HC explains provisions of Sections 129 & 130 | Detention, seizure, confiscation | GST

Synergy Fertichem Pvt. Ltd Vs State of Gujarat (Gujarat High Court)

(i) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, the harmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the Act. Both the sections are mutually exclusive. .

(ii) The phrase “with an intent to evade the payment of tax” in Section 130 of the Act assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word “evade” in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word “intent”. The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mens rea cannot be read into Section 130 of the Act.

(iii) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage 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 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 Section 129, is not deposited within the statutory time period, then the goods and the conveyance shall be liable to be put to auction and the sale proceeds shall be deposited with the Government.

(ix) Similarly, the reference to Sections 73 and 74 respectively of the Act is not warranted for the purpose of interpreting Sections 129 and 130 of the Act, more particularly, when they all are independent of each other. The provisions of Sections 73 and 74 of the Act are similar to the provisions of Section 11A of the Central Excise Act and Section 28 of the Customs Act, which deal with the adjudication proceedings. Despite this, Section 110 is present in the Customs Act, which speaks about seizure and similarly, Section 129 is present in the Act for detention/seizure. Therefore, Sections 129 and 130 of the Act have non-obstante clauses, whereby they can be operated upon in spite of Sections 73 and 74 of the Act.

(x) The provisions of sections 73 and 74 respectively of the Act deal with the ‘demands and recovery’ to be made by the assessing officer based upon the assessment, whereas the provisions of Section 129 of the Act deal with the ‘detention/ seizure’. While assessing the returns, if the assessing officer finds that the amount of tax has not been paid or erroneously refunded, or where the 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 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 seizure of 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 writ applicants 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. In 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.

(xiii) Although there is no serious challenge to the validity of the provisions of Sections 129 and 130 respectively of the Act, yet 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 ambit and scope of the legislative powers.

(xiv) The goods are not liable to be detained on the ground that the tax paid on the product was less. In such circumstances, the Inspecting Authority is expected to alert the Assessing Authority to initiate appropriate 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. 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.

(xv) Even in the absence 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.

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 conveyance. Thus, for the same breach and/or contravention of the provisions of the Act, there are two types of penalties provided under Section 129 and Section 130(i)(v) of the Act.

In this regard, we would like to observe as held by the Supreme Court that it would be important to notice certain well settled canons of interpretation of statutes. The primary and foremost task of a Court in interpreting a statute, is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the Court must then strive to so interpret the statute as to promote and advance the object and purpose of the enactments. If two constructions are possible upon the language of the statute, the Court must choose the one which is consistent with good sense and fairness, and eschew the other which makes its operation unduly oppressive, unjust or unreasonable or which would lead to strange, inconsistent results or otherwise introduce an element of bewildering uncertainty and practical inconvenience in the working of the statute. For this purpose, where necessary, the Court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need not be meek and mute submissions to the plainness of the language. To avoid patent injustice, anomaly or asburdity, the Court would well be justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing the written word if necessary. Though normally it is not permissible to read words in a statute which are not there, but, “where the alternative lies between either supplying by implication words which appear to have been accidently omitted or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words.” Having regard to the context in which a provision appears and the object of statute in which the said provision is enacted, the Court should construe it in a harmonious way to make it meaningful. An attempt must always be made so as to reconcile the relevant provisions as to advance the remedy intended by the statute.

I am of the view that the Legislature should, once again, look into both the provisions, i.e, Sections 129 and 130 of the Act and amend the sections accordingly so as to remove certain inconsistencies in the two provisions. Let this aspect be looked into by the State Government in accordance with law.

Recently in one of landmark judgment of GST Hon’ble Gujarat High Court in the matter of *Synergy Fertichem Private Limited vs State Of Gujarat* had occasion to interpret the provisions of Sections 129 and 130 of the act.  An attempt has been made in this blog to explain related provisions of Detention and Confiscation of Goods and/or Vehicles basis arguments raised by writ applicants, counsel appearing for government and judgment of the court.

FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT

1. Since the issues raised in all the captioned writ applications are the same, those were heard analogously and are being disposed of by this common judgment and order.

2. We have been called upon to look into and interpret the provisions of Sections 129 and 130 respectively of the 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 to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order directing the learned Respondent authorities to forthwith release goods with truck no.GJ-07-UU-7250 by quashing and setting aside the detention notices/orders issue for such purpose (annexed at Annexure F);

(C) Pending notice, admission and final hearing of this petition, this Hon’ble Court may be pleased to direct the learned Respondent authorities to forthwith release goops with truck no. GJ-07-UU-7250 detained/seized in purported exercise of powers under Section 129 and 130 of the GST Acts;

(D) Ex parte ad interim relief in terms of prayer C may kindly be granted;

(E) Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray.”

5. The facts, giving rise to this writ application in the words of the writ applicants, as pleaded in the writ application, are as under;

“1. By way of this petition under Article 226 of the Constitution of India the Petitioners pray for writ of mandamus quashing and setting aside notice dated 1.3.2019 issued under the Central/Gujarat Goods and Services Tax Act, 2017 (herein after referred to as “the GST Acts”). The Petitioners also pray for writ of mandamus directing the learned Respondents to forthwith release truck number GJ-07-UU-7250 along with goods contained therein seized by the learned Respondent authorities. Copy of the impugned notice dated 1.3.2019 is annexed herewith and marked as Annexure A.

2. The relevant facts giving rise to the present petition are briefly stated herein below:

The 1st Petitioner is a Private Limited Company having place of business at Synergy House-2, Subhanpura, Gorawa, Vadodara. The 2nd Petitioner is Director and Authorized Signatory of the 1st Petitioner and his rights and interest are directly affected by the impugned communication of the learned Officer. The 1st Respondent is the State of Gujarat. The 2nd Respondent is an officer of the State of Gujarat entrusted with the task of collecting tax under the GST Acts and is amenable to the writ jurisdiction of this Hon. Court.

3. The Petitioners are inter-alia engaged in import and sale of ceramic pigment ink which is used as colouring substance in the 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 bill of entry for home consumption on 13.2.2019 and paid the applicable customs duty as well as IGST which is payable on imports by importers. Copy of the bill of entry for home consumption filed by the Petitioners along with the export invoice, packing list and airway bill are collectively annexed herewith and marked as Annexure B.

7. The assessed value of goods is Rs. 39,43,272 on which the Petitioners paid customs duty amounting to Rs. 3,00,526 and IGST at the rate of 18% totaling to Rs. 7,09,789. Copy of e-receipt showing payment of such duty and tax on 13.2.2019 is annexed herewith and marked as Annexure C.

8. Ceramic pigment ink has a limited shelf life and it has to be preserved at temperatures which are preferably not to exceed 25 degrees centigrade. Long exposures to high temperatures and humidity are required to be avoided. Copy of the information note with regard to the product in question as published by the foreign manufacturer is annexed herewith and marked as Annexure D.

9. General instructions had been given by the Petitioners to their clearing and forwarding agents explaining to them urgency of transporting ceramic pigment ink immediately on import. Considering such general instructions, since a transport vehicle was immediately available, the clearing and forwarding agent of the Petitioners initiated transport of the ceramic ink to the warehouse of the Petitioners in Vadodara without even waiting for the e-way bill in respect of the goods. This was particularly considering the fact that the proof of payment of GST on the transaction itself was accompanying the goods in the form of bill of entry for home consumption.

10. The transporter had duly prepared transport receipt in respect of the vehicle for transport of goods from Ahmedabad Airport to the warehouse of the Petitioners in Vadodara. Copy of transport receipt in relation to the goods is annexed herewith and marked as Annexure E.

11. `The truck with the goods were stopped for verification on the Ahmedabad-Vadodara expressway by the learned Respondent No. 2. The transporter duly produced all documents relating to goods including bill of entry for home consumption evidencing payment of IGST on the transaction. The truck with the goods were however detained by the learned officer on the ground of absence of e-way bill in respect of the goods. Notices 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 by the Petitioners.

14. The learned Respondent authorities however refused to release the goods on the ground of absence of e-way bill. The learned Respondent authorities in fact insisted for payment of not only tax and 100% penalty under Section 129 of the GST Acts but also fine in lieu of confiscation equal to the value of goods under Section 130 of the GST Acts.

15. The Petitioners made written representation before the learned Deputy Commissioner as well as the learned Joint Commissioner of Commercial Tax for intervention in the matter as huge payment was being demanded for a genuine transaction on the basis of technical breach of provisions of law. Copy of written letters dated 26.2.2019 submitted before the learned departmental authorities are collectively annexed herewith and marked as Annexure H.

16. The Petitioners made similar representation even before the learned Chief Commissioner of State Tax. The goods with the vehicle are however not being released by the learned Respondent authorities. The learned Respondent authorities are insisting for payment of tax and 100% penalty under Section 129 of the GST Acts as well as redemption fine in lieu of confiscation equal to the value of goods under Section 130 of the GST Acts for securing release of goods.

17. In other words for goods which are admittedly worth Rs. 39,43,272 on which customs duty of Rs. 3,00,526 and IGST of Rs. 7,09,789 have already been paid, the learned Respondent authorities are demanding an amount of Rs. 60,72,639 for release of goods.

18. The Petitioners inquired from the learned Respondent authorities the basis for such huge demand since they had only received detention notices in Forms GST MOV-01 and GST MOV-06. Upon such inquiry the learned 2nd Respondent authority has issued the impugned show cause notice dated 1.3.2019 (annexed at Annexure A) requiring payment of Rs. 60,72,639 for release of goods failing which it is informed that the goods with the vehicle will be confiscated and auctioned.

19. In the respectful submission of the Petitioners the impugned notice demanding payment of Rs. 60,72,639 for securing release of goods which are admittedly worth Rs. 39,43,272 on which customs duty of Rs. 3,00,526 and IGST of Rs. 7,09,789 have already been paid is manifestly arbitrary, without application of mind, illegal and violating 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 subsequent release thereof on payment of applicable tax and penalty equal to 100% of tax payable on such goods if there is contravention of the provisions of the GST Acts and the rules made thereunder. Thus the provision is also as such applicable when tax is payable on the transaction. However in the facts of the present case when tax under the GST Acts is already paid in advance at the time of clearance of the goods for home consumption, the said provision is inapplicable the facts of the Petitioners.

22. Even otherwise it is respectfully submitted that 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 evasion.

23. 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.

24. The Petitioners point out that the Government itself has clarified by Circular No. 64/38/2018-GST dated 14.9.2018 that in case of technical errors in the documents accompanying the goods, provisions of Section 129 of the GST Acts may not be resorted to but instead goods may be released on payment of nominal penalty under Section 125 of the GST Acts. Copy of circular dated 14.9.2018 issued by the Government of India is annexed herewith and marked as Annexure I.

25. It is respectfully submitted that Section 129 and Section 130 of the GST Acts are provisions enacted to curb evasion of tax under the GST Acts. They are drastic measures whereby goods can be seized en-route and they would be released 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 Authorities, more particularly, the respondent No.2. In fact, the truck with the goods was intercepted at the Ahmedabad-Vadodara Express Way. It is the case of the writ applicants that the transporter produced all the documents relating to the goods including the bill of entry for home consumption evidencing payment of the IGST on the transaction. The truck, however, came to be detained by the officer concerned on the ground of absence of the e-way bill in respect of the goods.

7. The aforesaid led to issue of notices to the transporter of the goods in Form GST MOV-1 and GST MOV-6.

8. It is the case of the writ applicants that having come to know about the detention of the truck, they promptly generated the e-way bill in respect of the transaction. The authorities, however, declined to release the goods on the ground that while the goods were being transported, the driver of the vehicle was not carrying the e-way bill.

9. The authorities not only imposed 100% penalty under Section 129 of the Act but also imposed fine in lieu of confiscation equal to the value of the goods under Section 130 of the Act.

10. As the authorities insisted for payment of tax and 100% penalty under Section 129 of the Act as well as redemption fine in lieu of the confiscation equal to the value of goods under Section 130 of the Act, the writ applicants had to come before this Court with the present writ application.

11. On 6^th March, 2019, a Coordinate Bench of this Court passed the following order;

“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 thereunder. It was pointed out that firstly, under section 129 of the Act, the officer is required to issue a notice as contemplated under sub-section (3) thereof and thereafter, after affording an opportunity of hearing to the person concerned, pass an order thereunder. It was submitted that it is only if there is no compliance of the order passed under section 129 of the Act, that the provisions of section 130 of the IGST Act can be resorted to. The attention of the court was invited to the impugned 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 8^th 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 thereunder. It was pointed out that firstly, under section 129 of the Act, the officer is required to issue a notice as contemplated under subsection (3) thereof and thereafter, after affording an opportunity of hearing to the person concerned, pass an order thereunder. It was submitted that it is only if there is no compliance of the order passed under section 129 of the Act, that the provisions of section 130 of the IGST Act can be resorted to. The attention of the court was invited to the impugned 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.”

2. In response to the notice, Mr. Soham Joshi, learned Assistant Government Pleader, has appeared on behalf of the respondents.

3. The learned Assistant Government Pleader has invited the attention of the Court to the detention order dated 14.02.2019 issued by the proper officer under subsection (1) of section 129 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”) and other relevant statutes. It was submitted that the goods in question were not accompanied by an Eway bill during the course of transit and therefore, the respondents are fully justified in passing the detention order under section 129(1) of the CGST Act.

4. Subsection (3) of section 129 of the CGST Act provides that the proper officer detaining or seizing the 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). Subsection (4) provides that no tax, interest or penalty shall be determined under subsection (3) without giving the person concerned an opportunity of being heard.

5. In the present case, the show-cause notice dated 01.03.2019 has been issued under 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 to the effect that in case the petitioner, ultimately, does not succeed in the petition, he shall duly cooperate in the further proceedings.

7. Stand over to 27.03.2019, so as to enable the respondents to file affidavitinreply, if any, in the matter.

Direct service is permitted today. ”

13. The grounds of challenge to the impugned notice dated 1st March, 2019, Annexure-A to this writ application is substantially on the following grounds as raised in the memo of the writ application.

“A. The impugned notice demanding payment of Rs. 60,72,639 for securing release of goods which are admittedly worth Rs. 39,43,272 on which customs duty of Rs. 3,00,526 and IGST of Rs. 7,09,789 have already been paid is manifestly arbitrary, without application of mind, illegal and violating Article 14 of the Constitution of India.

B. 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.

C. Even in so far as Section 129 of the GST Acts is concerned the said provision allows detention of goods and subsequent release thereof on payment of applicable tax and penalty equal to 100% of tax payable on such goods if there is contravention of the provisions of the GST Acts and the rules made thereunder. Thus the provision is also as such applicable when tax is payable on the transaction. However in the facts of the present case when tax under the GST Acts is already paid in advance at the time of clearance 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 evasion.

E. Section 129 and Section 130 of the GST Acts are provisions enacted to curb evasion of tax under the GST Acts. They are drastic measures whereby goods can be seized en-route and they would be released 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.

F. The Petitioners crave leave to add, to alter, amend and/or delete any of the grounds aforesaid at the time of hearing.”

14. The facts of all other connected writ applications may not be the same but, ultimately, in the other connected writ applications also, the issue raised is with regard to the power of the authorities to invoke Section 130 of the Act at its inception.

Submissions on behalf of the writ applicants;

15. Uchit Sheth, the learned counsel appearing for the writ applicants has tendered his submissions in writing. The submissions are as under;

“(1) Section 129 of the GST Acts is a special provision providing for detention of goods in transit. Once goods are detained under this provision, mandate of the entire provision to be followed

Section 129 of the Central/Gujarat Goods and Services Tax Act, 2017 (herein after referred to as “the GST Acts”) is a special provision providing for detention and seizure of goods in transit. While Section 129(1) of the GST Acts provides for detention of goods being transported in contravention of the provisions of the GST Acts, the later portion of the very same provision requires release of the goods if the owner of the goods comes forward and makes payment of tax and penalty equal to 100% of the tax payable on such goods if the goods are taxable and in case of exempted gods on payment of an amount equal to 2% of the value of goods or Rs. 25,000 whichever is less. Even if the owner of the goods does not come forward to make payment of tax and penalty then Section 129(1)(b) of the GST Acts provides for release of the goods on payment of tax and penalty equal to 50% of the value of the goods reduced by the tax amount paid thereon in case of taxable goods and in case of exempted goods on payment of an amount equal 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 provision and directly issuing notice for confiscation under Section 130 of the GST Acts is wholly without jurisdiction, bad and illegal.

(2) Section 129 and Section 130 of the GST Acts are both provisions meant for checking evasion of tax and therefore need to be harmoniously construed

It is respectfully submitted that Section 129 as well as Section 130 of the GST Acts are both provisions which are meant for checking evasion of tax. Section 9 of the GST Acts provides for levy of tax on a completed supply transaction. Further, tax on a supply transaction is payable along with the monthly return in Form GSTR-3B to be filed on or before the 20th of the next month. However, in order to ensure that the suppliers do not evade payment of tax, Section 68 of the GST Acts empowers the Government to prescribe documents to be carried along with the goods. Rule 138A of the Central/Gujarat Goods and Services Tax Rules (herein after referred to as “the GST Rules”) stipulates invoice/bill of entry/delivery challan along with e-way bill as documents to accompany the goods. If it is found that either of such documents is missing while goods are inspected in transit or if it is found that there is any major discrepancy in the documents, then even though the taxable event i.e. supply is yet to be completed, Section 129 of the GST Acts allows detention of goods since the transportation is in contravention of the provisions of the GST Acts. Further Section 129(1) of the GST Acts mandates release of goods on payment of tax and penalty equal to 100% of tax where owner comes forward to make payment of such tax and penalty. Thus even though supply is yet to be completed and even though time limit for payment of tax is yet to lapse payment of tax as well as penalty is provided in section 129 of the GST Acts. It is further germane to note that the rate of penalty of 100% of tax is the rate which is stipulated under Section 74 of the GST Acts for instances of fraud or evasion vis-à-vis 10% penalty provided for routine cases not involving penalty or evasion under Section 73(9) of the GST Acts. Moreover as per Section 17(5)(i) of the GST Acts no input tax credit is admissible in respect of any tax paid in accordance with the provisions of Section 74, 129 and 130 of the GST Acts. Thus Section 129 of the GST Acts is grouped together with Section 74 and Section 130 of the GST Acts 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 detention of goods in transit have been upheld by Hon. Supreme Court on the ground that they were provisions meant for checking evasion and therefore intra-vires. Reference may be made in this regard to the following judgements of Hon. Supreme Court:

(a) Sodhi Transport Co. and Another v/s State of Uttar Pradesh (1986) 62 STC 381 (SC) f1st Compilation – Page 5, Relevant observations on page 11,12]

(b) State of Rajasthan and Another v/s D.P. Metals (2001) 124 STC 611 (SC) -1st Compilation – Page 49, Relevant observations on Page 72, para 29]

(4) Circular of the Government shows that Section 129 of the GST Acts not meant for minor discrepancies

In fact Circular No. 64/38/2018-GST dated 14.9.2018 (2nd Compilation – Page 1) issued by the Central Board of Indirect Taxes and Customs clearly shows that Section 129 of the GST Acts is meant for major discrepancies such as absence of e-way bill and not minor errors in the documents accompanying the goods. In case of such minor errors the authorities have been directed to levy general penalty under Section 125 of the GST Acts for which maximum statutory cap is Rs. 25,000.

5. Section 129 of the GST Acts provides a simple method of determination of tax and penalty and ensuring quick recovery

Thus while the purpose of Section 129 of the GST Acts is clearly to check evasion of tax, it provides for simple calculation of amount to be paid in time-bound manner for securing release of goods detained under the said provision. The authorities need not establish intention to evade payment of tax. If the goods are intercepted during transit and if the documents accompanying the goods are found to be defective or absent then the authorities can straightaway detain the goods under Section 129 of the GST Acts and demand payment of tax and 100% penalty. If the owner of the goods comes forward and makes such payment within 14 days of detention then the provision mandates immediate release of the goods. If however the assessee fails to make such payment then confiscation proceedings can be initiated under Section 130 of the GST Acts which require the authorities to establish intention to evade payment of tax and thereafter also determine fine in lieu of confiscation depending on facts and circumstances of the case. Thus the scheme of both the provisions if read in entirety reveals that Section 129 of the GST 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 issuance of notice and if such payment is made then no further notice is to be given as per Section 74(6) of the GST Acts. It is further provided in Section 74(8) of the GST Acts that even if notice is issued alleging fraud, evasion, etc and the assessee pays tax, interest and 25% penalty then all proceedings in respect of the said notice shall be deemed to be concluded. Even if the assessee does not avail such option and the learned adjudicating authority proceeds to pass order even then Section 74(11) of the GST Acts provides for closure of proceedings if tax with interest and penalty at the rate of 50% are paid within 30 days of communication of the order. Thus it can be seen that the legislative policy is to give incentive to the assessee for making immediate payment even in cases of alleged fraud and evasion and the sooner he makes the payment the less amount of penalty he is liable to pay. Further on such payment being made all proceedings against the assessee are deemed to be closed. It is respectfully submitted that Section 129 of the GST Acts is also required to be read in light of such policy. It allows the assessee to secure closure of proceedings on payment of tax along with 100% penalty. It could never have been legislative intention to provide for opportunities of reduced payment of penalty in case of adjudication on prompt payment of tax and penalty while allowing direct confiscation proceedings if the goods are detained in transit. Such interpretation will be contrary to the legislative policy and scheme of the GST Acts. The rational and contextual interpretation would therefore be that confiscation proceedings can be initiated under Section 130 of the GST Acts only if the assessee fails to pay tax and penalty as demanded under Section 129 of the GST Acts within the stipulated time period.

(7) There cannot be confiscation with detention and seizure. Hence before proceeding under Section 130,  Section 129 has to be invoked and followed in entirety

There cannot be confiscation of goods without detention and seizure. Since Section 129 of the GST Acts is the only provision providing for detention and seizure of goods in transit, detention/seizure has to be made under Section 129(1) of the GST Acts. If that be so then the remaining part of the same sub-section as well as the remaining sub-sections of Section 129 need to be followed 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 is provided then the goods are to be released provisionally.

9. Section 67(6) of the GST Acts cannot be interpreted as providing for provisional release in entirety

It is respectfully submitted that Section 67(6) of the GST Acts cannot be interpreted as providing for provisional release in entirety. The phrase “on provisional basis” is applicable only in case of release of goods on furnishing security and providing bond. It is not applicable to the 2nd portion of the provision which provides for release of goods on payment of tax, interest and penalty. Such interpretation is supported by the following reasons:

(1) Application of the phrase “on provisional basis” even to the 2nd portion of Section 67(6) will render the phrase “as the case may be” appearing at the end of the provision redundant.

(2) “Provisional release” necessarily means that the assessee continues to be accountable for production of the goods if required. Thus a bond is prescribed in Form GST INS-04 the relevant extract of which reads as under:

“Whereas I undertake to produce the said goods released provisionally to me as and when required by the proper officer duly authorized under the Act.”

Such bond is required to be produced only if goods are released on the basis of security. No such bond is required as per Section 67(6) if goods are released on payment of tax, interest and penalty which shows that in such case the release of goods is final.

(3) Rule 140 of the Central Goods and Services Tax Rules, 2017 (herein after referred to as “the GST Rules”) which provides for provisional release of goods also refers to the eventuality of provisional release only in case of furnishing security along with bond of the value of goods.

(4) In case of perishable commodity since it would not be possible for the assessee to give undertaking that he will produce the goods on demand, there is no concept of provisional release. Rule 141 of the GST Rules provides for final release of perishable goods on payment of tax, interest and penalty amount or market value of the goods whichever is lower. Thus in case of perishable commodity the final liability is restricted to the amount of tax, interest and penalty. This again shows that if tax, interest and penalty is paid forthwith then there is no question of any further liability of the assessee. 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 reiterated as under:

“16. In Keshavji Ravji and Co. v. CIT (1990) 2 SCC 231 it has been held by this Court that when in a taxation statute where literal interpretation leads to a result that does not sub-serve the object of the legislation another construction in consonance with the object can be adopted.”

(11) Since both Section 129 and 130 of the GST Acts contain non-obstante clauses, interpretation should be made by deciphering scheme and intention of legislature

It is respectfully submitted that since both Section 129 and 130 of the GST Acts contain non-obstante clauses, attempt should be made out to interpret them in accordance with the scheme of the GST Acts and cull out the legislative intention. Reference may be made in this regard to the judgement of Hon. Supreme Court in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v/s State of Uttar Pradesh and Others AIR 1961 SC 1170 (1st Compilation – page 93, relevant observations on page 7 to 10). In such circumstances the most reasonable interpretation of both the provisions will be their harmonious construction as suggested herein before. In fact Section 129 of the GST Acts can be said to be a special provision dealing with detention of goods in transit and thus even on such count it should prevail over Section 130 of the GST Acts.

(12) General non-obstante clause has to be interpreted contextually

It is further respectfully submitted that a general non-obstante clause such as that appearing in Section 130 of the GST Acts needs to be interpreted contextually. There needs to be determination as to which provisions would stand overridden by such non-obstante clause and which would not. The provision cannot be interpreted as standing all by itself. Reliance is placed in this regard on the judgement of Hon. Supreme Court in the case of Indra Kumar Patodia and Another v/s Reliance Industries Ltd. AIR 2013 SC 426 (2nd Compilation – Page 41, Relevant Observations Page 45 para 12). Similar view has also been taken by this Hon. Court in the case of Raajratna Metal Industries Ltd. v/s State of Gujarat Special Civil Application No. 15093 of 2018 decided on 20.6.2019.

(13) Direct invocation of Section 130 of the GST Acts will render Section 129(6) of the GST Acts redundant

It is further respectfully submitted that direct invocation of Section 130 of the GST Acts will render Section 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 title of the goods itself will vest with the Government. Thus for confiscation the learned authorities will necessarily have to establish intention to evade payment of tax. It is therefore respectfully submitted that the only possible effect of Section 129(6) of the GST Acts is to act as a threat to the assessee that if he fails to forthwith pay the tax, interest and penalty then he will risk loosing the goods in its entirety. Hence confiscation proceedings can be initiated only if tax and penalty are not paid within 14 days of detention and seizure. Any other interpretation will necessarily render Section 129(6) of the GST Acts redundant.

(15) In the alternative in any case the vehicle and goods are required to be released even if independently Section 130 is invoked

Without prejudice to the above submissions and in the alternative it is respectfully submitted that even if it is presumed for the sake of argument that payment of tax and penalty under Section 129 of the GST Acts does not preclude initiation of proceedings under Section 130 of the GST Acts, even then the goods and conveyances are required to be released at least on provisional basis on furnishing of security or on payment of amount as determined under Section 129 of the GST Acts. Hence even if the learned authorities are empowered to subsequently invoke Section 130 of the GST Acts under the belief that the goods are being supplied with the intention to evade payment of tax, even then the goods ought to be released on provisional basis on furnishing of security or payment of the amount as determined under Section 129 of the GST Acts. Confiscation proceedings under Section 130 of the GST Acts require full fledged adjudication after examination/cross-examination of evidences. The vehicle and the goods cannot be kept seized pending such long drawn adjudication process. This would be the position even if it is presumed for the sake of argument that Section 67(6) of the GST Acts refers to provisional release in its entirety. Refusal on the part of the learned Respondent authorities to even provisionally release the goods and conveyance even though tax and penalty are fully paid is without jurisdiction, arbitrary and illegal.

(16) From any angle impugned action of the learned Respondent authorities untenable

Thus, viewed from any angle, the impugned action of the learned Respondent authorities 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 concerned adjudicating authority of the supplier who can thereafter adjudicate the issue after following due process of law. Detention of goods on the ground of under-valuation is wholly without jurisdiction and illegal. Reliance is placed in this regard on the judgement of Hon. Gauhati High Court in the case of Shri Kamal Kumar Sharma v/s State of Assam (2006) 144 STC 458 (Gau.) (2nd Compilation – Page 11, Relevant Observations – Page 16, Para 4). Reference may also be made to the judgement of Hon. Madras High Court in the case of Jeyyam Global Foods (P) Ltd. v/s Union of India (2019) 64 GSTR 129 (Mad.) (2nd Compilation – Page 19) wherein it was held that the authority did not have power to determine classification of goods in exercise of powers under Section 129 of the GST Acts. Similar decision was rendered by Hon. Kerala High Court in the case of N.V.K. Mohammad Sulthan Rawther and Sons v/s Union of India (2019) 61 GSTR 307 (Ker.).

(18) GST leviable on actual transaction value and not market value

This is particularly because tax under the GST Acts is leviable on actual transaction value and not on market value of the goods. Section 15 of the GST Acts provides for valuation of supplies and it is principally leviable on price actually paid or payable in respect of the goods or services. Thus as such it is not even open for the adjudicating authority to impose tax on market value. He would have to establish that the assessee has unrecorded receipts for the purpose of enhancing the valuation of supplies made by the assessee. In the context of sales tax statutes Hon. Supreme Court has in fact held in the case of State of Rajasthan v/s Rajasthan Chemist Association (2006) 147 STC 542 (SC) (2nd Compilation – Page 55) that imposition of tax on maximum retail price of the goods is beyond the legislative competence of the State legislature. Thus when even the adjudicating authority cannot impose tax on market value of goods without establishing that this was in fact the transaction value, the question of enhancement of value by the authority intercepting the goods in transit does not arise. In fact this would lead to granting extremely arbitrary powers to the authorities in as much as thousands of varieties of goods are moved across the country having different values which may in fact vary from commodity to commodity and transaction to transaction depending on 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

In Special Civil Application No. 4730 of 2019 the goods in transportation are imported goods. The goods were being transported from airport to the premises of the Petitioner. Admittedly while e-way bill was not there the goods were accompanied by bill of entry for home consumption which showed that IGST had already been paid by the Petitioner before commencement of movement of goods. Thus there cannot be any question of intention to evade payment of tax since tax was already paid in advance on the imported goods at the time of clearance for home consumption at the airport. In fact since the applicable tax had already been paid prior to commencement of movement of goods, there is also no question of payment of tax again under Section 129 of the GST Acts which is applicable only in cases where tax is yet to be paid. Penalty is also payable under Section 129 of the GST Acts on tax “payable”. Since in such case the tax was already paid no tax was “payable” and hence the question of penalty also does not arise. Demand of tax and penalty under Section 129 of the GST Acts and redemption fine equal to value of goods under Section 130 of the GST Acts in such facts and circumstances is in any case arbitrary, mechanical, bad and illegal.

(21) Confiscation of goods on the ground of non-production of documents is in fact unconstitutional

It is in fact respectfully submitted that if Section 130 of the GST Acts is allowed to be directly invoked on the ground of absence of necessary documents during transportation then such provision will be unconstitutional as held by Hon. Supreme Court while interpreting similar provision in the case of The Checkpost Officer, Coimbatore v/s K.P. Abdulla and Bros. (1971) 27 STC 1 (SC) (1st Compilation – Page 1)

(22) Additional grounds raised in affidavit in reply not forming part of the detention orders/confiscation notices required to be outrightly rejected

It is further respectfully submitted that some additional grounds raised in some of the affidavits in reply in support of detention orders/confiscation notices which are not forming part of the notices are required to be out rightly rejected. It is well settled that the learned Respondents cannot be allowed to improve upon the impugned orders/notices by way of affidavits in reply. Reliance is placed in this regard on the judgement of Hon. Supreme Court in the case 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 person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the Rules made thereunder, such goods and conveyance shall be liable to detention or seizure and shall be released upon payment of applicable tax and 100% penalty on such tax. The examples of  contraventions of the provisions of this Act or the Rules made thereunder are enumerated in S. 122 of the Act.

S. 130 talks about confiscation of goods or conveyances and levy of tax, penalty and line thereon. The section also begins with non-obstante clause and states amongst other things that if any person “contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax”, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty, apart from tax and fine, u/s 122. Therefore, even S. 130 is also a sub-set of 8.122.

A Close comparison of these three provisions viz. S. 122, 129 & S. 130 of the Act leave no doubt that S.122 is a general penalty section which covers certain offences enumerated therein. S. 129 talks about the very same contraventions albeit, when committed in transit. Therefore it’s a specific section operates only when goods are in transit as against general penalty as provided u/s 122. In other words, provisions of S.129 alone need to be invoked when contraventions of any of the provisions of the Act are caught when goods are in transit. Because these contraventions are caught when the goods are in transit, a fast track mechanism is provided under the Scheme of the Act so as to have faster adjudication of the same in terms of subsection (2) to (5) of S.129 of the Act. So if the person so caught, pays payment of applicable tax and 100% penalty on such tax, goods are released immediately and proceedings for such contravention come to an end.

The major distinction between S.129 and S.130 is that the provisions of S.129 can only be invoked when goods are in transit whereas S.130 can be invoked at any stage, much after the goods have reached their destination or even during assessment proceedings subject to of course, fulfilling its conditions.

For any violation of the provisions of the Act or rules made thereunder while goods are in transit, straightway, proceedings u/s 130 cannot be initiated as has been done by the Revenue. It 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 clause (1) also supports this interpretation as the said clause talks about opinion of the proper officer about the movement of goods being effected to evade payment of tax. Such opinion has to be objective opinion based on hard evidences and not merely on conjecture, surmises and presumptions. If the proceedings are automatic and compulsory no such opinion is required.

S.130 applies to 5 kinds of offences enumerated in sub-section (1). The fundamental difference between language of S.129 and S.130 of the Act is the phrase with intent to evade payment of tax’. This phrase inherently carries with it the element of ‘mens rea’. It is implicit in the phrase ‘with intend to evade payment of tax’ that there has been a willful, deliberate and calculated act on the part of the person to evade payment of tax. The action is planned and premeditated purely with a clear intention to evade payment of tax.

Thus unless, such intention is proved beyond a reasonable doubt, provisions of S.130 cannot be invoked. Unlike S.135 which applies to prosecution alone, presumption of culpable mental state is not available to Revenue department when dealing with S. 130.

In the present case, even Form GST MOV -10 categorically states that “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.” This clearly shows that the conclusion as to ‘intent to evade tax’ is purely based on presumption which is not permissible.

S. 129(5) states that on payment of amount referred to in sub-section (1) i.e. tax and 100% penalty on such tax, all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. Therefore, for this default or contravention or cause of action, revenue cannot once again initiate proceedings u/s 130. This interpretation is supported by the Explanation 1 appended to S.74 of the Act which reads::

“Explanation 1- For the purpse of section 73 and this section,-

iI) the expression “all proceedings in respect of the said notice “shall not include proceedings under section 132;

(ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 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. 73 and 74 are one such example. S. 129 and 130 are another example. However, Act does not contemplate consecutive proceedings under both the sections for the very same contravention. If a contravention is penalized under S.129, the same contravention cannot be once again penalized u/s 130. Without there being a different cause of action or something more to the contravention, proceedings u/s 129 cannot be succeeded by S.130.

As regards the argument that if a person does not pay the necessary tax and penalty as demanded u/s 129(1) r/w S. 129 (3) of the Act, revenue has no option but to initiate proceedings u/s 130 as prescribed u/s 129(6) of the Act because then revenue is left remedy less as no further proceedings are prescribed u/ s 129 of the Act, it is submitted that once goods in transit are subjected to S.129 of the Act, the person has to pay necessary tax and penalty. If he doesn’t, all consequences as stated in S.79(1)(c)(iii) r/w. S.79(1)(b) shall follow. These provisions empower the revenue to sell goods seized without the same having to be confiscated. Confiscation u/s 130 brings with it the fine apart from tax, interest and penalty. Therefore, the same can only be invoked when conditions stated in the said section are fulfilled.

In fact goods seized u/s 67 of the Act also are treated and sold, if need be, as prescribed u/s 79 of the Act without the same having to be confiscated first.”

17. We have also heard Mr. Paresh M. Dave, the learned counsel appearing for the writ applicants of the Special Civil Application No.9105 of 2019. According to Mr. Dave, the three broad issues involved in this litigation could be summarized as under;

“(I) Whether proceedings for confiscation of goods or conveyances (and also levy of penalty) under Section 130 of the CGST Act can be initiated without first following the procedure laid down under Section 129 of the CGST Act?

(II) Whether procedure and proceedings for confiscation of goods or conveyances (and also levy of penalty) under Section 130 of the CGST Act are permissible even after the procedure of Section 129 of the Act was followed i.e., amount referred in sub-section (1) was paid by the concerned person?

(III) Whether it is permissible in law to order confiscation of goods or conveyance once they are released under Section 129 of the Act on payment of the 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 coercive measure to ensure payment of tax and penalty levied on a dealer who, otherwise, is at a threat of loosing the goods itself. The vociferous argument is that the confiscation is not an automatic consequence ensuing from the detention and seizure. It is only when the applicable tax and penalty that may be levied under Section 129 is not paid, there could be proceedings initiated under Section 130 which would lead to confiscation of the goods itself. The argument is that the provisions of Section 130 are applicable only in the event of failure on the part of the dealer to pay the applicable tax and penalty. The principal argument of all the learned counsel appearing for the writ applicants is that the concerned authorities have not been able to understand the true purport and object of the two sections, i.e., Sections 129 and 130 of the Act respectively. The argument is that no sooner the goods are seized and the vehicle is detained, straightway the provisions of Section 130 of the Act are being invoked. This, according to the learned counsel, is not permissible in law. The argument is that both the provisions are independent of each other. Confiscation proceedings can be initiated at the threshold only if the authority is convinced having regard to the materials on record that the party concerned had contravened the provisions of the Act and the rules with an intent to evade the payment of tax. It is argued that there is an element of mens rea, i.e., the culpable mental state in Section 130 of the Act. A mere technical irregularity or lapse on the part of the owner of the goods or the driver of the vehicle may not be sufficient to impute mens rea so as to come to the conclusion that the intention was to evade payment of tax. In such circumstances, referred to above, it is prayed that appropriate directions may be issued to the authorities concerned as regards Sections 129 and 130 respectively of the Act.

Submissions on behalf of the State;

19. All the writ applications have been vehemently opposed by Mr. Kamal Trivedi, the learned Advocate General appearing for the State.

20. Broadly, the submissions of the learned Advocate General may be summarized as under;

(I) The principles applicable in the matter of interpretation of the taxing provisions like Sections 129 and 130 of the Act are different than those which are applicable in the case of 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. It is pointed out that Section 130 of the Act specifically talks about the intention, i.e., mens rea. Both the sections are independent of each other.

(IV) It is further submitted that it is preposterous on the part of the writ applicants to contend that Section 130 of the Act can be made applicable only if Section 129(6) of the Act is not complied with. It is submitted that the provisions of Section 130 are independent of the provisions of Section 129 of the Act and that the same can be invoked by the department at any stage i.e. (i) after concluding the proceedings initiated under Section 129 of the Act, or (ii) after issuing notice under Section 129(3) of the Act, or (iii) directly after detaining the goods under Section 129(1) of the Act. Thus, there cannot be any straight jacket procedure to be adopted, as the same would entirely depend upon the facts and circumstances of each case.

(V) Mr. Trivedi further submitted that when a breach of the provisions of the Act and the Rules is found, resulting in detaining the goods and/or conveyance under Section 129(1) of the Act, by issuing the detention order (i.e. MOV-06) followed by the service of a show cause notice under Section 129(3) of the Act (i.e. MOV-O7), if owner of the goods comes forward and makes the payment of tax and penalty, such goods are required to be released in terms of Section 129(1) of the Act and that the proceedings with respect to Section 129(3) of the Act will be deemed to be concluded. However, after such release, if it is found out that the contravention of the Act or the Rules was/is with an intention to evade payment of tax or falling under any of the eventualities mentioned in Section 130(1) of the Act. then in that case, once the goods/conveyance are released, the exercise under Section 130 would be a futile exercise, because of non-availability of goods and conveyance.

(VI) It is submitted that the reliance placed by the writ applicants on Explanation 1 appended to the provisions of Section 74 of the Act, for contending that Section 130 of the Act cannot be invoked by the department for the transaction with respect to which, assessee has already paid the amount of tax and penalty in terms of Section 129 of the Act. is also not tenable in the eyes of law. This is in view of the fact that the said Explanation neither provides that the confiscation proceedings against the ‘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. the provisions of Section 130 of the Act proposing confiscation of goods/conveyance can be invoked by the department. This apart, in the above-referred situation, it may also happen that considering the same as contravention of the provisions of the Act, the concerned officer may inadvertently issue notice under Section 129(3) of the Act. However, thereafter it may be realised by the concerned officer that the said contravention directly triggers the provisions of Section 130(1)(iii) of the Act and that the said goods are liable for confiscation. Hence. under such circumstances, the authorities would like to proceed further by issuing a notice under Section 130(1) read with 130(4) of the Act for the proposed confiscation. Therefore. it is incorrect to contend that there has to be ‘anything more’ than that was prevailing at the time of invocation of Section 129 of the Act, for invoking the provisions of Section 130 of the Act.

(VIII) It is submitted that specific inclusion of sub-section (2) in Section 129 of the Act has a purpose which suggests that while framing the provisions of Sections 129 and 130 of the Act, the legislature was conscious of the fact that the detention/seizure of the goods/ conveyance under the provisions of Section 129(1) of the Act continues, till an order of release is passed by the concerned authority under the provisions of Section 129 of the Act or an order of confiscation is passed under the provisions of Section 130 of the Act. However. in the meanwhile, i.e. during the continuation of detention/ seizure. till the same culminates into the final order of release or confiscation, the said goods/conveyance can be released on provisional basis upon execution of bond and furnishing of a security of such quantum, as may be prescribed. However, the exercise of such a discretion by the authority in the case of provisional release would once again depend upon the genuineness of the transaction and not in all cases like where the consignor or the consignee is not registered or the same is not traceable.

(IX) ‘It is submitted that considering the object and purpose of the Act, one has to read the word ‘shall’, as used in Sub-Section (3) of Section 129 of the Act, as ‘directory’ and not ‘mandatory, as otherwise, the provisions relating to confiscation contained under Section 130 would be rendered otiose/meaningless.

(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, there arises no question of invocation of ‘non-obstante’ clause in such a situation.

(XI) It is submitted that the provisions of sections 73 and 74 of the Act deal with the ‘demands and recovery’ to be made by the assessing officer based upon the assessment, whereas the provisions of Section 129 of the Act deal with the ‘detention/ seizure’. While assessing the returns, if the assessing officer finds that the amount of tax has not been paid or short paid or erroneously refunded, or where 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 are operating in different sphere.

(XII) It is submitted that 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.

(XIII) It is further submitted that the provisions of Sections 110(2) and 124 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 seizure of 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 writ applicants 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. In 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 ambit and scope of the legislative powers. He submitted that it is not correct on the part of the writ applicants to contend that the imposition of penalty is arbitrary and unconstitutional inasmuch as, the same is only levied in case where the owner of the goods is not coming forth and the goods are not being accounted for by any one and hence, with a view to safeguard the revenue’s interest, such a measure/yardstick is incorporated in the provisions of Section 129(1)(b) of the Act. for which, the aforesaid two Sections 129 and 130 of the Act cannot be faulted.

(XV) Mr. Trivedi further, very elaborately, explained the different eventualities for the purpose of taking recourse of Sections 129 and 130 respectively of the CGST Act as under;