemplate as to in how much time, the same has to be adjudicated upon. Therefore, the contention raised on behalf of the Petitioners that the goods which are seized are to be released within a short span of time and that the legislature has not contemplated to retain the goods pending the confiscation proceedings, is not tenable. 164. In addition to the above, even otherwise, the provisions of Section 110A of the Customs Act, which deal with th....
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....on 125 of the Customs Act, 1962 can be imposed even if the goods are neither available for confiscation nor cleared on undertaking/bond. After considering the various contentions and judgments relied upon, the learned Division Bench of the Punjab & Haryana High Court upheld the order of the tribunal that in the absence of the goods being available no fine can be imposed. Revenue had relied on the judgment of the Supreme Court in Weston Components Ltd. Vs. Commissioner of Customs, New Delhi 2000 (115) E.L.T. 278 (S.C.). The Supreme Court there noted that the goods were released on the application by the appellant and appellant executed a bond. The court then observed that in these circumstances, if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine. The contention therefore, of the appellants there that the redemption cannot be imposed because the goods were not available for custody of the respondent authoritie....
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....nnot be maintained and no fine in lieu of confiscation can be imposed especially where the goods were neither seized nor cleared on undertaking. While passing the said order, the Commissioner of Customs has relied upon the observations of Hon'ble Apex Court in the case of M/s Weston Components Ltd. Vs. Commissioner of Customs, New Delhi (supra ), Ram Khazana Electronic vs. CC ( AIR Cargo ) Jaipur reported as 2003 (156) ELT 122 (Indel) and Chinku Exports vs. CC, Calcutta reported as 1999(112) ELT 400 (Tri.). Before the Tribunal, the contention of the revenue was that even in cases where the goods are not available, order of confiscation can be passed. However, the Tribunal vide impugned order, relied upon the observation of the Hon'ble Apex Court in the case of M/s Weston Components Ltd. Vs. Commissioner of Customs, New Delhi (supra) and the judgment of the Tribunal in the case of Ram Khazana Electronic v. CC ( Air Cargo ), Jaipur ( supra ) and held that there is no error in the impugned orders, which are based upon the judgment of the Hon'ble Apex Court. 12. It may also be noticed here that in the case of M/s Weston Components Ltd. Vs. Commissioner of ....
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....payment of redemption fine is not taken away merely because the goods were initially released on execution of bond/undertaking. In the two High Court decisions, the goods were not available for confiscation, and in such circumstances, there was neither a question of confiscation of goods nor redemption thereof. According to Mr. Trivedi, if the goods are under seizure, or they were cleared on understanding that the same would be made available in case of order of confiscation thereof, then in that case, the goods can either be confiscated or redeemed (released) on payment of fine in lieu of confiscation, provided they are available at that time. Inspite of having released the goods on execution of bond and undertaking,, if the same are not made available to the authorities at the time of confiscation proceedings, then in that case, though confiscation or redemption may not be physically possible, the terms of the bond and undertaking/bank guarantee can be enforced by seeking to recover the full value of the goods. Hence, in nutshell, it could be said that if the goods are available for confiscation, then only the question of giving an option of redemption fine in lieu of confiscatio....
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....sarily confined to the goods in question, but the redemption is with regard to the conduct as well. 174. The per-requisite for making an offer of fine under Section 130 of the Act is pursuant to the finding that the goods are liable to be confiscated. In other words, if there is no authorisation for confiscation of such goods, the question of making an offer by the proper officer to pay the "redemption fine", would not arise. Therefore, the basic premise upon which the citadel of Section 130 of the Act rests is that the goods in question are liable to be confiscated under the Act. It, therefore, follows that what is sought to be offered to be redeemed, are the goods, but not the improper conduct of the owner to transport the goods in contravention of the provisions of the Act or the Rules. We must also bare in mind that the owner of the goods is liable to pay penalty under Section 122 of the Act. The fine contemplated is for redeeming the goods, whereas the owner of the goods is penalized under Section 122 for doing or omitting to do any act which rendered such goods liable to be confiscated under Section 130 of the Act. In the aforesaid context, we may refer to and rely upon a ....
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....e affidavit filed by the Additional Collector, appellant No. 1, mentions the circumstances in which the scrap exported by respondent was allowed to leave the country. It was allowed to leave the country after the Collector had formally seized it and after the agents of the shipping company had undertaken not to release the documents in respect of the cargo to its consignees. This undertaking meant that the cargo would remain under the control of the customs authorities as seized cargo till further orders from the Additional Collector releasing the cargo and making it available to the consignees by the delivery of the necessary documents to them. The documents were allowed to be delivered to them on the application of the respondents praying for the passing on of the necessary documents to the purchasers of the goods in Japan and on the respondents giving a bank guarantee that the full f.o.b. value to be released from the said parch would be paid to the customs authorities towards penalty or fine in lieu of confiscation that might be imposed upon the respondents by the adjudicating authority. The customs authorities had seized the goods when they were within their jurisdiction. It i....
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.... go beyond the justified inhibitions under any Statute except where there is a complete jettisoning of the rule of law or under exceptional circumstances which demand timely judicial interdict. This inhibition is basically ordained, keeping in mind that there is a national weal behind any valid piece of Legislation incorporating and inhering in itself the social objective behind any Legislation. Though, no limitations or fetters have been put on the powers of the High Court under Articles 226 and 227 of the Constitution of India, as the High Courts perform as sentinel on the qui-vive, but such power is not to be exercised casually and without coming to the conclusion that non- exercise of such power would lead to positive injustice. Times without number, it has been held by the High Courts that only under condition of a person establishing that substantial injustice has or is likely to ensue, such extraordinary powers can be exercised. It needs no adumbration by this date that the plenary powers of the High Court have only to be exercised in the interest of justice. 179. Thus, an order of release of goods or conveyance may be passed under Article 226 of the Constitution of India....
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....age of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway. (iv) If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act. (v) Even if the goods or the conveyance is released upon payment of the tax and penalty under Section 129 of the Act, later, if the authorities find something incriminating against the owner of the goods in the course of the inquiry, if any, then it would be permiss....
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....input tax credit has been wrongly availed or utilized for any reason, either with mala fide intention or without the same, as the case may be, the provisions of Section 73/74 of the Act would be invoked. However, the provisions of Section 129 of the Act deal with situation where the evasion of tax/contravention of the Act/Rules is detected during transit itself, requiring the adoption of summary like proceedings. Therefore, the said provisions operate in different spheres. (xi) The comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not correct. Section 110(1) of the Customs Act is not comparable to Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/ seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. (xii) The provisions of Sections 110(2) and 124 of the Customs Act do not contemplate that ....
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....ce of the physical availability of the goods or the conveyance, the authority can proceed to pass an order of confiscation and also pass an order of redemption fine in lieu of the confiscation. In other words, even if the goods or the conveyance has been released under Section 129 of the Act and, later, confiscation proceedings are initiated, then even in the absence of the goods or the conveyance, the payment of redemption fine in lieu of confiscation can be passed. (xvi) The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation. 183. One and all should be mindful of the fact that the country has altogether a new tax regime. It has been just two years since the new tax regime, in the form of GST, has been implemented. Although, this path-breaking reform meets the longstanding demand of trade and industry to simplify and streamline the tax regime in the country, yet, there are many issues which need to be addressed....
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....edings. We have not examined individual petition for the purpose of finding out whether the notice for confiscation under Section 130 of the Act is justified in the facts and circumstances of the case or not. We have laid down general principles with regard to the applicability of Sections 129 and 130 of the Act. Let these matters now be notified before the Hon'ble Court taking up tax matters for the purpose of deciding whether the confiscation notice deserves to be quashed and set aside or not. (J. B. PARDIWALA, J) (A. C. RAO, J) (PER : HONOURABLE MR.JUSTICE A.C.RAO) 187. I have had the benefit of going through the final conclusion drawn by my Learned Brother Justice J.B. Pardiwala in the judgment, with which, I have concurred. However, I would like to add few words of my own on the subject. 188. From the plain reading of Sections 129 and 130 of the Act, it is clear that the suppliers or receivers of the goods transport any goods in contravention of provisions of the Act or the Rules made thereunder are liable for the detention or seizure of the goods under Section 129 of the Act and under Section 130 (i)(v) of the Act for confiscation of the goods and conveyanc....