1. Section 130 of the CGST Act, 2017 lists out the specific situations leading to confiscation of goods /conveyance.

2. Statutory Provision :

Section 130(1) Notwithstanding anything contained in this Act, the goods/conveyance shall be liable to confiscation and penalty under section 122, when any person does the following:-
(i) supplies or receives any goods in contravention of any of the provisions of this Act or rules made there under leading to evasion of tax
(ii) does not account for any goods on which he is liable to pay tax under this Act
(iii) supplies any goods liable to tax under this Act without having applied for the registration
(iv) Contravenes any of the provisions of the CGST/SGST Act or rules made there under with intent to evade payment of tax.”
(v) Uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made there under.

However, the conveyance shall not be confiscated if the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent. if any, and the person in charge of the conveyance

3. Notice & opportunity of being heard

Section 130(4) No order for confiscation of goods or conveyance or imposition of penalty shall be issued without giving the person an opportunity of being heard.

4. Option to pay fine in lieu of Confiscation

Section 130(2) Whenever confiscation of any goods is authorized by this Act, the officer adjudging the confiscation of any goods or conveyance shall give an option to the owner of the goods to pay in lieu of confiscation, such fine as the said officer thinks fit
The proviso to Sec 130(2) The fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon.

The aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under section 129(1) of the CGST Act.

3rd Proviso to Sec 130(2) The owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon
Section 130(3) The fine imposed in lieu of confiscation of goods or conveyance shall be in addition to any tax, penalty and charges payable in respect of such goods or conveyance.

5. Disposal of confiscated goods and conveyance

Section 130(5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.
Section 130(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.
Section 130(7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.

Case Laws : 

Sri Krishna Traders Vs State of Gujarat (Gujarat High Court): It is held by the hon’ble Gujrat High Court that merely on suspicion, the authorities may not be justified in invoking Section 130 of the Act straightway. 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.

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. 

Synergy fertichem Pvt Ltd Vs State of Gujarat, It is held that for the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e, at the stage of Section 129 of the Act itself, the case has to be of such a nature that on the face of the entire transaction, the authority concerned is convinced that the contravention was with a definite intent to evade payment of tax.

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April 2021