Seizure and confiscation of goods and conveyances in transit (under section 129 and 130 of CGST Act, 2017) is a separate proceeding from the recovery of tax
The Central Government has brought into effect the provisions of Finance Act, 2021 effective from 1st January, 2022. The Finance Act, 2021 has amended section 74 of the CGST Act, 2017 by amending clause (ii) of explanation (i) as follows:
“In section 74 of the Central Goods and Service Tax Act, in Explanation 1, in clause (ii), for the words and figures sections 122, 125, 129 and 130, the words and figures sections 122 and 125 shall be substituted.”
The said amendment was made effective w.e.f. 01.01.2022 vide Notification No. 39/2021-Central Tax, dated 21.12.2021. The objective of this amendment is to make seizure and confiscation of goods and conveyances in transit a separate proceeding from the recovery of tax.
By virtue of the above amendment, there will be ‘separate recovery proceedings’ for the following two sections:
Section 129 – Detention seizure and release of goods and conveyance in transit
Section 130 – Confiscation of goods or conveyance and levy of penalty.
Where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 (Determination of tax when no fraud or suppression) or section 74 (Determination of tax when there is fraud or suppression), the proceedings against all the persons liable to pay penalty under section 122 (penalty for certain offences) and 125 (general penalty) are deemed to be concluded- Explanation (1)(ii) to section 74 of the CGST Act, 2017 as amended vide Section 113 of Finance Act, 2021 w.e.f., 01.01.2022.
Thus, once demand is confirmed under section 73 or 74 of the CGST Act, 2017, further penalty under section 122 and 125 cannot be imposed. However, proceedings under section 129 (detention, seizure and release of goods and conveyances and levy of penalty) can continue. A notice even for penalty or late fee or co-noticees cannot be issued under section 122 and 125 of CGST Act, 2017.
Before the aforesaid amendment, the wording in Explanation (1)(ii) to section 74 of the CGST Act, 2017 includes sections 122, 125, 129 and 130. By the aforesaid amendment, reference to section 129 (detention, seizure and release of goods and conveyances in transit) and section 130 (confiscation of goods or conveyances and levy of penalty) have been omitted as these provisions are being made as stand-alone and independent provisions.
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