TaxTMI 
TaxTMI 
2021 (12) TMI 123
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.... release of goods by payment of fine in lieu of confiscation, even before orders of confiscation are issued. In addition, an incidental question that arises is on the quantum payable as fine in lieu of confiscation. 3. The genesis of the dispute emerges from an inspection conducted by the officers of the Kerala State GST Department on 03-08-2021, who seized, as per Rule 139(2) of the Central Goods and Services Tax Rules, 2017, (for brevity 'the Rules'), beedis, stored by the respondent in this review petition in his different godowns. Orders of prohibition were later issued under Rule 140 of the Rules. For easier comprehension, the review petitioners are hereafter referred to as 'Tax Officer', while the respondent will be referred to as the 'dealer'. 4. It is appropriate to mention that beedi is an indigenous smoking product like a cigar or a cigarette, made by rolling a dried leaf filled with flaked tobacco and is undoubtedly perishable in nature, with a limited shelf life. 5. When attempts to obtain release of the seized beedis were unsuccessful, the dealer initially filed W.P.(C) No.17280 of 2021, wherein, by an interim order dated 26-08-2021, this Court observed that t....
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.... that, the Tax Officer is refusing to abide by the mandate of the Statute, despite the dealer offering to pay the amounts in lieu of confiscation. 9. Soon thereafter, the Tax Officer preferred the present review petition, seeking to review the interim order dated 07-09-2021 in W.P. (C) No.18169 of 2021. Arguments: 10. The learned Senior Government Pleader Dr.Thushara James, contended that section 130 of the Act does not envisage a provisional release, and the option to pay the fine in lieu of confiscation can arise only after the Tax Officer issues an order of confiscation. The conspicuous absence of the time within which an order to release the goods or conveyance is to be issued, according to the learned Senior Government Pleader, indicated that time was at the discretion of the Tax Officer. According to the learned Senior Government Pleader, the discretion rests upon the Tax Officer to pass an order of confiscation immediately or later, depending upon the circumstances and it is only thereafter that the goods could be released. 10.1. Drawing cue from the concept of provisional release under section 129(6) as well as section 67(6) of the Act, it was also submitted tha....
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.... is not to be used for calculating the fine in lieu of confiscation. Reference was made to the decisions in Collector of Customs Bombay v. M/s.Elephanta oil and industries Ltd. [(2003) 4 SCC 325)] 12. Two main contentions are raised by the Tax Officer in the review petition. However based upon the contentions raised in the review, the following three issues arise for consideration: Issues (i) Whether the provisions of section 130 of the Act contemplate any provisional release of goods, as directed in the interim order of this Court? (ii) Whether the amount payable for release of the goods under section 130 of the Act is fine alone or is it fine, penalty and tax to be paid together for securing release of the goods? and, (iii) What is the basis or rate for calculating the fine under section 130 of the Act? Issue No. (i) Whether the provisions of section 130 of the Act contemplate any provisional release of goods, as directed in the interim order of this Court? 13. For a better understanding of the disputes raised, it is apposite to extract section 130 of the Act. S.130. Confiscation of goods or conveyances and levy of penalty. ....
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.... this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) 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. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government." 14. As the subtitle of the section indicates, the provision deals with two facets of penalising evasion or attempt to evade tax - confiscation and penalty. Section 130(1) of the Act stipulates that, if any of the five conditions specified in the said sub-clauses (i) to (v) are satisfied, then, there can be confiscation of goods and conveyances and a further penalty leviable on the person. 15. Confiscation is not defined in the Act. It is a term that has its origin in Roman law meaning 'seizing' or 'taking i....
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....iscation'?. The hurdle of storing the goods and conveyances until adjudication is completed is one of the reasons for incorporating a provision to redeem the goods on payment of a fine. 19. The issue under consideration, no doubt, requires an interpretation of the provisions of section 130 of the Act. While interpreting a taxing statute, it is elementary that the court has to merely look at what is clearly written. There is no room for any intendment. The Statute is, in fact, a fiat of the Legislature. It should be read as it is, without deforming or distorting its language. There is no latitude, under any circumstances whatsoever, to interpret taxing statutes based upon any assumption or presumption. The approach of the court, while considering the interpretation to be given to the provisions of a taxing statute is to look at each word of the provision in its literal sense, without any addition, deletion, assumption or presumption. Neither hardship nor equity, has any role while considering the meaning to be ascribed to the provisions of a taxing statute. Further, there is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him because the legisl....
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....gy of section 130(2) of the Act is examined, it reveals a different set of words employed therein vis-a-vis section 130(7) of the Act. The intention behind the said sub-clause can be gathered from the words: (a) whenever confiscation of goods or conveyance is authorised by this Act (b) the officer adjudging it, and (c) give to the owner of the goods an option. 24. The words 'authorised by this Act', 'officer adjudging it' and 'owner of the goods', employed in section 130(2) of the Act are decisive in understanding the meaning of the said statutory provision. Of course, the words 'officer adjudging it' is seen in section 130(6) also. However, when the words 'officer adjudging it', is followed by the words 'owner of the goods' as evident from Section 130(2) of the Act, there cannot be any contrary interpretation. The reason is plain and clear. Once the confiscation order is issued, as mentioned earlier, ownership of the goods, by operation of the statute, vests with the Government. The use of the present continuous words "officer adjudging it" and the words 'owner of the goods' is clearly indicative of the intention behind incorporating section 130(2) of the Act. The intent of sec....
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.... of the goods, even before being deprived of his title to the goods or conveyance, is ready to pay the fine stipulated by the officer, then without further wrangles, if the goods and or conveyance can be released to the said owner, the same avoids unnecessary procedural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130(7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily. Thus, in view of the above deliberations, I am of the firm view that section 130(2) of the Act applies before the order of confiscation is issued. 28. The decision relied upon by the learned Senior Government Pleader rendered by the Karnataka High Court in M/s.Meghdoot Logistics case, according to me, can be distinguished. Though the said decision observes in paragraph 21 that there is no provision for a provisional release of the seized goods under section 130 of the Act, this Court is of the considered view that the question of release under section 130(2) of the Act never arose for consideration in that case and the observations were only obiter dict....
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....ugh there is no equity in tax, the statute must be fair to both the assessee as well as to the revenue. As observed by the Supreme Court in Rajasthan Rajya Sahakari Spinning and Ginning Mills Federation Limited v. Deputy Commissioner of Income Tax, Jaipur [(2014) 11 SCC 672] hardship or equity is not relevant in interpreting provisions in a taxing statute and the court should not concern itself with the intention of legislature when the language is plain and unambiguous. 33. While understanding the scope of Section 130(3), this Court cannot ignore the interplay between section 130(2) and 130(3) of the Act. To enable release of goods under section 130(2) of the Act, fine in lieu of confiscation has to be imposed. When the owner of the goods opts to pay a fine in lieu of confiscation, while the adjudication is continuing, an obligation to pay the tax, penalty and charges for such goods or conveyance, becomes payable in addition to the fine. Thus, when the fine is paid in lieu of confiscation, the tax, penalty and other charges become payable thereon. 34. The words 'be liable' indicates that the tax, penalty and charges will fall due upon the owner of the goods or the person ref....
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....ry provisions by courts when called upon to do so. 38. The words in a statute often take their meaning from the context of the statute as a whole, as is clear from the legal maxim 'exposition ex visceribus actus'. The words cannot be construed in isolation. The words 'be liable' in the context in which it occurs in section 130(3) of the Act only imports a possibility of attracting liability. Merely because the owner of goods or conveyance opts to pay fine in lieu of confiscation does not mean that the facts essential for incurring the liability to order confiscation automatically stands proved. That proof has to come out through the process of adjudication, as otherwise, there would be conferment of unbridled powers upon the Proper Officer to coerce every dealer to pay fine, tax, penalty and other charges without even any adjudication. Such a procedure is against fairness and contrary to the principle of rule of law. 39. In the decision in Superintendent and Remembrancer of Legal Affairs to Government of West Bengal v. Abani Maity [(1979) 4 SCC 85], though the words 'be liable' in that decision was held to have a compulsive force, it was observed as follows; "Accordi....
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....ed". 43. The definition of the term market value clearly indicates that the term is not referable to the maximum retail price and on the contrary, it is a sale price that is agreed to between a bonafide supplier and a bonafide purchaser, who are not related to each other. 44. If the goods that are subject to confiscation proceedings carries an invoice and the Proper Officer has no dispute on the value mentioned in the invoice based upon a preliminary appreciation of the amount payable for goods or services of a like kind or quality, at or about the same time and at the same commercial level, then that shall be the market value. If on the other hand, the tentative amount or the amount assumed to be the market value preliminarily is disputed by the taxpayer, it calls for a determination during adjudication, where an opportunity for showing the true market value of the property will be available to the taxpayer. A reading of the definition, no doubt, reveals that the statute does not reckon MRP as the criteria for determining the fine leviable. The intention and the explicit words used in the statute clearly indicates that the proper officer cannot base the fine on the MRP impri....