GST: Interplay between Section 129 & 130 [Pre & Post Amendment by Finance Act 2021]

“Words are the weakest medium of expressing but the strongest medium for crystallizing the expression”

The draftsman of the law has the huge responsibility to create the law on behalf of thousands of citizen and put their voices on few pieces of paper. The legislature are presumed to be taking due care while drafting the proposed legislation, however a slip here or there cannot be ruled out due to several factors including but not limited to intension of ruling government through parliament. In this regards GST Law is not an exception. There are many here and there in the law since it was implemented and Section 129 and 130 of the CGST Act, 2017 are even not an exception.

Section 129 and 130 of the Central goods and services Act, 2017 (CGST Act) are two separate sections, the former dealing with detention, seizure and release of goods and conveyance in transit and later dealing with Confiscation of goods and conveyance and levy of penalty and it was amended by clause no 108 and 109 of Finance Act 2021 and amended section were made applicable from 01.01.2022. First let’s look at the section as it was from 01.07.2017 and amended section as applicable as on date along with intension of legislature known to us by way of memorandum explaining provision of Finance Act 2021.

PAGE CONTANT

A.   Comparison of Old Section 129 with as amended by Finance Act 2021

B.   Amendments in Section 129(1), related to Payment of Penalty at glance

C.   Comparison of Old Section 130 with as amended by Finance Act 2021

D.  Discussion on Interplay between Section 129 & 130 before amendment by Finance Act 2021

E.   Discussion on Interplay between Section 129 & 130 after amendment by Finance Act 2021

F.   Concluding Remarks

A. Amendments in section – 129 Detention, seizure and release of goods and conveyances in transit*

Old Provision	After Amendment
(1)      Notwithstanding anything contained in this Act, where 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, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,—  (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b)  on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.	(1) Notwithstanding anything contained in this Act, where 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, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, — (a) on payment of penalty equal to two hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty; (b)on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribzd:  Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
(2)  The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.	Omitted vide the Finance Act, 2021, effective from a 01.01.2022 by Central Government
(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).	(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1)
(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.	(4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(5) 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.	(5) 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.
(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130: Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.	(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3): Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less; Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.
*Emphasis applied

B. Amendments in Section 129(1), related to Payment of Penalty at glance, relating to Detention, Seizure and release of goods & conveyance in transit:

Scenario	Goods and Conveyance would be release subject to the below payment
	Nature of Goods	Existing Provisions	Amendment by the Finance Bill 2021
If the owner comes forward	Taxable Goods	Applicable tax and 100% Penalty	Penalty equal to 200% of tax payable on such goods
	Exempted Goods	Penalty 2% of the value of goods or Rs. 25000, whichever is lower	Penalty 2% of the value of goods or Rs. 25000, whichever is lower
If the owner doesn’t come forward	Taxable Goods	Applicable tax and penalty equal to 50% of the value of goods	Penalty equal to 50% of the value of such goods or 200% of the tax payable on such goods whichever is higher
	Exempted Goods	5% of the value of goods or Rs. 25000, whichever is lower	Penalty 5% of the value of goods or Rs. 25000, whichever is lower

Now after this amendment it is clear that person need to pay only Penalty for release of goods and tax is requried to be paid at the time of filling relevant GSTR 1 and GSTR 3B, where in pre amendment cases there are divergent opinion on this.

C. Amendments in section – 130 Confiscation of goods or conveyances and levy of penalty*

Old Provision	After Amendment
(1)  Notwithstanding anything contained in this Act, if any person— (i)   supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii)   does not account for any goods on which he is liable to pay tax under this Act; or (iii)  supplies any goods liable to tax under this Act without having applied for registration; or (iv)  contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v)  uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.	(1)  Where any person – (i)   supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii)   does not account for any goods on which he is liable to pay tax under this Act; or (iii)  supplies any goods liable to tax under this Act without having applied for registration; or (iv)  contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v)  uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.
(2)Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon: Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, 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.	(2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon: Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty equal to hundred per cent. of the tax payable on such goods; Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, 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.
(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.	Omitted vide the Finance Act, 2021, effective from 1-1-2022.
(4)  No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.	(4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.
(5)Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government	(5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.
(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.	(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.
(7)The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.	(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.

*Emphasis applied

Discussion on Interplay between Section 129 & 130 before and after the amendment by finance Act 2021

Practically in almost all the cases related to movement of goods without valid documents, particularly without E way bill, the authorities always wishes to apply section 130 of CGST act and opposite party contends that Section 129 of CGST Act should be applied.

But before going in to the nitty-gritty of the sections let’s first understand the overall framework of the CGST Act related to Section 129 & 130

Section 129 and Section 130 of the GST Acts are both provisions meant for checking evasion. 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 return in Form GSTR-3B normally 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 Goods and Services Tax Rules (herein after referred to as “the GST Rules”) stipulates e invoice/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. It is further germane to note that the rate of penalty of 100% with tax/200% of tax is the rate more then 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.

D. Interplay between Section 129 & 130 before the amendments by Finance Act 2021 (this understanding will be useful in the cases related to period before 01.01.2022)

(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 Goods and Services Tax Act, 2017 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 goods 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. Section129(5) of the GST Acts specifically provides that on payment of amount referred in sub-section (1), all proceedings in respect of the notices 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.

(2) Considering such provisions, it is incumbent upon the 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.

(3) Circulars 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 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.

(4) 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.

(5) 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 and in the alternative it can be 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.

(6) CBEC circular dated 13/04/2018 clauses (k) supports this interpretation in as much 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.

(7) Even pre drafted Form GST MOV -10, normally issued, 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.

(8) Observation of Hon’able Gujarat High Court in case of Synergy Fertichem Pvt. Ltd vs State Of Gujarat on 23 December, 2019 (C/SCA/4730/2019)

In the above case in Para 102 & 103 Hon’able Gujarat High Court observed as follows

102. In such circumstances, referred to above, we propose to take the view that in all cases, without any application of mind and without any justifiable grounds or reasons to believe, the authorities may not be justified to straightway issue a notice of confiscation under Section 130 of the Act. 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. We may give one simple example. The driver of the vehicle is in a position to produce all the relevant documents to the satisfaction of the authority concerned as regards payment of tax etc., but unfortunately, he is not able to produce the e-way bill, which is also one of the important documents so far as the GST Act, 2017 is concerned. The authenticity of the delivery challan is also not doubted. In such a situation, it would be too much for the authorities to straightway jump to the conclusion that the case is one of confiscation, i.e, the case is of intent to evade payment of tax. 103. We take notice of the fact that practically in all cases, after the detention and seizure of the goods and the conveyance, straightway notice is issued under Section 130, and in the said notice, one would find a parrot like chantation “as the goods were being transported without any valid documents, it is presumed that the goods were being transported for the purposes of evading the tax”. We have also come across notices of confiscation, wherein it has been stated that the driver of the conveyance is presumed to have contravened the provisions of the Act or the Rules with intent to evade payment of tax. This, in our opinion, is not justified. The resultant effect of such issue of confiscation notice at the very threshold, without any application of mind or without there being any foundation for the same, renders Section 129 of the Act practically otiose. We take cognizance of the fact that once the notice under Section 130 of the Act is issued, then the vehicle is not released even if the owner of the goods is ready and willing to pay the tax and the penalty that may be determined under Section 129 of the Act. Such approach leads to unnecessary detention of the goods and the conveyance for an indefinite period of time. Therefore, what we are trying to convey is that all cases of contravention of the provisions of the Act or the Rules, by itself, may not attract the consequences of such goods or the conveyance confiscated under Section 130 of the Act. Section 130 of the Act is altogether an independent provision which provides for confiscation in cases where it is found that the intention was to evade payment of tax. Confiscation of goods or vehicle is almost penal in character. In other words, it is an aggravated form of action, and the object of such aggravated form of action is to deter the dealers from evading tax.

E. Interplay between Section 129 & 130 after the amendment by finance Act 2021

At this juncture of discussion, it is worthwhile to mention a proverb saying “Simplification is one of the most difficult things to do; it will make complicated things more complex”

The government by introducing the amendment in Section 129 and 130 of CGST Act 2017 vide clause 108 and 109 of Finance Act 2021, tried to make it simpler for interpretation and implementation.

(1) The Memorandum Explaining the Provisions in the Financial Bill, 2021 mentioned as follows

Explanation to Clause 108 which is amending the Section 129

“Section 129 of the CGST Act is being amended to delink the proceedings under that section relating to detention, seizure and release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty.”

Explanation to Clause 109 which is amdening the Section 130

“Section 130 of the CGST Act is being amended to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit”

(2) Even after the above amendments has been put in force from 01.01.2022 by removing ‘Non-Obstante’ clause from Section 130 and keeping it intact in Section 129, certain matters were reported where still the learned authorities are of the opinion that the deletion of Non-Obstante clause from Section 130 of the Act does not take away power of the authorities to invoke the said provision of law and the provisions of Sections 129 and 130 are now independent and the authorities are authorized to exercise the power under the any of provisions of law, and if we adopt the thinking that in all cases transportation of goods without valid documents are to be covered under section 129 then the same would render sub clause (i) and (v) of Section 130 entirely unemployed and sub clause (iv) of Section 130 partially redundant.

This view can even further be elaborated by referring the landmark ruling, of pre-independence era, in case of CIT v. Mahaliram Ramjidas, AIR 1940 PC 124, where in court held that while interpreting machinery provision strict rule is inapplicable. The rule of strict construction has no application to all the provisions in taxing statue. It does not, for example, apply to a provision not creating a charge for the tax but laying down the machinery for its calculation or procedure for its collection. In interpreting the (machinery) provision, the rule it that construction should be preferred which makes the machinery workable.

(3) But to the opposite to above stand of authorities it is worthwhile to mention that from vide Finance Act, 2021, Sections 129 and 130 were amended to the effect that ‘Non-Obstante’ Clause was removed from Section 130, while retaining the Non-Obstante clause in Section 129 of the Act and that the said amendment came into effect from 01.01.2022 and as such from the said date, Section 129 of the Act shall have over riding effect on Section 130 of the Act. Further Section 129 clearly indicates that the same is specific provision which deals with the goods in transit and in respect of cases pertaining to goods in transit, if at all any penalty is leviable, the same shall be levied under Section 129 of the Act. It is further to be noted that the Non-Obstante clause in Section 129 of the Act is indicative of the legislative intent to prevent the application of any other provisions of the Act with respect to goods in transit.

The above view was upheld by recently, by passing the interim order by Andhra Pradesh High Court in case of Matrix Traders Vs Deputy Assistant Commissioner, on 04.05.2022 and by Gujarat High Court on 30.03.2022, in M/s. Shanti Metal Industries vs. State of Gujarat, having same facts of the case

(4) To add further Section 129 of the GST Acts provides a simple method of determination of 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 200% 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. However under Section 130 of the GST Acts, which requires 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 penalty. 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.)

(5) There cannot be confiscation before or with detention and seizure. Hence before proceeding under Section 130, Section 129 has to be invoked and followed in entirety. 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 is wholly without jurisdiction.

F. Conclusion

At the time of concluding the above discussion it is useful to refer to the Observation of HONOURABLE MR.JUSTICE A.C.RAO of Gujarat High Court in case of Synergy Fertichem Pvt. Ltd vs State Of Gujarat on 23 December, 2019 (C/SCA/4730/2019) in Concluding Para 187 to 190

187. I have had the benefit of going through the final conclusion drawn by my Learned Brother Justice J.B. Pardiwala in the judgment, with which, I have concurred. However, I would like to add few words of my own on the subject. 188. 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 there under 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. 189. 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. 190. 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. (for clarity to the readers we would like to draw attention the above observation are made on 23.12.2019 by the court on pre amended section 129 and 130)

Our Remarks

The issue, that, where goods are transported without valid documents Specifically E way bill, and/or in contravention of any other provision of laws, “Whether Section 129 should mandatorily be invoked first ?” will remain unanswered to certain extent even after the introduction of the amendments brought in by Finance act 2021. The amendments made are not as per expectation Gujarat high court as discussed in above Para. The issues might be settled by honorable supreme courts of India in days to come, but meanwhile to save the time and efforts of honest taxpayers as well as of overburdened judiciary board should come out with detailed circular in this regards. The GST Council may also future deliberate on the issue and government should come out with more precise amendments to the act to put to an end to the discussion.

At present in our humble opinion, As the section 130 specifically use the words “Intention to evade the payment of taxes” (mens rea), which cannot be decided on the ROAD during transportation without full-fledged adjudication and examination/cross-examination of evidences, which is duly a judicial process, should not be presumed by the authorities in every here and there case where only e way bill is missing during transportation or when e way bill or invoice has certain major discrepancies. Hence it is incumbent upon authorities to only invoke provisions of Section 129 during transportation; otherwise it will severely hamper the so called “ease of doing business” initiative by the government and may encourage the “TAX TERRORISM”.

Views express in these articles except the bare act, rules and extracts of judgments are personal views of the author. Author or his associates are no where responsible for any loss or adverse legal consequences caused to any person by relaying on the above views. The Author, CA Ravi Tanna, is a partner in charge of GST at KST and Associates, Chartered Accountants, having offices at Rajkot & Pune and can be reached on ca.tannaravi@gmail.com.