TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 941
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....L CIVIL APPLICATION NO. 7677 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 8387 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 10854 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 11235 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 11240 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 11560 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 11561 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 11958 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 13083 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 13232 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 15706 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 15707 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 20379 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 24180 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 25322 of 2022 With CIVIL APPLICATION (FOR JOINING PARTY) NO. 1 of 2023 In R/SPECIAL CIVIL APPLICATION NO. 25322 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 5525 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 5752 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 6405 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 6407 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 6493 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 6502 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 6509 of....
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....L CIVIL APPLICATION NO. 21071 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23460 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 23857 of 2022 With R/SPECIAL CIVIL APPLICATION NO. 1504 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 5900 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 10562 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 13829 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 13928 of 2023 With CIVIL APPLICATION (FOR DIRECTION) NO. 1 of 2023 In R/SPECIAL CIVIL APPLICATION NO. 13928 of 2023 With CIVIL APPLICATION (FOR DIRECTION) NO. 2 of 2023 In R/SPECIAL CIVIL APPLICATION NO. 13928 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17882 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17885 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17897 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18302 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18402 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18481 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18485 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18561 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 864 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 1013 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 1196 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 123....
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....ers, the respondents have mechanically invoked Section 130 of the CGST Act for confiscation of goods immediately upon interception under Section 129 of the CGST Act, which is impermissible in law. 6. Primarily, the following grounds are raised in the writ petitions: (A) The respondent-authority/Proper Officer, who seizes and detains goods and conveyance in transit by exercising powers under Section 129 of the CGST Act, is required to complete the entire procedure prescribed under Section 129, which forms part of Chapter XIX of the Act. The authority cannot straightaway travel to Section 130 of the CGST Act for confiscation of the goods or conveyance while the process under Section 129 of the CGST Act is still underway. (B) After the amendment brought into effect from 01.01.2022, Section 129 of the CGST Act retains the non-obstante clause, thereby giving it overriding effect over all other provisions, including Section 130 of the CGST Act. In contrast, the non-obstante clause that formerly existed in Section 130 of the CGST Act has been deleted. Therefore, the amended Section 129 of the CGST Act takes precedence in cases of detention and seizure of goods in tran....
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....of the CGST Act, the complete procedure under the said provision must be undertaken, as Section 129 of the CGST Act, being a special provision containing a non-obstante clause, shall prevail over other provisions of the Act, including Section 130 of the CGST Act. 11. The non-obstante clause has been consciously removed from Section 130 of the CGST Act and retained in Section 129 by the Finance Act, 2021, thereby completely delinking both provisions. Accordingly, in the event of any conflict, Section 129 shall supersede Section 130 of the CGST Act. 12. Section 130(1) of the CGST Act permits confiscation of goods or conveyance in the situations listed from clauses (i) to (v). The purpose of confiscation, as apparent from Section 130(1), is to safeguard the recovery of the penalty which may be imposed under Section 122 of the CGST Act. Hence, it is submitted that the purpose of confiscation under Section 130(1) is to safeguard the recovery of penalty. 13. Having resorted to the proceedings under Section 129 of the CGST Act, including issuance of Form GST MOV-06, the authorities are bound to complete proceedings under Section 129 and cannot resort to Section 130 as an alternat....
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....tion, deletion, assumption or presumption is permissible, and neither hardship nor equity has any role in construing taxing statutes. Reliance is placed upon the judgment of the Supreme Court in the case of State of West Bengal vs. Kesoram Industries Ltd., (2004) 10 S.C.C. 201. 19. Albeit, Section 67(6) of the CGST Act, does not expressly refer to conveyance, it refers to "thing", which includes conveyance. Therefore, Section 67(6) can be invoked even after resorting to Section 130 for confiscation of either goods or conveyance. Section 2(91) of the CGST Act, defines "Proper Officer", and as per Circular No. F.No.34975/2017-GST dated 09.02.2018, powers under Section 130 are to be exercised only by the jurisdictional officer. Confiscation powers under Section 130(1) are delegated to the Assistant Commissioner / State Tax Officer, whereas powers relating to detention and seizure of goods in transit under Section 129 of the CGST Act, lie with the Proper Officer defined under Section 2(91) of the CGST Act. 20. Reliance is placed on the judgment of the Karnataka High Court in the case of Rajiv Traders vs. Union of India, (2022) 142 Taxmann.com 420 (Karnataka), which holds that the....
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....spicion or portal data discrepancies, since such discrepancies may be at the end of a supplier's supplier. Reference is made to Shiv Enterprises vs. State of Punjab, 2022 (2) TMI 296. 25. The term "goods" is defined under Section 2(52) of the CGST Act, to include movable property of all kinds, thus, a conveyance/ vehicle used for transportation, being a movable asset, falls within the definition of "goods" and thereby can be seized if used in connection with taxable goods or in the furtherance of alleged evasion, and hence the same can be released provisionally under Section 67(6) of the CGST Act. SUBMISSIONS OF LEARNED ADVOCATE GENERAL ON BEHALF OF THE RESPONDENT - AUTHORITIES : 26. Learned Advocate General appearing for the respondents has submitted that in view of the judgment of the Division Bench of this Court in the case of Synergy Fertichem Private Limited Vs. State of Gujarat, (2019) 12 TMI 1213 (HC-Guj.), all the present writ petitions deserve to be rejected, since the very same contentions now raised by the petitioners were considered and dealt with by the Coordinate Bench. It is submitted that the Division Bench, after analysing the provisions of Sections ....
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....n the present matter except in cases of actual conflict. A non-obstante clause does not ipso facto nullify or override succeeding provisions of the Act. 31. Accordingly, it is urged that the present writ petitions are liable to be rejected in view of the categorical observations of the Division Bench in the case of Synergy Fertichem Private Limited (supra). ANALYSIS AND CONCLUSION : - ANALYSIS OF PROVISIONS SECTION 129 AND 130. 32. The grievance of the petitioners, as well as the impugned action of confiscation emanates from the provisions of Sections 129 and 130 of the CGST Act. Both provisions were subjected to substantial amendment with effect from 01.01.2022 under the Finance Act, 2021. It is pertinent to note that the amendments appear to have been introduced in the backdrop of the judgment of the Coordinate Bench of this Court in the case of Synergy Fertichem Private Limited (supra). We may, at this stage incorporate the relevant final conclusions of division bench in the case of Synergy Fertichem Private Ltd (supra). "FINAL CONCLUSION:- 182 We would sum up our conclusion of the points raised in the writ applications as follows; "(i) Sec....
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....if the authorities find something incriminating against the owner of the goods in the course of the inquiry, if any, then it would be permissible to them to initiate the confiscation proceedings under Section 130 of the Act. (vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act. (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. (viii) For the purpose of Section 129(6) of the Act, it would not be necessary for the department to establish any intention to evade payment of tax. If the tax and penalty, as determined under Sect....
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....levy tax on the goods and thus, fall within the ambit and scope of the legislative powers. (xiv) xxxxxx (xv)xxxxxx (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." 33. Thus, prior to amendment, i.e before deletion of non-obstante clause in Section 130 of the Act, this Court has comprehensive delved into the provisions and similar submissions while considering the effect of non-obstante clause in both the sections. However, a fresh attempt is made to convince after the amendment of the provisions of Sections 129 and 130. The division bench has emphatically held that Section 130 of the CGST Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the CGST Act, and they are independent of each other and are mutually exclusive. It is held that even if the goods or the conveyance is released upon payment of the tax and penalty....
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.... Sr. No. 11 - "Section 130 of the CGST Act is being amended to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under Section 129 relating to detention, seizure and release of goods and conveyances in transit." 37. Clauses 108 and 109 of the Finance Bill are also similarly worded. "Clause 108: This clause amended Section 129 of the Central Goods and Services Tax (CGST) Act to separate the process of detaining, seizing, and releasing goods in transit from the process of confiscation and penalty. Clause 109: This clause amended Section 130 of the CGST Act to create a clear separation for the confiscation of goods and the imposition of penalties. 38. Accordingly, necessary amendments were introduced in both provisions. For ready comparison, Section 129 of the CGST Act prior to amendment and post amendment reads as under: (FOR CONVENIENCE : THE DELETED WORDS ARE STROKED THROUGH AND THE ONE WHICH ARE REPLACED ARE IN BOLD) "Section 129. Detention, seizure and release of goods and conveyances in transit 1. Notwithstanding anything c....
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....re the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty under provided in sub-section (1) within fourteen (fifteen) days from the date of receipt of the copy of the order passed under sub-section(3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner within such time as may be prescribed, to recover the penalty payable under sub-section(3) of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of Section 130." Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section(3) or one lakh rupees, which ever is less: 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. SECTION 130 : Confiscation of goods or conveyances and levy of penalty (1) Notwithstanding anything contained in this Act, Where any person- (i) supplies or receives any goods in contravention of any of the p....
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.... (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." 39. It is significant to note that while the non-obstante clause opening with "Notwithstanding anything contained in this Act" has been retained in Section 129 of the CGST Act, the same has been deleted from Section 130 of the CGST Act. Section 130 of the CGST Act now commences with the expression "Where any person" in place of the earlier non-obstante clause. 40. It is also observed that in Section 129 of the CGST Act, the words "applicable tax" have been deleted and substituted with "tax payable" in clauses (a) and (b), and the quantum of penalty earlier computed on the basis of applicable tax ....
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.... 44. On the other hand, it is the stand of the Revenue that once it is found that there is a blatant evasion of tax at the stage of seizure and detention of goods under Section 129 of the Act, the authorities are empowered to proceed for confiscation of goods or conveyance and it is not necessary to resort to Section 67, which falls under Chapter XIV relating to search and seizure undertaken by the Proper Officer not below the rank of Joint Commissioner at the premises of a trader engaged in transporting goods for evading tax or contravening the provisions of the Act or the Rules. 45. It is the case of the petitioners that though the reference to Section 67(6) of the CGST Act, has been deleted from Section 129 of the CGST Act, goods can still be released on provisional basis as envisaged under Section 67(6), even after confiscation. The relevant provisions of Section 67(6) read as under: "67. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as ....
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....13th April, 2018 and extract of MOV-10 are incorporated as under: "Paragraph 2(l) of the Circular dated 13th April, 2018 2. (l) Where the proper officer is of the opinion that such movement of goods is being effected to evade payment of tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum of tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equal to the tax payable on the goods being transported in lieu of confiscation of the conveyance FORM MOV-10 "NOTICE FOR CONFISCATION OF GOODS OR CONVEYANCES AND LEVY OF PENALTY UNDER SECTION 130 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 READ WITH THE RELEVANT PROVISIONS OF STATE/UNION TERRITORY GOODS....
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....2017 read with State Goods and Services Tax Act / section 2 of the Union Territory Goods and Services Tax Act or section 20 of the Integrated Goods and Services Tax Act, 2017/Goods and Services Tax (Compensation to States) Act, 2017. In addition, you are liable to pay the tax, penalty and other charges payable in respect of such goods and the conveyance. OR As the goods were transported without any valid documents, it is presumed that the goods were being transported for the purposes of evading the taxes. In view of this, the undersigned proposes to confiscate the above goods and the conveyance used to transport such goods under the provisions of section 130 of the Central Goods and Services Tax Act, 2017 read with the relevant provisions of the State Goods and Services Tax/Union Territory Goods and Services Tax Act, the Integrated Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, 2017. In addition, you are liable to pay the tax, penalty and other charges payable in respect of such goods and the conveyance. XXXXX 7. You are hereby directed to show cause, within seven days from the receipt of this notice, as t....
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.... evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. (2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that the documents or books or....
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....ut for the conveyance from which the goods are seized, the proper officer is required to follow the procedure prescribed in the amended Section 129 of the CGST Act. Hence, once the goods and conveyance are seized, no remedy of provisional release of the same is available under Section 67(6) of the CGST Act after the amendment, and only remedy is the one prescribed under Section 129 of the CGST Act. 52. Having held as above, we may delve in to the provision of Section 130 of the CGST Act. The provisions of Section 130 of the CGST Act, has the caption "confiscation of goods or conveyances and levy of penalty". Thus, Section 129 of the CGST Act provides for seizure and detention of goods and conveyance during transit, whereas Section 130 directs confiscation of goods or conveyances. The provision of Section 130, if read in juxtaposition with Section 67 of the CGST Act, it is borne out that, the 'goods' which are seized during the inspection and search on the premises/warehouses under Section 67 of the CGST Act, and are liable to be confiscated, can be confiscated under Section 130 and the person, who supplies, receives, or stores good, having intention to evade tax then the goods c....
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.... asserted that by retaining the non-obstante clause in Section 129, the same becomes a complete code in itself and has overriding effect on Section 130 of the Act, and hence the authorities have to complete the entire process envisaged under Section 129 of the Act and are precluded from resorting confiscation under Section 130 midway. However, we do not subscribe to the interpretation as advanced. It is true, that the provision of Section 129 has retained the non-obstante clause which mentions about the overriding effect on the provisions of the entire Act. The effect of non-obstante clause is that the entire procedure prescribed under Section 129 of the CGST Act has to be followed, and the action of seizure of goods and conveyance is required to be brought to its logical end as per the provisions of Section 129 of the CGST Act only. However, the only caveat is that the goods and conveyance which are seized can be confiscated under Section 130 of the CGST Act, if they involve an element of "intention to evade payment of tax". The legislature cannot be attributed the intention of absolute ignoring the provision of Section 130 of the CGST Act, even if there is blatant evasion of paym....
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....t be an impediment for the operation of the enactment. Thus, a non-obstante clause is a legislative device used by a Parliament or legislature sometimes to give an overriding effect to what has been specified in the enacting part of a section in case of a conflict with what is contained in the non-obstante clause as stated above." (vide Mohd.Abdul Samad, supra). Thus, albeit the non-obstante clause has been retained in Section 129 of the Act, and will have an overriding effect on other provisions of the Act including Section 130, however, it will have no impediment on the operation of the Section 130 of the Act. On an overall analysis of the scope and sphere of operation of both the Section, it is evident that there is no conflict in both the Sections. The quintessential feature which distinguishes and enlarges the scope of Section 130 from Section 129 of the Act is the "intent to evade the payment of tax". There is no conflict between the sections as far as the forming an opinion on intention of evasion of tax. The provisions of Section 129 are stand alone provisions as far as no element of intention of evasion of tax is involved. As held by this Court in case of Synergy Fertichem....
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.... Driver since the premises are found closed. Even after the release of goods by issuing MOV-6, MOV-10 has been issued, which is permissible in cases of evasion of tax. Under sub-section(3) of section 129, the proper officer has to issue notice within a period of seven days of detention and seizure of the foods or conveyance, and necessary orders have to be passed within seven days under clause (a) or (b) of Section 129(1), i.e, issue MOV-7. It appears from the aforementioned details, that the proper officer or the authorised officers has not adhered to the time line as specified in the section. The Scheme and the pattern in which the FORM-MOV's are arraigned will make us understand that release of conveyance and goods, which are confiscated is provided in MOV-5 on payment of tax, penalty, fine in lieu of confiscation of goods and conveyance. We may refer to Rules 138B and 138C of the CGST Rules, 2017, which govern the verification of documents and conveyances. Rule 138B -Verification of documents and conveyances (1) The Commissioner or an officer empowered by him in this behalf may authorize the proper officer to intercept any conveyance to verify the e-way bill i....
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....fficer empowered by the Commissioner. The proviso to Rule 138B brings in the element of evasion of tax. It is prescribed that in case any specific information relating to the "evasion of tax" is received, the physical verification of a specific conveyance can also be carried out by any other officer after obtaining necessary approval of the Commissioner or an officer authorised by him in this behalf. Thus, an officer, who intercepts a vehicle/conveyance on receiving an information on evasion of tax, can carry out physical verification, and it can also be done any other officer as authorised by the Commissioner. However, it has to be done by an officer after obtaining necessary approval from the Commissioner or an officer authorised on his behalf. As per the Circular No.3/3/2017 dated 5th July 2017, the proper officer to take action under Section 130(6) and (7) is the Deputy or Assistant Commissioner of Central Tax, whereas as per the Order dated 23rd June, 2017 issued by the Commissioner of State Tax, Gujarat State, Ahmedabad, by invoking powers under sub-section(1) of Section 5 read with Clause(91) of Section (2) of the Gujarat Goods and Service Tax Act, 2017, the jurisdictional p....
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....ces, e-way bills, consignment note, registration particulars produced at the time of interception. The formation of opinion of 'intent to evade tax', on the act or omission of a person, who is not proximately or directly linked to such activity with the dealer cannot be made the foundation for confiscation of goods. 62. We may at this stage clarify, that the Ministry of Finance, Department of Revenue Central Board of Indirect Taxes, has issued a Circular No. CBEC/20/16/03/2017-GST dated the 14th September, 2018 clarifying the Circular Nos. 41/15/2018-GST dated 13.04.2018 and 49/23/2018-GST dated 21.06.2018. The relevant extract is as under: "4. Whereas, section 129 of the CGST Act provides for detention and seizure of goods and conveyances and their release on the payment of requisite tax and penalty in cases where such goods are transported in contravention of the provisions of the CGST Act or the rules made thereunder. It has been informed that proceedings under section 129 of the CGST Act are being initiated for every mistake in the documents mentioned in para 3 above. It is clarified that in case a consignment of goods is accompanied by an invoice or any other speci....
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.... of the highest degree, such as absence of documents or fake or forged documents, absence of details of dealer, forged e-way bills, a complete deceptive/ divergence/ mismatch of goods, fake registration, etc. which apparently establishes the 'intention to evade payment of tax'. We may also clarify that the proper officer cannot venture into the assessment and valuation of goods at the time of interception of vehicle, and resort to seizure and confiscation of goods and conveyance by resorting to the entries in portal, and digging out the evasion of tax, etc of third parties. TIME LINE FOR FORMING THE OPINION OF EVASION OF TAX FOR THE GOODS IN TRANSIT : 65. Under Rule 138C of the CGST Rules, 2017, the proper officer has to prepare a summary report of every inspection of goods within 24 hours in Part-A of FORM GST-EWB-4 and the final report in Part B of such form has to be recorded in three days, however, the period of three days can be extended for further period of three days by the Commissioner or by any officer authorised by him, if circumstances warrant. Such request of extension of time is as per FORM MOV-03. Thus, the limitation of preparing the final report FORM-MOV-04, ....