TaxTMI 
TaxTMI 
2021 (1) TMI 216
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....Act" and individually these Act and the Integrated Goods and Service Act are referred to in the abbreviation). The petitioner has also sought for a direction to the respondent to consider the petitioner's representation dated 01.09.2020 as per Annexure-G. 2.The petitioner is a transporter and operates under a GST registration. The petitioner's case is that it was approached by M/s MK Enterprises, Delhi (the Consignor) for transportation of certain tobacco products (the Goods) to M/s SKB Trading, Salem (the Consignee). The petitioner arranged for transportation of the Goods from Delhi to Salem with appropriate Tax Invoices/ e-Way Bills. The petitioner's vehicle bearing No. RJ-14-G-F-9449 (the Conveyance) was intercepted on 10.08.2020 at about 9:45 PM near Makali, Tumkur Road Bengaluru, and the driver/person-in-charge of the Conveyance furnished Lorry receipt, e-Way Bills and Tax Invoices. The respondent passed an order for physical verification of the Goods, Conveyance and documents on 10.8.2020. The respondent conducted the physical verification of the Goods/Conveyance/ Documents and drew up a Physical Verification Report (Annexure-C). The respondent also passed the Order of det....
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....penalty is in a sum of Rs. 1,46,15,250/-. 5.The petitioner has filed objections vide the Reply dated 01.09.20 20 (Annexure-G) and the petitioner's essential response is that the petitioner, as a transporter, had ensured that the necessary documents were accompanying the Conveyance and the petitioner could establish the existence of both the Consignor and the Consignee. It is after this Reply dated 01.09.20 20 (Annexure-G), that the impugned notice dated 07.09.2020 (Annexure-A) - hereafter referred to as the impugned Show Cause Notice dated 07.09.2020 - is issued calling upon the petitioner to show cause why the Goods and the Conveyance should not be confiscated under the provisions of Section 130 of the Act and why the petitioner should not be called upon to pay the proposed Tax, Penalty and Fine. 6.The respondent in issuing the impugned Show Cause Notice dated 07.09.2020 (Annexure- A), while recording that the Show Cause Notice dated 25.8.2020 "stands abated", has opined that there is connivance between the petitioner (the transporter) and the Consignor/Consignee and that the Goods are brought into the State of Karnataka with the documents raised in favour of taxpayers in Sa....
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....ns filed by the petitioners proceeded to pass the impugned order of confiscation of goods and conveyance under section 130 (1) (ii) read with 122 (1) (ii) and (iv) of the CGST act, whereby penalty and fine payable by the petitioner is quantified. At this juncture,reference made by the learned HCGP to section 160 of the CGST Act to treat the said impugned order as an order of penalty cannot be countenanced for the reason that it was not mere wrong quotation of provisions of law in passing theorder impugned but the procedure prescribed is disturbed. It is well settled law that unless tax and penalty are quantified, no confiscation order could be passed. It is necessary to provide an opportunity to the owner of the goods or person in charge of the goods vehicle to make payment of tax and penalty subsequent to the objection filed, if any. Without providing such an opportunity, proceeding to pass confiscation order directly would not be construed as any mistake, defect or omission to come within the ambit of section 160 ofthe CGST Act. It is a fundamental flaw which goes to the root of the matter and the said lacuna cannot be cured by referring to section 160 of the CGST Act. More parti....
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....arately in the given circumstances of a case. But, this proposition would be contrary to the scheme under the Act. Sri. Arvind Kamath relies upon the following submissions to bolster his contention : [i] The Specific Title of Section 129 of the Act: The title of Section 129 of the CGST/KGST Act, i.e., Detention, seizure and release of goods and conveyance in transit itself indicates that insofar as contravention of the provisions of the CGST/KGST Act, or the Rules made thereunder, the goods and the conveyance would be liable for detention or seizure subject to further proceedings as mentioned therein; [ii] The power of detention is only under Section 129 of the Act: The provisions of Section 129 of the CGST/KGST Act confer the power to seize the goods and detain the conveyance but such power is not conferred under the provisions of Section 130 of the Act; and in the absence of specific power to detain/ seizure, which would be necessary when the goods are in transit by a conveyance, there cannot be detention/ seizure under Section 129 and confiscation under Section 130 of the Act. The Legislature, because it intended a different procedure and cons....
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....to section 3 of CST Act, 1956 should not be confined to Physical Delivery but would also include Constructive Delivery to contend that if there is any unintended benefit under the provisions of the statute, it would not be permissible to give a particular interpretation to deny such benefit and the proper course would be a Legislative amendment. Therefore, this Court in interpreting the provisions of Section 129 and Section 130 of the Act should not conclude that the authorities under the Act, in cases where goods/conveyance are seized/detained while in transit, could proceed either under Section 129 or 130 of the Act, and if proceedings under Section 129 are initiated, the respondent could treat the proceedings as having abated and commence confiscation proceedings under section 130 of the Act. This interpretation of the provisions of Section 129 or 130 of the Act would offend the scheme under the Act which provides for confiscation of goods/conveyance which are seized/detained while in transit only when there is default in payment of the applicable tax and penalty determined under Section 129(1) of the Act within the statutory period. 11. Sri Dyan Chinnappa, learned Additional....
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....Act, and in lieu of the confiscation, levy Fine in addition to the applicable tax and Penalty. If however, as contemplated under the provisions of Section 130(1)(v) of the Act, the owner of the conveyance can prove that the conveyance was so used without his or his agent's knowledge or connivance, the conveyance will not be confiscated. 13. Sri Dyan Chinnappa, submits that thus the purposes of the provisions of Section 129 and Section 130 of the Act are distinct with undeniable differences in the consequences, even in the case of a transporter, when there is contravention of breach of the provisions of the Act/Rules and there is intent to evade taxes. Therefore, when a conveyance transporting goods is intercepted in transit, and there is reason for detention/seizure, recourse could be had to the provisions of Section 129 of the Act: upon scrutiny of the response to the Show Cause Notice issued thereunder and upon ascertaining further information, it comes out that there is evasion of tax, it would be open to the authorities to initiate proceedings for confiscation with the initial notice under Section 129 of the Act abating. This would be the true import of both the provisions o....
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....n the present case is because, after the goods are seized in transit with the conveyance being detained, the respondent, on the basis of the information collected and available, has formed an opinion that there is an effort to evade payment of tax. The respondent, who had issued notice under sub-clause (4) of Section 129 of the Act (Show Cause Notice dated 25.08.2020), has issued subsequent notice under sub-clause (4) of Section 130 of the Act (the impugned Show Cause Notice dated 07.09.2020) observing that the earlier notice has abated and calling upon the petitioner to show cause against confiscation and why the tax, penalty and other charges payable in respect of such goods and the conveyance should not be paid by the petitioner. The chief contention is that there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under way in accordance with the provisions of Section 129 of the Act in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit. 18. It is settled that a decision is an authority for what it decides. The Hon'b....
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....uld be initiated if there is reason for the authorities to opine that there is contravention with the provisions of the Act/Rules in the supply or receipt of goods with the intention to evade tax Section 130(1)(i) and (iv) or there is inability to account for the goods Section 130(1)(ii) or goods liable to tax under the Act are supplied without having applied for registration Section130(1)(iv) or if conveyance is used as a means of transport for carriage of goods in contravention of the provisions of the Act Section 130(1)(v). The object of the provisions of Section 130 of the Act, when seen with the object of the provisions of section 129 of the Act, are wider i.e., it is to curb contraventions of the provisions of the Act/ Rules with a certain intent (The significance and import of this expression has been elaborately discussed by the Division Bench of the Gujarat High Court in Synergy Fertichem P. Ltd. Supra). 20. The provisions of Section 129 and Section 130 of the Act, which begin with non-obstante clauses, are carved with specific objectives and contemplate different procedures insofar detaining the conveyance and seizing goods and taking and holding possession of the thin....
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....(c) and 129(2) *Upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: *The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances 130(5) 130 (6) *Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government *The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. 129(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 fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130130 (7) The proper officer may, after satisfying himself that the confiscated goods or c....
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....enalty equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereonand, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty Sub-clause (3) Where any Fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. 23. In Synergy Fertichem P. Ltd., v. State of Gujaratsupra, a Division bench of the Gujarat High Court, whileconsidering the question whether both Sections 129 and 130 of the Act are independent of each other or they could be used interchangeably at the discretion of the authorities, after a conspectus reference to the decisions by the Hon'ble Apex Court on different aspects given the specific features of these provisions such as both the provisions beginning with the non-obstante clauses, the cross reference in each of these provisions to the ....
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.... (vii) Sections 129 and 130 respectively of the Act are mutually exclusive and independent of each other. If the amount of tax and penalty, as determined under Section 129 of the Act for the purpose of release of the goods and the conveyance, is not deposited within the statutory time period, then the consequence of the same would be forfeiture of the goods and the vehicle with the Government. This does not necessarily imply that the confiscation proceedings can be initiated only in the event of the failure on the part of the owner of the goods or the conveyance in depositing the amount towards the tax and liability determined under Section 129 of the Act. 24. This Court in the light of the provisions of Section 129 and 130 of the Act, which are delineated as above, and upon reading of the decision of the Division Bench of Gujarat High Court in Synergy Fermitech P Ltd supra., is of the considered view that the it cannot be held that the provisions of Section 130 of the Act could be invoked in cases of conveyance/ goods detained/ seized while in transit only if there is a failure to pay the amount of tax and penalty as provided under section 129 (6) of the Act. This Cour....
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....eds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same." When the provisions of Section 130(1)(iv) of the Act are looked at fairly and read harmoniously with the object of Section 130 of the Act, even without interpolating any morality or ethics or logic, it could only be that if intent to evade payment of tax is established in the use of the conveyance for transporting goods, the confiscation proceedings under Section 130 of the Act must be invoked. Would this be different if, at the first instance, a conveyance is detained, and b....
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....pose of each of the two provisions, containing a non obstante clause. Two provisions in same Act each containing a non obstante clause, requires a harmonious interpretation of the two seemingly conflicting provisions in the same Act. In this difficult exercise, there are involved proper consideration of giving effect to the object and purpose of two provisions and the language employed in each" The non-obstante clauses in both Sections 129 and 130 of the Act, will have to be read harmoniously given the object of these two provisions. The object of these two provisions as well as the interplay insofar as determination of liability are discussed earlier. The non-obstante clause establishes that the Legislature did not intend that, for the commencement of the proceedings under Section 130 of the Act, the proceedings initiated under Section 129 of the Act should end even without determination of the liability thereunder. 29. In the light of the above discussion it is held that if after interception of conveyance with goods in transit and detention of the conveyance and seizure of the Goods with issuance of notice under section 129(3) of the Act, and when there is information abou....