M.S. Meghdoot Logistics Vs Commercial Tax Officer (Karnataka High Court)
Proper Officer was empowered to possess Confiscated Goods if option to pay Fine in addition to the tax payable, penalty and other charges was not exercised
Conclusion: Where proper officer, who had detained the conveyance and seized the goods was able to form opinion that there was an attempt to evade payment of tax, would .have to determine the applicable tax and penalty under Section 129 while simultaneously initiating proceedings for adjudging confiscation under Section 130. If during the pendency of these proceedings, a request for provisional release was submitted, the same would have to be considered in the light of the provisions of Section 129 read with sub-clause (6) of Section 67. If after adjudging confiscation, the option to pay Fine in addition to the tax payable, penalty and other charges was not exercised despite opportunity under section 130(7), the Proper officer would have to take and hold possession of the things confiscated subject to consequences as contemplated thereunder.
Held: The controversy in the present case was because, after the goods were seized in transit with the conveyance being detained, the officer, on the basis of the information collected and available, had formed an opinion that there was an effort to evade payment of tax. The officer, who had issued notice under sub-clause (4) of Section 129 (Show Cause Notice dated 25.08.2020), had issued subsequent notice under sub-clause (4) of Section 130 (the impugned Show Cause Notice dated 07.09.2020) observing that the earlier notice had abated and calling upon assessee to show cause against confiscation and why the tax, penalty and other charges payable in respect of such goods and the conveyance should not be paid by assessee . The chief contention was that there could not be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under way in accordance with the provisions of Section 129 in the case of contravention of the provisions of the Act/Rules when the goods were being transported, or goods were stored in transit. It was held that the provisions of Section 129 and Section 130 of the CGST Act were carved with specific objectives and contemplate different procedures insofar detaining the conveyance and seizing goods and taking and holding possession of the things confiscated. If after interception of conveyance with goods in transit and detention of the conveyance and seizure of the Goods with issuance of notice under section 129(3), and when there was information about the intent to evade payment of tax, it was not open to the proper officer to treat the notice under section 129(3) of Act as having abated or truncate such proceedings and initiate proceedings under 130 for confiscation with the issuance of notice thereunder. The proper officer, who had detained the conveyance and seized the goods, when he was able to form opinion that there was an attempt to evade payment of tax, would have to determine the applicable tax and penalty under Section 129 of the Act while simultaneously initiating proceedings for adjudging confiscation under Section 130 of the Act. If during the pendency of these proceedings, a request for provisional release as contemplated under sub-clause (3) of Section 129 of the Act, was submitted, the same would have to be considered in the light of the provisions of Section 129 read with sub-clause (6) of Section 67. If after adjudging confiscation, the option to pay Fine in addition to the tax payable, penalty and other charges was not exercised despite opportunity under section 130(7), the Proper officer would have to take and hold possession of the things confiscated subject to consequences as contemplated thereunder. The officer was directed to decide, in accordance with law, on the proposed levy of tax, penalty and cess as proposed therein with reasonable opportunity of hearing to assessee, who should have the liberty to seek provisional release of goods/conveyance as provided for under sub-clause (2) of Section 129 . The officer was also directed to contemporaneously decide on the impugned Show Cause Notice in accordance with the provisions of Section 130 of the Act.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has impugned the Show Cause Notice dated 07.09.2020 bearing No.ADCOM/ENF/SZ/CTO(Enf) 09/VTS/MOV-10/No.8/2020-21 [Annexure-A) issued by the Commercial Tax Officer [Enforcement] South Zone-9, Bengaluru – 560 047 – the respondent – under Section 130 of the Central Goods and Services Tax Act, 2017/ the Karnataka Goods and Services Tax Act, 2017 and Section 20 of Integrated Goods and Services Tax Act, 2017 /Section 11 of the Goods and Services Tax (Compensation to States) Act, 20171. The petitioner has also sought for a direction to the respondent to consider the petitioner’s representation dated 01.09.2020 as per Annexure-G.
2. The petitioner is a transporter and operates under a GST registration. The petitioner’s case is that it was approached by M/s MK Enterprises, Delhi (the Consignor) for transportation of certain tobacco products (the Goods) to M/s SKB Trading, Salem (the Consignee). The petitioner arranged for transportation of the Goods from Delhi to Salem with appropriate Tax Invoices/ e-Way Bills. The petitioner’s vehicle bearing No. RJ-14-G-F-9449 (the Conveyance) was intercepted on 10.08.2020 at about 9:45 PM near Makali, Tumkur Road Bengaluru, and the driver/person-in-charge of the Conveyance furnished Lorry receipt, e-Way Bills and Tax Invoices. The respondent passed an order for physical verification of the Goods, Conveyance and documents on 10.8.2020. The respondent conducted the physical verification of the Goods/Conveyance/ Documents and drew up a Physical Verification Report (Annexure-C). The respondent also passed the Order of detention dated 10.08.2020 (Annexure-D) under section 129(1) of the Act and Section 20 of IGST Act/ Section 11 of the Compensation to States Act.
3. The reasons assigned by the respondent for ordering detention of conveyance and seizure of Goods and are as follows:
