Explore a comprehensive analysis of Sections 129 & 130 of the CGST Act, 2017. Understand the provisions, rules, and procedures for detention, seizure, and release of goods and conveyances.
SECTIONS
Section 68 – Inspection of Goods in Movement
Section 122 – Penalty for Certain Offences
Section 129 – Detention, Seizure and Release of Goods and Conveyance in Transit
Section 130 – Confiscation of Goods or Conveyance and Levy of Penalty.
RULES
Rule 55A – Tax Invoice and Bill of Supply to Accompany Transfer of Goods
Rule 138 – Information to be Furnished Prior To Commencement of Movement of Goods and Generation Of E-Way Bill
Rule 138 – Information to be Furnished Prior To Commencement of Movement of Goods and Generation Of E-Way Bill
Rule 138B – Verification of Documents and Conveyance
Rule 138C – Inspection and Verification of Goods
Rule 138D – Facility for Uploading Information Regarding Detention of Vehicle
Rule 140 – Bond and Security for Release of Seized Goods
Rule 141 – Procedure in Respect of Seized Goods
Section 68 – Inspection of goods in movement
(1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed (Under Rule 138 & 138A).
(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed (Under Rule 138B).
(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.
Analysis
Section 68 of CGST Act, 2017 stipulates that the person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount shall carry with him prescribed documents and devices (invoice or bill of supply or delivery challan, as the case may be) which shall be validated in the prescribed manner. If such conveyance is intercepted by the proper officer at any place, the person in charge of the conveyance shall be liable to produce the documents for verification and also allow the inspection of goods.
Rule 138 of CGST Rules 2017: Generation of e-way Bill for Movement of Goods
Rule 138A – Documents and devices to be carried by a person-in-charge of a conveyance
(1) The person in charge of a conveyance shall carry —
(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner:
Provided that nothing contained in clause (b) of this sub-rule shall apply in case of movement of goods by rail or by air or vessel.
1 Provided further that in case of imported goods, the person in charge of a conveyance shall also carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of FORM GST EWB-01.
2 “(2) In case, invoice is issued in the manner prescribed under sub-rule (4) of rule 48, the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer in lieu of the physical copy of such tax invoice”.
Rule 138B – Verification of documents and conveyances
(1) The Commissioner or an officer empowered by him in this behalf may authorize the proper officer to intercept any conveyance to verify the e-way bill in physical or electronic form for all inter-State and intrastate movement of goods.
(2) The Commissioner shall get Radio Frequency Identification Device readers installed at places where the verification of movement of goods is required to be carried out and verification of movement of vehicles shall be done through such device readers where the Eway bill has been mapped with the said device.
(3) The physical verification of conveyances shall be carried out by the proper officer as authorised by the Commissioner or an officer empowered by him in this behalf:
Provided that on receipt of specific information on evasion of tax, physical verification of a specific conveyance can also be carried out by any other officer after obtaining necessary approval of the Commissioner or an officer authorised by him in this behalf.”;
Rule 138C – Inspection and verification of goods
(1) A summary report of every inspection of goods in transit shall be recorded online by the proper officer in Part A of FORM GST EWB-03 within twenty four hours of inspection and the final report in Part B of FORM GST EWB-03 shall be recorded within three days of such inspection.
1 Provided that where the circumstances so warrant, the Commissioner, or any other officer authorised by him, may, on sufficient cause being shown, extend the time for recording of the final report in Part B of FORM EWB-03, for a further period not exceeding three days.
1 Explanation. – The period of twenty-four hours or, as the case may be, three days shall be counted from the midnight of the date on which the vehicle was intercepted.
(2) Where the physical verification of goods being transported on any conveyance
has been done during transit at one place within the State or Union territory or in any other State or Union territory, no further physical verification of the said conveyance shall be carried out again in the State or Union territory, unless a specific information relating to evasion of tax is made available subsequently.”;
Procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances. [Circular No. 41/15/2018-GST dated 13th April, 2018 as amended by Circular No. 88/07/2019 dated 01.02.2019].
| S.No. | Form | Particulars |
| 1 | FORM GST MOV-01 | Where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in charge of the conveyance in FORM GST MOV-01. |
| 2 | FORM GST MOV-02 [Order of physical verification]
FORM GST EWB-03 |
In addition, the proper officer shall issue an order for physical verification/inspection of the conveyance, goods and documents in FORM GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods. The proper officer shall, within twenty-four hours of the aforementioned issuance of FORM GST MOV-02, prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal. |
| 3 | FORM GST MOV-03 [Written Permission] | Within a period of three working days from the date of issue of the order in FORM GST MOV-02, the proper officer shall conclude the inspection proceedings, either by himself or through any other proper officer authorised in this behalf. Where circumstances warrant such time to be extended, he shall obtain a written permission in FORM GST MOV-03 from the Commissioner or an officer authorized by him, for extension of time beyond three working days and a copy of the order of extension shall be served on the person in charge of the conveyance. |
| 4 | FORM GST MOV-04 [Report of Physical Verification]
FORM GST EWB-03 |
On completion of the physical verification/ inspection of the conveyance and the goods in movement, the proper officer shall prepare a report of such physical verification in FORM GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance.
The proper officer shall also record, on the common portal, the final report of the inspection in Part B of FORM GST EWB-03 within three days of such physical verification/ inspection. |
| 5 | FORM GST MOV-05 [Release Order] | Where no discrepancies are found after the inspection of the goods and conveyance, the proper officer shall issue forthwith a release order in FORM GST MOV-05 and allow the conveyance to move further. |
| 6 & 7 | FORM GST MOV-06 [Order of Detention] FORM GST MOV-07 [Notice u/s 129(3)] | Where the proper officer is of the opinion that the goods and conveyance need to be detained under section 129 of the CGST Act, he shall issue an order of detention in FORM GST MOV-06. and
a notice in FORM GST MOV-07 in accordance with the provisions of sub-section (3) of section 129 of the CGST Act, specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance. |
| 8 | FORM GST MOV-09 [Order of Demand] | Where the owner of the goods or any person authorized by him comes forward to make the payment of tax and penalty as applicable under clause (a) of sub-section (1) of section 129 of the CGST Act, or
where the owner of the goods does not come forward to make the payment of tax and penalty as applicable under clause (b) of sub-section (1) of the said section, the proper officer shall, after the amount of tax and penalty has been paid in accordance with the provisions of the CGST Act and the CGST Rules, release the goods and conveyance by an order in FORM GST MOV-05. Where any objections are filed against the proposed amount of tax and penalty payable, the proper officer shall consider such objections and thereafter, pass a speaking order in FORM GST MOV-09, quantifying the tax and penalty payable. On payment of such tax and penalty, the goods and conveyance shall be released forthwith by an order in FORM GST MOV-05. Further, the order in FORM GST MOV-09 shall be uploaded on the common portal and the demand accruing from the proceedings shall be added in the electronic liability register and the payment made shall be credited to such electronic liability register by debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. |
| 9 | FORM GST MOV-08 [Bond] | Where the owner of the goods, or the person authorized by him, or any person other than the owner of the goods comes forward to get the goods and the conveyance released by furnishing a security under clause (c) of sub-section (1) of section 129 of the CGST Act, the goods and the conveyance shall be released, by an order in FORM GST MOV-05, after obtaining a bond in FORM GST MOV-08 along with a security in the form of bank guarantee equal to the amount payable under clause (a) or clause (b) of sub-section (1) of section 129 of the CGST Act.
The finalisation of the proceedings under section 129 of the CGST Act shall be taken up on priority by the officer concerned and the security provided may be adjusted against the demand arising from such proceedings. |
| 10 | FORM GST MOV-10 | In case the proposed tax and penalty are not paid within Fourteen days (‘earlier seven days’ amended vide Circular No. 88/07/2019 dated 01.02.2019) from the date of the issue of the order of detention in FORM GST MOV-06, action under section 130 of the CGST Act shall be initiated by serving a notice in FORM GST MOV-10, proposing confiscation of the goods and conveyance and imposition of penalty.
Where the proper officer is of the opinion that such movement of goods is being effected to evade payment of tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum of tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equal to the tax payable on the goods being transported in lieu of confiscation of the conveyance. 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. |
| 11 | FORM GST MOV-11 [Order of confiscation of goods] | An order of confiscation of goods shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the goods (owner or his representative), and the same shall be served on the person concerned.
Once the order of confiscation is passed, the title of such goods shall stand transferred to the Central Government. In the said order, a suitable time not exceeding three months shall be offered to make the payment of tax, penalty and fine imposed in lieu of confiscation and get the goods released. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. Once an order of confiscation of goods is passed in FORM GST MOV-11, the order in FORM GST MOV-09 passed earlier with respect to the said goods shall be withdrawn. An order of confiscation of conveyance shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the conveyance and the same shall be served on the person concerned. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. Once an order of confiscation of goods is passed in FORM GST MOV-11, the order in FORM GST MOV-09 passed earlier with respect to the said goods shall be withdrawn. The order referred to above i.e., the objections filed by the person in charge of the goods (owner or his representative), and the objections filed by the person in charge of the conveyance, may be passed as a common order in the said FORM GST MOV-11. |
| 12 | Auction of goods | In case neither the owner of the goods nor any person other than the owner of the goods comes forward to make the payment of tax, penalty and fine imposed and get the goods or conveyance released within the time specified in FORM GST MOV-11, the proper officer shall auction the goods and/or conveyance by a public auction and remit the sale proceeds to the account of the Central Government. |
Section 129 – Detention, seizure and release of goods and conveyances in transit
(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 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 tax and penalty;
(b) on payment of the penalty equal to the fifty per cent. of the value of the goods 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.
(3) The proper officer detaining or seizing goods or conveyances shall issue a notice within seven days 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 tax and penalty under clause (a) or clause (b) or clause (c).
(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.
(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of penalty as provided in 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 subsection (3) or one lakh rupees, whichever is less
Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.
Penalty under section129 is an ‘penalty in action’, that is, penalty cannot be imposed after completion of movement in case goods are NOT intercepted during movement and found to be deficient on the prescribed documents. If subsequent evidence is collected that clearly proves that goods have been moved without issuing EWB, even then penalty under section129 CANNOT be imposed if such investigation is conducted after movement has ended.
Decision of Patna HC in the case of Ram Charitra Ram Harihar Prasad vs State Of Bihar (CWP 11221 of 2019) where the HC held that if EWB generated had expired but another EWB was generated just before vehicle was intercepted which was produced to the inspecting officer. HC held that intercepting officer cannot be question if a valid EWB was produced even though, from the facts, the vehicle can be understood to have travelled without a valid EWB but not intercepted. Offence cannot be reconstructed ‘in theory’. Penalty under section129 will arise only when offence is ‘in progress’.
Circular No.76/50/2018-GST, dated31.12.2018
Issue 6
Who will be considered as the „owner of the goods‟ for the purposes of section 129(1) of the CGST Act?
It is hereby clarified that
if the invoice or any other specified document is accompanying the consignment of goods, then either the consignor or the consignee should be deemed to be the owner.
If the invoice or any other specified document is not accompanying the consignment of goods, then in such cases, the proper officer should determine who should be declared as the owner of the goods.
State Legislature or the State Government has no power to make law/rules to govern interstate movement of goods and cannot even detain a consignment for not carrying documents prescribed by them for transporting goods in the course of interstate trade
| Favour | Against |
| Hon’ble High Court of Allahabad vide its order dated 30.04.2018 in the case of Om Disposals and Ors. V State of U.P. and Ors. Reported as [2018] 93 taxmann.com 117 (Allahabad), inter alia, held as under:
State Legislature or the State Government has no power to make law/ rules to govern interstate movement of goods and cannot even detain a consignment for not carrying documents prescribed by them for transporting goods in the course of interstate trade. Reference may be made to the judgment of the Hon’ble Madras High Court in M/s Ascis Trading Company v. The Assistant State Tax Officer 2017 (71) STJ143 |
Godrej & Boyce Manufacturing Co. Ltd. v. State of U.P. reported as [2018] 97 taxmann.com 552 (All.), it has been, interalia, held as under:
Officers of State are also competent for search, seizure and imposition of penalty in respect of violation of Central Enactments. Moreover, provisions relating to search and seizure are not for the purpose of imposition of a new liability but to regulate fiscal statutory provisions in order to avoid evasion of tax. Nothing has been placed on record to show that similar requirement of relevant documents was not provided by Central Government also in respect of inter-state transactions. There is also a principle that mere mention of a wrong provision will not make an order bad, if otherwise, power exists in the Statute. Officers appointed under the SGST Act are authorised to be proper officers for purposes of IGST Act, 2017. [2018] 98 taxmann.com 120 (Madhya Pradesh) HIGH COURT OF MADHYA PRADESH On due consideration of the arguments of the learned counsel for the parties so also the provisions of Section 4 of the IGST Act, we are of the view that officers appointed under the MPGST Act are authorized to be proper officers for the purpose of IGST and, therefore, the contention of the petitioner that no notification was issued and in absence of any notification under Section 4 of the IGST Act has no force, we cannot accept the contention of the petitioner that the action of the respondent No.4 is wholly without jurisdiction |
Cases where in detention of goods may not be initiated:
In a case where consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under sec 129 of the CGST Act may not be initiated in certain situations as given in circular no. 64/38/2018-GST dated 14.09.2018 such as:
I. Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct.
II. Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN-code should not have the effect of increasing the validity period of the e-way bill.
III. Error in the address of the consignee to the extent that the locality and other details of consignee are correct. iv. Error in one or two digits of the document number mentioned in the e-way bill.
IV. Error in 4 or 6digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct.
V. Error in one or two digits/characters of the vehicle number.
Further it was clarified that for such cases penalty to the tune of INR 1,000/- under CGST/SGST Act (INR 500/ towards CGST and INR 500/- towards SGST) and INR 1,000/- under IGST Act may be imposed A record of all such consignments where proceedings under sec 129 of the CGST Act, have not been invoked in view of these situations shall be sent by the proper officer to his controlling officer on a weekly basis.
Section 130 – Confiscation of goods or conveyances and levy of penalty
(1) where, 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.
(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 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.
(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.
(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.
Analysis
> The first thing the authorities need to look into closely is the nature of the contravention of the provisions of the Act or the Rules.
> The second step in the process for the authorities to examine closely is whether such contravention of the provisions of the Act or the Rules was with an intent to evade the payment of tax.
> 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.
> Section 129, clause (6) provides that if the tax and penalty is not paid within 14 days of detention or seizure: then further proceedings would be initiated in accordance with the provisions of Section 130.
Case Laws
Synergy Fertichem (P.) Ltd. v. State of Gujarat [2019] 112 taxmann.com 370 HIGH COURT OF GUJARAT
In many matters of the present type, we have noticed that the goods are detained on the ground that the tax paid on the product was less. In such matters, although the documents were found to be in order and the description of the product also accorded with the relevant declaration, still the consignment were detained on the ground that the tax paid was less.
In our opinion, the detention and seizure of goods on such ground cannot be justified. In such an eventuality, the correct procedure which the inspecting authority is Expected to follow is to alert the Assessing Authority to initiate the 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. What we want to convey is that the process of detention of the goods cannot be resorted to when the dispute is bonafide especially concerning the eligibility of tax and, more particularly, the rate of that tax. In the aforesaid context, we may refer to and rely upon a decision of the Kerala High Court in the case of N.V.K. Mohammed Sulthan Rawtger & Sons Dindigul, Tamil Nadu, Represented by Managing Partner, Raja Mohammed & Ors., vs. Union of India & Ors., reported in (2019) 61GSTR3072018-VIL-502-KER.
Hon’ble High Court of Gujarat vide its order dated 23.12.2019 in the case of Synergy Fertichem Pvt. Ltd. v. State of Gujarat, reported as [2019] 112 taxmann.com 370 (Gujarat) has, interalia, held as under:
if amount of tax and penalty, as determined under section 129 for the purpose of release of goods and conveyance, is not deposited with in statutory time period, then consequence of same would be forfeiture of goods and vehicle with Government, this does not necessarily imply that confiscation proceedings can be initiated only in even of failure on part of owner of goods or conveyance in depositing amount towards tax and liability determined under section 129 of the Act.
For the purpose of section129(6), it would not be necessary for department to establish any intention to evade payment of tax – If tax and penalty, as determined under section 129, is not deposited within statutory time period, then goods and conveyance shall be liable to be put to auction and sale proceeds shall be deposited with the Government.
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 Section11A 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.
Synergy Fertichem (P.) Ltd. v. State of Gujarat [2020] 116 taxmann.com 221
| Issue | Where Competent Authority detained goods of assessee in transit and vehicle on ground that goods were not accompanied by E-way Bill, whether goods shall be released where tax has already been paid at the time of import? |
| Facts of the Case | Competent Authority detained goods of assessee in transit as well as vehicle on ground that goods were not accompanied by E-way Bill-He further issued on assessee a show cause notice under section 130 as to why goods in question as well as vehicle should not be confiscated for non-payment of an amount of Rs.60.72 lakhs.
Assessee filed writ petition seeking relief in this regard -It submitted that tax had already been paid on goods in question at time of import thereof. |
| Held | Whether Competent Authority was to be directed to release goods and vehicle forthwith –
Held, yes – Whether assessee was to be directed to make good its case before Competent Authority that show cause notice issued under section 130 deserved to discharged in view of judgment of Gujarat High Court rendered in case of Synergy Fertichem (P.) Ltd. v. State of Gujarat [2019] 112 taxmann.com 370 Held, yes |
Mere suspicion is not sufficient to invoke the provision of the confiscation
A.P. Refinery (P.) Ltd. v. State of Uttarakhand– [2021] 130 taxmann.com 307 (Uttarakhand High Court)
The petitioner was transporting Rice Bran Oil from its factory located in Jagraon, Punjab to a dealer and the GST officers intercepted vehicles. The drivers produced e-Invoices, e-Way bills, bilty etc. but e-way bills were expired and vehicles were detained.
The department also issued confiscation order and the petitioner challenged the confiscation orders by filing writ petition. It was contended that no opportunity of being heard was given before passing the confiscation orders under Section 130 in Form GST MOV-11.
The honourable High Court observed that
the department failed to prove that the opportunity of being heard was given to the assessee before the passing the orders of the confiscation in Form GST MOV-11.
Moreover, before invoking the provisions of Section 130 for confiscation, there should be a very strong base to proceed for confiscation. Mere suspicion is not sufficient to invoke the provision of the confiscation.
Therefore, it was found that order under Section 130 was not passed in accordance with law and liable to be set aside.
The court also directed to release the vehicles and goods upon execution of a bond for the value of the goods in Form GST INS-04 and furnishing of a security in form of a bank guarantee.
Siddhbali Stone Gallery v. State of Gujarat [2020] 115 taxmann.com 313 (Gujarat) HIGH COURT OF GUJARAT
Where Competent Authority detained goods of assessee under transport as well as vehicle and issued notice under section 130, said authority was to be directed to release goods on payment of tax amount and further assessee was to be advised to make good its case before Competent Authority that notice issued under section 130 deserved to be quashed
The authorities concerned cannot invoke Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure. What we are trying to convey is that for the purpose of invoking Section 130 of the Act at the very threshold, the authorities need to make out a very strong case.
Merely on suspicion, the authorities may not be justified in invoking Section 130 of the Act straight way. 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. Any opinion of the authority to be formed is not subject to objective test
GST: Where Competent Authority detained goods of assessee under transport as well as vehicle and issued notice under section 130, said authority was to be directed to release goods on payment of tax amount and further assessee was to be advised to make good its case before Competent Authority that notice issued under section 130 deserved to be quashed.
Age Industries (P.) Ltd. v. Assistant State tax Officer [2018] 89 taxmann.com 276
Section 129 of the Kerala Goods and Services Tax Act, 2017 read with rules 55 and 138 of the Kerala Goods and Services Tax Rules, 2017- Detention, seizure and release of goods and conveyances in transit- Assessee was engaged in manufacture and sale of surgical gloves- It sent goods to three parties for quality appraisal on job work basis against series delivery challans- Adjudicating Authority, in exercise of power under section 129, detained said goods for reasons that (i) they were not accompanied by document provided for under rule 138(2), and (ii) they were intended to be supplied to an unregistered firm- Whether detention of goods on above reasons was illegal- Held, yes [Paras 4,5,6] [In favour of assessee]
Kerala High Court earlier in writ petition (C) No. 196 of 2018 held that the power of detention contemplated under section 129 can be exercised only in respect of goods which are liable to be confiscated under section 130. There is no taxable supply when goods are transported on delivery challans so long as the authenticity of the delivery challan is not doubted. Therefore, such goods cannot be detained merely for infraction of rule 138(2). In the light of the said judgment, the first reason on which the goods are detained viz. that the goods were not accompanied by the document provided for under rule 138(2) is unsustainable. [Para 4]
Section 129, read with section 130, of the Central Goods and Services Tax Act, 2017/ Section129, read with section 130, of the Karnataka Goods and Services Tax Act, 2017 – Detention, seizure and release of goods and conveyances in transit – Competent Authority detained goods of assessee under transport and also vehicle and issued a penalty notice under section 129(1)(b), to which assessee filed objections –
Competent Authority without considering objections filed by assessee passed order of confiscation of goods and conveyance –
Assessee filed writ petition challenging order of confiscation – Whether impugned order of confiscation of goods and conveyance deserved to be set aside – Held, yes – Whether Competent Authority was to be directed to consider objections filed by assessee and pass appropriate orders after quantifying tax and penalty for purpose of section 129 – Held, yes [Para12] [In favour of assessee]
Presence of vehicle at a different route cannot be a basis for detention of goods and levying tax and penalty on the same. In the, case of M/s Commercial Steel co. versus the Assistant of State tax reported as 2020-VIL-116-TEL, dated 04.03.2020
When the consignment was coming from Vidyanagar with all requisite documents through a vehicle, it was detained at Jeedimetla and a notice under Section 129 (3) of the C.G.S.T. Act, 2017 (for short, ‘the Act’) was issued alleging’ wrong destination’ and directing payment of 9% of the Central Tax and 9% of State Tax and penalty equal to tax estimating the purchase value of Rs. 11,14,579/-as against the actual tax invoice value of Rs. 4,16,447/-
It has been held as under:
…merely on the basis of the fact that vehicle is found at a different route does not indicate that the petitioner intends to sell such goods locally and evade payment of CGST and SGST when IGST liability has already been discharged by the petitioner considering such supply as inter-state supply. Thus, amount collected by the department towards tax and penalty under the CGST and SGST act, 2017 under the threat of detaining vehicle is arbitrary and is in violation of Articles 14, 265 and 300-A of the constitution of India, Accordingly, said amount is required to be refunded by the department along with interest @ 6% per annum.
Appellate Authority – GST, HIMACHAL PRADESH Bhushan Power & Steel Ltd. v. ACST&E (Proper Officer) Circle Mall Road [2020] 114 taxmann.com 454 (AA-GST-HP)
Where Assistant Commissioner raised additional amount of tax and imposed penalty on ground that e-way bill issued to assessee for movement of goods had expired, in view of fact that Rule 138(10) mentions that validity of e-way bill may be extended within 8 hours from time of its expiry, but, in instant case vehicle was practically apprehended in almost 08 to 09 hours of expiry of e-way bill, prima facie it appeared that assessee had not been given reasonable opportunity to update Part-A of e-way bill and, moreover, it also apparent that Part-B of e-way bill was duly filled which put to rest any doubt about intention of assessee to evade tax, impugned order passed by authority below was to be set aside.
In the view of above circumstances the instant appeals are accepted and the order passed by Asst. Commissioner State Taxes & Excise-cum-Proper Officer, the Mall Road Circle, Shimla are set aside. Since the appellant has made minor procedural laps as required to follow under rule 138(10) therefore a penalty of Rs. One thousand only (Rs- 1000/- IGST Act) in each case is imposed on the tax payer under section 125 under the CGST/HPGST Act 2017 in accordance to CBIC Circular No. 64/38/2018-GST, dated 14th Sep 2018 and the State Circular no. dated 13th March 2019 and may be recovered accordingly. The judgment in these cases was reserved on 18-12-2019 which is released today.
K.P. Sugandh Ltd. Vs. State of Chhattisgarh [2020] 122 taxmann.com 291 (Chhattisgarh)
Under valuation of a good in the invoice cannot be ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the CGST Act, 2017.
M.S. Steel and Pipes V. Assistant State Tax Officer [2020] 119 taxmann.com 211 (Kerala)
Whether power of detention under section 129 is to be exercised only in cases where a transportation of goods is seen to be in contravention of provisions of Act and Rules and not simply because a document relevant for assessment does not contain details of tax payment – Held, yes.
Petitioners consignment was detained on ground that there was a discrepancy in e-way bill that accompanied transportation of goods – Reason for detention was that there was that, while consignment was supported by an invoice which contained details of goods transported as also tax paid in respect of goods, there was no mention of tax amounts separately in e-way bill that accompanied goods – However, it was found that a person transportation – A reading of said Rule clearly indicates that e-way bill has to be in FORM GST EWB-01, and in that format, there is no field, wherein transporter is required to indicate tax amount payable in respect of goods transported.
Whether therefore, there being no contravention by petitioner of any provision of Act or Rule for purposes of section 129, detention in instant case was not justified – Held, yes.
Whether therefore, respondent was to be directed to release goods forth with to petitioner – Held, yes [Para4] (In favour of assessee)
Radha Tradelinks (P.) Ltd. v. State of Gujarat [2020] 121 taxmann.com 48
| Facts of the case | > Competent Authority detained goods of assessee under transport as well as vehicle on ground that many discrepancies were noticed as regards documents, etc.
> He further passed an order under section 129 determining amount of tax and penalty to be paid by assessee > Simultaneously he issued notice under section 130 calling upon assessee to show cause as to why goods and conveyance should not be confiscated > Assessee filed writ petition seeking relief in this regard |
| Held | Whether Competent Authority was to be directed to release goods as well as vehicle on assessee depositing Rs. 1.70 lacs towards tax and penalty and furnishing bank guarantee of Rs.17 lacs of any Nationalized Bank
Held, yes Whether adjudication of confiscation proceedings under section 130 required to be proceeded in accordance with law Held, yes |
Where Competent Authority detained goods of assessee under transport as well as vehicle and passed order under section 129 determining tax and penalty to be paid by assessee, said Authority was to be directed to release goods and vehicle on assessee depositing Rs. 1.70 lacs towards tax and penalty and furnishing bank guarantee of Rs. 17 lacs.
Shri Durga Traders v. State Tax Officer [2020] 117 taxmann.com 780
| Issue | Can confiscation proceedings be halted on petition challenging validity of notice under section 130? |
| Facts of the Case | > Assessee entered into a contract for supply of groundnuts – Consignment of groundnuts was dispatched from Madhya Pradesh to reach Rajkot
> In course of transportation, vehicle was intercepted and a few discrepancies were found in e-way bill- Accordingly, a show cause notice was issued under section 130 > Assessee filed instant petition challenging legality and validity of said notice |
| Held | The confiscation proceedings shall proceed further on its own merits in accordance with law.
Whether, on facts, authority concerned had to be allowed to proceed with adjudication of show cause notice Held, yes Whether, therefore, instant petition was to be disposed of with a direction to concerned authority to release goods confiscated subject to deposit of certain amount by assessee towards tax and penalty Held, yes |
Petition challenging validity of notice under section 130 was to be disposed of with a direction to concerned authority to proceed with adjudication of said notice and, to release goods confiscated subject to deposit of certain amount by assessee towards tax and penalty.
Hanuman Trading Co. v. State of Gujarat [2020] 116 taxmann.com 488
| Facts of the Case | Competent Authority detained goods of assessee in transit as well as vehicle- He further issued on assessee a notice under section 130 for confiscation of goods and vehicle and levy of penalty
Assessee filed writ petition seeking relief in this regard |
| Held | Whether Competent Authority was to be directed to release goods and vehicle on payment of requisite tax amount
Held, yes Whether assessee was to be directed to make good its case before Competent Authority that impugned notice deserved to be discharged in view of judgment of Gujarat High Court rendered in case of Synergy Fertichem (P.) Ltd. v. State of Gujarat [2019] 103 taxmann.com 426/72 GST 641 (Guj.) Held, yes |
Whether assessee was to be directed to make good its case before Competent Authority that impugned notice deserved to be discharged in view of judgment of Gujarat High Court rendered in case of Synergy Fertichem (P.) Ltd. v. State of Gujarat [2019] 103 taxmann.com 426/72 GST 641 (Guj.).
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Author Bio
Very good coverage of various judgments. Please cover road side cases judgment after amendment in Finance Act 2021, especially with regard to confiscation under section 130.