TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 652
X X X X Extracts X X X X
X X X X Extracts X X X X
.... over the gold ornaments to the State Tax Officer and issued a summons. The statement of the carrier was recorded. After knowing the detention of the gold ornaments and issuance of notices to the respondent, the respondent appeared before the adjudicating officer and filed objections. However, the respondent failed to produce any documents. Hence, the State Tax Officer issued notices proposing to confiscate the gold ornaments transported without any document and impose the penalty as provided under Section 130 of the GST Act. 3. The State Tax Officer finalised the order of confiscation under Section 130 of the GST Act. The State Tax Officer held that there were no valid documents in respect of the gold ornaments transported at the time of detention. The State Tax Officer rejected the argument of the respondent that the soft copies of the bills were available with the carrier. It was also held that even the soft copies sent through WhatsApp said to be accompanied with the gold ornaments was for 825 grams only, whereas the actually transported gold ornaments quantity was 724.99 grams, which would show that the documents produced had no connection with the gold ornaments transported.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so to Section 130 of the CGST / SGST Act, 2017. 7. Proviso 1 of Section 130 of the Act puts fetter on the absolute discretion conferred on the adjudicating officer to fix a fine. The adjudicating officer cannot impose a fine beyond the market value of the goods confiscated. It is within the realm of power vested in the adjudicating authority to impose the fine upto the market value of the goods confiscated. Unless it is said that the discretion exercised by the adjudicating authority is arbitrary or unreasonable, the appellate authority should not interfere with the powers of discretion of the adjudicating authority to impose the quantum of fine in lieu of the confiscation of the goods seized. 8. It is further submitted that without coming to the conclusion that the discretion exercised by the adjudicating authority in imposing the fine in lieu of confiscation at the rate of the market value is arbitrary or against the provisions of the CGST/ SGST Act 2017, the interference by the appellate authority in such a discretion of the adjudicating authority in reducing the fine substantially to four times the tax payable is unjustified and liable to be set aside. 9. On the other hand M....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, 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; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall 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). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the pers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of penalty, an opportunity of hearing is contemplated under Section 130 (4). Section 130 (5) provides that whether any goods or conveyance are confiscated under the Acts, the title of such goods are convinced vest in the Government. Section 130 which is relevant for taking decision in the present case is extracted hereunder:-. "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 (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as may be prescribed within three months from the date on which the said decision or order is communicated to such person. 14. Section 107 (11) empowers the appellate authority that after making such further enquiry as maybe necessary, the appellate authority may pass such order as it thinks fit and proper, confirming, modifying or annulling the decision or order appealed against but the appellate authority shall not refer the case back to the adjudicating authority that has passed the said decision or order. First proviso to Section 107 (11) provides that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order. Section 107 (1) and (11) of the CGST / SGST Act are reproduced hereunder:--- "107. (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within thr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an order passed under Section 130 of the CGST / SGST Act lies on facts, evidence and law. Section 107 (11) empowers the appellate authority to pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against. If the appeal before the appellate authority was only on point of law, then there was no scope for the appellate authority against an exercise of discretion by the adjudicating authority in imposing the redemption fine, in lieu of the confiscation of the seized goods, unless the discretion exercised by the adjudicating authority was vitiated by unreasonableness, self-misdirection, irrelevant consideration or some other legal error. Even in the case where the appeal lies only on point of law, the appellate authority may interfere with the discretion of the decision of the adjudicating authority produces manifest injustice or it plainly wrong or unreasonable. Learned counsel for the respondent submits that in the present case, the appellate authority has taken into consideration the books of accounts and other relevant material and the discretion exercised by the appellate authority under Section 107 (11) is justified and c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... wrong. Even otherwise if there is manifest, self misdirection and so on so forth or erroneous exercise of discretion, it would enable the appellate authority to interfere with the decision whether the discretion is vested in the adjudicating authority as such. Any erroneous exercise of discretion is always considered to be an error in point of law. 22. Where the right of appeal is unrestricted, the appellate authority or the court should not interfere with the adjudicating authority decision as it is based on its own observance of the material / evidence before it. However, where the appellate authority is equally empowered to exercise the discretion under the appellate provision, the appellate authority is entitled to evaluate the material / evidence to come to a different conclusion or order than the adjudicating authority. 23. In the judgment impugned in the present case, the appellate authority having considered the facts and circumstances of the case as well as the evidence as exercised the discretion under Section 107 (11) in modifying the order of penalty / fine to four times of the tax payable. 24. The next question which falls for consideration is that whether the disc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es the discretion available under Rule 126M (8) with respect to the relevant date for calculation of the redemption fine. The officer continues to have the discretion to impose a fine lesser than the market value as on the date of seizure. There is therefore no inconsistency between the DoI Rules and the Act." 63. The substance of the submission is that both the RULES and the GOLD ACT provide for giving an option to the "owner" of the gold adjudged to be confiscated. While the RULES provide an unrestricted discretion to the "officer adjudging" to determine the amount of fine, GOLD ACT restricts the discretion by imposing an upper limit on the quantum of fine that could be imposed by declaring that "give to the owner thereof an option to pay in lieu of confiscation such fine, not exceeding the value". According to the petitioner, such value is to be determined with reference to the date of the seizure of the gold because of Section 73 of the GOLD ACT read with Section 2(v)thereof. 64. At the outset, we must make it clear that there is nothing in the text of Section 73 of the GOLD ACT which requires the value of the gold (for the purpose of determining the fine) should be the val....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erior events should be deemed to have taken place under, the statute which came into existence later. Such fictions could only have limited consequences. 67. Prior to the GOLD ACT, seizure and confiscation of gold were authorised by the RULES. Though, by virtue of the fiction created under Section 116, the confiscations adjudged under the RULES are deemed to be confiscations adjudged under the GOLD ACT, the Scheme and the limitations of such fiction are already explained earlier in para 29. Therefore, neither Section 73 nor the definition under Section 2(v), in our opinion, would be applicable for the confiscations adjudged under the RULES - pursuant to a seizure that took place before the commencement of the GOLD ACT. 68. No doubt that the option to pay fine in lieu of confiscation is one of the consequences flowing from the adjudgment of confiscation. Therefore, in view of the fiction under Section 116, Section 73 of the GOLD ACT would have been applicable if consequence of applying such fiction to the confiscations adjudged under the RULES is not inconsistent with the GOLD ACT. In view of the language of Section 73- "confiscation authorised by this Act" limits the operation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lue of the gold so confiscated as on the date (9.12.94) the appellant was given an option to pay the fine in lieu of confiscation. Even according to the said order of the Collector, the value of the gold as on that date was Rs. 11.04 crores. Therefore, the High Court was right in its direction. 72. We are only left with one submission made on behalf of the Union of India, i.e., in view of the enormous delay which took place in the confiscation proceedings (50+ years), the appellant must be made to pay the interest on the amount of fine of Rs. 11.04 crores. Otherwise, it would have the effect of permitting the appellant to profit by litigation as according to the Attorney General if the appellant is permitted to take back the entire quantity of 240.040 kgs. of gold the current market value would be Rs. 72 crores (approx.). We find the submission wholly justified. We, therefore, deem it proper to direct that the appellant would be entitled to redeem the gold by paying not only the fine of Rs. 11.04 crores but also the interest thereon calculated @ 10% p.a." 29. In the case of Deputy Commissioner, Dakshine Kannada District (supra), the question which was involved for consideration ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the commissioner came to be interfered by the Tribunal and the Tribunal reduced the quantum of redemption fine as also the penalty. 32. Considering the provisions of the Customs Act, the Supreme Court held that the quantum of redemption fine would be imposed is always be dependent on the determination of the market price of the goods confiscated. This is one of the pre-requisite prescribed in that statue itself. In the said case, there was no market survey done for determining the market price of the goods, and therefore, it could not have been possible for the Commissioner to arrive at legally justified and correct quantum of redemption fine to be imposed. 33. In the Customs Act, there is no such provision or guideline for imposing the fine less than the market price of the goods confiscated as provided under Section 130 (2) of the Act. Under the Scheme of the GST Act, if the adjudicating authority decided to impose the redemption fine other than the market price of the confiscated goods, there is a guidelines / restriction for imposing the fine and penalty, and therefore, I am of the considered view that the said judgment has also of no relevance. 34. Section 130 of the Act p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under Section 130. However, the contravention of the Act and Rules justifying detention under section 129 will not by itself result in confiscation of goods or conveyance. Section 130 is an independent provision empowering confiscation in cases of intention to avoid tax. In a given case, the same breach or contravention of the provision of the Act or Rules can lead to detention of seizure of the goods under Section 129 and confiscation under Section 130(1) of the Act. 39. The authority must be convinced that the contravention of the provisions of the Act or rules made thereunder was with definite intent to avoid the payment of tax. The adjudicating officer must firstly record contravention and specifically refer to the provisions of the Act and Rules that had been contravened and secondly must record a specific finding that such contravention was with intent to avoid the payment of tax. The fine provided under the first proviso of Section 130 (2) is the maximum fine levied. In every case, the adjudicating officer / authority is required to examine the seriousness of the contravention and impose the fine accordingly. It is not as if the maximum fine should be imposed in every case.....