Can proceeding u/s Section 129 and 130 of CGST Act 2017 be carried out simultaneously for a single offence/ violation of CGST Act and rule ?
Moot question in this article is that a person can be penalised twice one under the proceeding under section 129 of the Central Goods and Service Tax, 2017 and also under the proceeding u/s 130 of Act ibid for a single offence.
To go in detail, let first analysis the provision of both section 129 and 130 of the Central Goods and Service Tax ,2017 as under :-
A. Section 129 of the Central Goods and Service Tax,2017
(1) First of it is to be noted that section 129 of the Central Goods and Service Tax, 2017 starts with non obstante clause ( “notwithstanding anything contained in this Act”). Justice G.P. Singh in his book ‘Principles of Statutory Interpretation’, 9th Edition has stated that “A non-obstante clause is generally appended to a section with a view to give the enacting part of the section, in case of conflict, an overriding effect over the provision in the same or other Act mentioned in the non obstante clause. It is equivalent to saying that inspite of the provisions or Act mentioned in the non obstante clause, the provision following it will have its full operation or the provisions embraced in the non- obstante clause will not be an impediment for the operation of the enactment or the provision in which the non obstante clause occurs.
In Union of India v. G.M. Kokil, AIR 1984 SC 1022, the Supreme Court, , held as follows:
“It is well-known that a non-obstante clause is a legislative device which is usually employed to give overriding effect to certain provision over some contrary provision that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions.”
(2) Section 129 of the Central Goods and Service Tax, 2017 is a special provision providing for detention of goods in Section 129(1) of the Central Goods and Service Tax, 2017 provides for detention of goods being transported in contravention of the provisions of the GST Act, 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 god son payment of an amount equal to 2% of the value of goods or Rs. 25,000 which ever 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 Central Goods and Service Tax, 2017 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 to fan amount equal to 5% of the value of goods or Rs. 25,000 which ever is less.
(3) Section 129(5) of the Central Goods and Service Tax, 2017 specifically provides that 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.
(4) It is further provided in Section 129(6)of the Central Goods and Service Tax, 2017 that where the person trans porting 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 in it initiated in accordance with the provisions of Section 130 of ibid.
(5) Considering such provisions, it is incumbent upon the learned authorities who have detained the goods under Section 129 of the Central Goods and Service Tax, 2017 to give notice for payment of tax and penalty under Section 129(1)of the Central Goods and Service Tax,2017 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 shall initiate confiscation proceeding sunder Section 130 of the GST Acts.
(6) Now let we have a analysis of the section:-Prima-facie this section does not prescribe the depth of gravity of contravention of the provision of Act or rule made there under, so as to trigger this section.Whether all contravention, intentional or unintentional, knowingly or unknowingly . minor or major will be covered to initiate proceeding of detention of goods and conveyance .
(7) To overcome above situation and control the blanket power of authorities, the Act provides the section 126 of Act, the general disciplines for imposition of tax for minor breaches of regulations or procedural requirements, defined in the Explanation to the provision. Section 126 of the Act is extracted below:-
“General disciplines related to penalty.
(1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence.
Explanation.–For the purpose of this sub-section,–
(a) a breach shall be considered a ‘minor breach’ if the amount of http://www.judis.nic.in tax involved is less than five thousand rupees;
(b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record.
(2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach.
(3) No penalty shall be imposed on any person without giving him an opportunity of being heard.
(4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified.
(5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the officer under this Act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person.
(6) The provisions of this section shall not apply in such cases where the penalty specified under this Act is either a fixed sum or expressed as a fixed percentage.'”
(8) The Central Board of Indirect Taxes and Customs, New Delhi, has issued a Circular in F.No. CBEC/64/38/2018-GST, dated 14.09.2018, in regard to the procedure to be followed in the ‘Interception of conveyances for inspection of goods in movement and detention, release and confiscation of such goods and conveyances’.
The relevant paragraphs 3, 4, 5 and 6 of the said Circular calling attention are , extracted below:- “.
“3. Section 68 of the CGST Act read with rule 138A of the Central Goods and Services Tax Rules, 2017 requires that the person in charge of a conveyance carrying any consignment of goods of value exceeding Rs 50,000/- should carry a copy of documents viz., invoice/bill of supply/delivery challan/bill of entry and a valid e-way bill in physical or electronic form for verification. In case such person does not carry the mentioned documents, there is no doubt that a contravention of the provisions of the law takes place and the provisions of section 129 and section 130 of the CGST Act are invocable. Further, it may be noted that the non-furnishing of information in Part B of FORM GST EWB-01 amounts to the e-way bill becoming not a valid document for the movement of goods by road as per Explanation (2) to rule 138(3) of the CGST Rules, except in the case where the goods are transported for a distance of upto fifty kilometres within the State or Union territory to or from the place of business of the transporter to the place of business of the consignor or the consignee, as the case may be.
4. Whereas, section 129 of the CGST Act provides for detention and seizure of goods and conveyances and their release on the payment of requisite tax and penalty in cases where such goods are transported in contravention of the provisions of the CGST Act or the rules made thereunder. It has been informed that proceedings under section 129 of the CGST Act are being initiated for every mistake in the documents mentioned in para 3 above. It is clarified that, section 129 of the CGST Act provides for detention and seizure of goods and conveyances and their release on the payment of requisite tax and penalty in cases where such goods are transported in contravention of the provisions of the CGST Act or the rules made thereunder. It has been informed that proceedings under section 129 of the CGST Act are being initiated for every mistake in the documents mentioned in para 3 above. It is clarified that in case a consignment of goods is accompanied by an invoice or any other specified document and not an e-way bill, proceedings under section 129 of the CGST Act may be initiated.
5. Further, in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:
a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
b) 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;
c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
d) Error in one or two digits of the document number mentioned in the e-way bill;
e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
f) Error in one or two digits/characters of the vehicle number.
6. In case of the above situations, penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and the respective State GST Act should be imposed (Rs. 1000/- under the IGST Act) in FORM GST DRC-07 for every consignment. A record of all such consignments where proceedings under section 129 of the CGST Act have not been invoked in view of the situations listed in paragraph 5 above shall be sent by the proper officer to his controlling officer on a weekly basis. ‘the questions to be determined in these cases relate to the release of consignment and thequantum of penalty, if any, to be levied at this stage, and pending adjudication.”
(8) Wrong mentioning of distance in e way bill as 280 kilometer instead of correct distance of 2800 kilometer is not a justified reason to initiate proceeding under section 129 of the Act /Sabitha Riyaz v. Union of India Kerla High court .
(9) On going through the sub section 129(6) of the Act , it will be revealed that if in the case of detention of goods and conveyance and where tax and penalty as determined under section sub section 1 of section 129 is not paid with in 14 days then further proceeding will be carried out in accordance with the provision of section 130 of the Act. It is pertinent to mention here that section 130 of Act is apply when one person supplies or receives any goods in contravention of any provisions of this act or rules made thereunder with the intent to evade payment of tax. Conversely it can be concluded that goods or conveyance can be detained under section 129 which are transit in contravention of this Act and rule, with the intention of evade payment of If tax and penalty is not paid on detained goods and conveyance within 14 days then goods or conveyance become liable to be confiscated under section 130 Act. Confiscation of goods or conveyance can be carried only contravention of act or rule is made with intent to evade any tax.
(10) If we go through the section 126 , 130 and circular as stated supra , even if the ward “with the intent to evade payment of tax“is not mentioned in section 129 of Act , no proceeding of detention of goods or /and conveyance can be carried out under section 129 if contravention of act or rule is not carried out “with the intent to evade payment of tax“.
(11) The Kerala High Court, in M/S Indus Towers Limited Vs. The Assistant State Tax Officer, (intelligence) 2018(01)LCX 0010 2018(11)GSTL229 Kerla., held that the power of detention contemplated under Section 129 of the SGST Act can be exercised only in respect of goods which are liable to be confiscated under Section 130 of the SGST Act. Considering the question whether the detention of goods under the present case was justified on ground of non-compliance of Rule 55 and 138 of the SGST Act, the Court answered in negative. Allowing the petition, the bench, relying on the FAQs by the Central Board of Excise and Customs (CBEC) released on 31.03.2017, observed that a combined reading of section 129 and 130 would indicate that the goods can be detained only when it is suspected that the goods are liable to confiscation. Further, according to section 130, the goods can be confiscated when a taxable supply is made and there is a violation of procedure with the intention to evade the payment of the tax.
(12) It is not clear whether on non-payment of tax and penalty as determined under section 129(1) of Act , within 14 days, the order of payment of tax and penalty as determined under section 129 (3) will be continued or annulled and fresh / denova proceeding will be started under section 130 of the Act .
B. SECTION 130 OF The Central Goods and Service Tax,2017
(1) It is to be noted that section 130 of the GST Act also starts with non obstante clause (“notwithstanding anything contained in this Act”)
(2) Section 130 of the Act provides for specific situations or causes leading to the confiscation of goods/conveyances. There are five precise causes for confiscation of goods and/ or conveyances specified in this section and theyare:
| Action | consequence |
| Supply or receive goods in contravention of the Act or tax rules made thereunder | Resulting in actual evasion of tax |
| Not accounting for goods | Carrying a liability to payment of tax |
| Supply of goods liable to tax | Without applying registration |
| Contravention of the provisions of Act or rules made thereunder | With intent to evade payment of tax |
| Use of conveyance as a means of transport/for carriage of taxable goods | In contravention of the Act or rules made thereunder |
(2) In all the aforesaid eventualities, the goods or conveyance shall be liable for confiscation. However the conveyance shall not be confiscated where the owner of the conveyance proves that it is without the connivance of owner himself, his agent or person in charge of the conveyance. Further, the person shall be liable to pay penalty under section 122 of the Act.
(3) If the goods or conveyance are liable to be confiscated under the provisions of this Act, the proper officer shall give the owner of the goods an option to pay fine in lieu of confiscation.
(4) The amount of fine shall not exceed the market value of goods as reduced by the amount of tax payable thereon. However, at the same time, the aggregate of fine and penalty leviable shall not be less than the amount of penalty as leviable under section 129(1) While section 129 is applicable on transporters, section 130 primarily covers the owner.
(5) Where the conveyance is used for transportation of goods or passenger on hire, the owner of the conveyance shall be given an option to pay in lieu of confiscation of the conveyance a fine equal to amount of tax payable on the goods transported on his conveyance. It is worthwhile to note that the amount of fine payable is in addition to any tax, penalty and other charges payable on confiscated goods or conveyance.
(6) The order for confiscation cannot be issued without giving the person an opportunity of being heard.
(7) The title of the confiscated goods or conveyance shall be vested upon the Government.
(8) The proper officer adjudging confiscation shall take and hold possession of the things confiscated on behalf of the Government and every officer of police shall assist in taking such hold and possession.
(9) section 130 of the Act prescribes that in case of happening of five precise causes, all such goods or conveyance shall be liable to confiscation AND PERSON SHALL BE LIABLE TO PENALTY UNDER SECTION 122.
(10) Above provision clarifies that in a situation where goods has been detained and sized and tax and penalty has been determined under section 129 (1) but payment of tax and penalty has not been carried out with in 14 days, then that proceeding will come to end . And a new penalty will be levied under section 122 of Act. The section 122 (1) of the act provides offence of 21 types. Section also provides that in case of offence committed any or more out 21 , the person shall be liable to pay a penalty of Rs 10,000/- or an amount equivalent to tax evaded, whichever is higher. Although the sub section (1) and (2) of 130 do not discuss about the tax amount. But sub section (3) make it clear that person has pay (a) fine in lieu of confiscation (b) any tax (c) penalty (as determined u/s 122) and (d) charges payable in respect of such goods and conveyance.
C. Now we start with the moot question whether proceeding can be carried by the authorities under section 129 as well under section 130 at a time for same offence and these two provisions overlap or are independent of each other. Hon’ble high Court of Gujrat has the occasion to handle such situation in the case of Synergy Fertichem Private limited V. State of Gujrat. Facts of case are as under ;-
(1) The 1st Petitioner is a Private Limited Company having place of business at Synergy House-2, Subhanpura, Gorawa, Vadodara.
(2) The Petitioners are inter-alia engaged in import and sale of ceramic pigment ink which is used as colouring substance in the tiles manufacturing industry. The Petitioners are authorized agents/distributors of Esmalglass – Itaca group which has its head office at Partida Rambleta, S/N 12191, PoblaTornesa, Castellon, Spain.
(3) In so far as import transactions are concerned, importers such as the Petitioners are required to pay customs duty as well as the IGST payable on such imports before clearance for home consumption. In other words for imports the IGST is paid prior to commencement of movement of goods from the port/airport.
(4) The Petitioners had ordered for a consignment of ceramic pigment ink from its principal in Spain. The import took place through the Ahmedabad Airport. The Petitioners duly filed bill of entry for home consumption on 13.2.2019 and paid the applicable customs duty as well as IGST which is payable on imports by importers.
(5) The assessed value of goods is Rs. 39,43,272 on which the Petitioners paid customs duty amounting to Rs. 3,00,526 and IGST at the rate of 18% totaling to Rs. 7,09,789.
(6) The truck with the goods were stopped for verification on the Ahmedabad-Vadodara expressway by the learned Respondent No. 2. The transporter duly produced all documents relating to goods including bill of entry for home consumption evidencing payment of IGST on the transaction. The truck with the goods were however detained by the learned officer on the ground of absence of e-way bill in respect of the goods. Notices in Form GST MOV-1 and GST MOV-6 were served to the transporter of the goods.
(7) On being informed about such detention the Petitioners promptly generated the e-way bill in respect of the transaction.
(8) The Petitioners thereafter immediately approached the learned Respondent authorities and gave explanation. It was submitted that the goods being perishable and due to urgency of transporting goods the clearing and forwarding agent had initiated transportation of goods immediately on clearance from customs authorities without waiting for e-way bill from the Petitioners. However the fact is that IGST had been paid on the transaction even before commencement of movement of goods. Bill of entry for home consumption had been duly filed in respect of goods which was admittedly possessed by the transporter. Thus there was no question of the goods being unaccounted or there being any intention of evading payment of tax. In fact tax under the Central Goods and Service Tax ,2017 had already been paid by the Petitioners.
(9) The learned Respondent authorities however refused to release the goods on the ground of absence of e-way bill. The learned Respondent authorities in fact insisted for payment of not only tax and 100% penalty under Section 129 of the Central Goods and Service Tax , 2017 but also fine in lieu of confiscation equal to the value of goods under Section 130 of the GST Acts.
(10) In other words for goods which are admittedly worth Rs. 39,43,272 on which customs duty of Rs. 3,00,526 and IGST of Rs. 7,09,789 have already been paid, the learned Respondent authorities are demanding an amount of Rs. 60,72,639 for release of goods.
(11) NOW MATTER WAS BEFORE HON’BLE high court of Gujrat in form of writ of mandamus requesting to issue direction for quashing and setting aside notice.
(12) Following submissions were offered by the writ applicants
(a) Section 129 of the Central Goods and Service Tax, 2017 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/Gujarat Goods and Services Tax Act, 2017,
(b) Section 129 and Section 130 of the Central Goods and Service Tax, 2017 are both provisions meant for checking evasion of tax and therefore need to be harmoniously construed.
(c) As per Section 17(5)(i) of the Central Goods and Service Tax, 2017 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. Thus Section 129 of the Central Goods and Service Tax,2017 is grouped together with Section 74 and Section 130 of the Central Goods and Service Tax,2017 which are admittedly invocable in cases of evasion. Collective reading of all such provisions shows that Section 129 of the Central Goods and Service Tax,2017 is enacted for curbing evasion of tax. Thus the contention of the Respondents that Section 130 of the Central Goods and Service Tax,2017 is a special provision enacted for checking evasion of tax is contrary to the scheme of the provisions of the GST Acts. It is only if the tax and penalty under Section 129 of the Central Goods and Service Tax, 2017 are not paid within the stipulated period that resort can be made by the learned authorities to Section 130 of the GST Acts.
(d) Circular of the Government shows that Section 129 of the Central Goods and Service Tax ,2017 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 Central Goods and Service Tax,2017 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 Central Goods and Service Tax,2017 for which maximum statutory cap is Rs. 25,000.
(e) Section 129 of the Central Goods and Service Tax, 2017 provides a simple method of determination of tax and penalty and ensuring quick recovery Thus while the purpose of Section 129 of the Central Goods and Service Tax, 2017 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 Central Goods and Service Tax, 2017 and demand payment of tax and 100% 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. If however the assessee fails to make such payment then confiscation proceedings can be initiated under Section 130 of the Central Goods and Service Tax, 2017 which require 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 Central Goods and Service Tax,2017 allows the assessee to get the goods released on immediate payment of tax and penalty failing which he is under threat of loosing the goods under Section 130 of the GST Acts. Per contra under section 129 of the Central Goods and Service Tax,2017 the authorities are also saved from establishing intention to evade payment of tax which is a pre-requisite for Section 130 of the GST Acts. 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.)
(f) Direct invocation of Section 130 of the Central Goods and Service Tax, 2017 will render Section 129(6) of the Central Goods and Service Tax, 2017 redundant. It is further respectfully submitted that direct invocation of Section 130 of the Central Goods and Service Tax, 2017 will render Section 129(6) of the Central Goods and Service Tax, 2017 redundant. The legislature was aware that Section 130 of the Central Goods and Service Tax, 2017 contains a non-obstante clause. Even then it was provided in Section 129(6) of the Central Goods and Service Tax, 2017 that provisions of Section 130 of the Central Goods and Service Tax, 2017 will be invoked only if the owner or transporter fails to make payment of tax and penalty within 14 days of detention ort seizure. It is well settled that an interpretation which will render any part of the statute otiose is to be avoided. Reliance is placed in this regard on the judgement of Hon. Supreme Court in the case of Union of India and Another v/s Hansoli Devi AIR 2002 SC 3240.
(13) Following submissions were offered by the another writ applicants
(a) Section 129 talks about detention, seizure and release of goods and conveyances in transit. As per the section which begins With non-obstante clause, 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, such goods and conveyance shall be liable to detention or seizure and shall be released upon payment of applicable tax and 100% penalty on such tax. The examples of contraventions of the provisions of this Act or the Rules made thereunder are enumerated in S. 122 of the Act. S. 130 talks about confiscation of goods or conveyances and levy of tax, penalty and line thereon.
(b) A Close comparison of these three provisions viz. S. 122, 129 & S. 130 of the Act leave no doubt that S.122 is a general penalty section which covers certain offences enumerated therein. S. 129 talks about the very same contraventions albeit, when committed in transit. Therefore it’s a specific section operates only when goods are in transit as against general penalty as provided u/s 122. In other words, provisions of S.129 alone need to be invoked when contraventions of any of the provisions of the Act are caught when goods are in transit. Because these contraventions are caught when the goods are in transit, a fast track mechanism is provided under the Scheme of the Act so as to have faster adjudication of the same in terms of subsection (2) to (5) of S.129 of the Act. So if the person so caught, pays payment of applicable tax and 100% penalty on such tax, goods are released immediately and proceedings for such contravention come to an end.
(c) The major distinction between and S.130 is that the provisions of S.129 can only be invoked when goods are in transit whereas S.130 can be invoked at any stage, much after the goods have reached their destination or even during assessment proceedings subject to of course, fulfilling its conditions. For any violation of the provisions of the Act or rules made thereunder while goods are in transit, straightway, proceedings u/s 130 cannot be initiated as has been done by the Revenue. It is only after exhausting this remedy of S.129 that recourse can be had to S.130. Provisions of S.129(6) leave little doubt about this legislative intent. As per S.129(6) if the amount demanded u/s 129(1) is not paid within 14 days, further proceedings shall be initiated in accordance with the provisions of S.130. Thus Proceedings are to be initiated as per law and in accordance with conditions of S.130.
(d) Here, proceedings u/s 130 can only be initiated if conditions stated under the said section are satisfied. It cannot be interpreted in a manner so as to hold that once tax and penalty as demanded u/s 129 is not paid within a period of 14 days, S.130 automatically gets invoked without having to satisfy any of the preconditions as stated under the said section. These conditions are sine qua non for invoking the provisions of S.130 of the Act.
(14) Core issues in writ application are summarized as under:-
“(I) Whether proceedings for confiscation of goods or conveyances (and also levy of penalty) under Section 130 of the CGST Act can be initiated without first following the procedure laid down under Section 129 of the CGST Act?
(II) Whether procedure and proceedings for confiscation of goods or conveyances (and also levy of penalty) under Section 130 of the CGST Act are permissible even after the procedure of Section 129 of the Act was followed i.e., amount referred in sub-section (1) was paid by the concerned person?
(III) Whether it is permissible in law to order confiscation of goods or conveyance once they are released under Section 129 of the Act on payment of the amount of tax and penalty?. In other words, once the goods and the conveyance is released, then the authority could not be said to be in physical possession of both, and in the absence of the goods or conveyance, there cannot be any confiscation of the same. To put it more simply, the physical availability of the goods and the conveyance will have significance for imposition of redemption fine under Section 130 of the Act.”
(15) Summary of submission made on behalf of state is as under:-
(a) The non-obstante clause used in any legal provision seeks to provide the same, a sweeping overriding effect over any other legal provisions operating in the same or similar field. Since both the provisions, i.e., Sections 129 and 130 contain a non-obstante clause, they are required to be interpreted harmoniously while keeping in mind the object and purpose behind the enactment. It is argued that Section 129 of the Act deals with the detention/seizure of the goods/conveyance while in transit. Section 130 deals specifically with the confiscation of such goods/conveyance.
(b) For invocation of Section 129 of the Act all that is necessary is “contravention of the provisions of the Act or the Rules”, whereas Section 130 of the Act prescribes specific circumstances for the purpose of invoking the provisions relating to confiscation. It is pointed out that Section 130 of the Act specifically talks about the intention, i.e., mensrea. Both the sections are independent of each other.
(c) It is further submitted that it is notcorrect to contend that Section 130 of the Act can be made applicable only if Section 129(6) of the Act is not complied with. It is submitted that the provisions of Section 130 are independent of the provisions of Section 129 of the Act and that the same can be invoked by the department at any stage i.e. (i) after concluding the proceedings initiated under Section 129 of the Act, or (ii) after issuing notice under Section 129(3) of the Act, or (iii) directly after detaining the goods under Section 129(1) of the Act. Thus, there cannot be any straight jacket procedure to be adopted, as the same would entirely depend upon the facts and circumstances of each case.
(d) It is further submitted that when a breach of the provisions of the Act and the Rules is found, resulting in detaining the goods and/or conveyance under Section 129(1) of the Act, by issuing the detention order (i.e. MOV-06) followed by the service of a show cause notice under Section 129(3) of the Act (i.e. MOV-O7), if owner of the goods comes forward and makes the payment of tax and penalty, such goods are required to be released in terms of Section 129(1) of the Act and that the proceedings with respect to Section129(3) of the Act will be deemed to be concluded. However, after such release, if it is found out that the contravention of the Act or the Rules was/is with an intention to evade payment of tax or falling under any of the eventualities mentioned in Section 130(1) of the Act. then in that case, once the goods/conveyance are released, the exercise under Section 130 would be a futile exercise, because of non-availability of goods and conveyance.
(16) After considering all submission made by applicants and respondent, the hon’ble court sum up the conclusion of issue. The relevant part of conclusion is as under :-
(a) Section 129 of the Act talks about detention, seizure and release of goods and conveyances in transit. On the other hand, Section 130 talks about confiscation of goods or conveyance and levy of tax, penalty and fine thereof. Although, both the sections start with a non-obstante clause, yet, the harmonious reading of the two sections, keeping in mind the object and purpose behind the enactment thereof, would indicate that they are independent of each other. Section 130 of the Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the Act. Both the sections are mutually exclusive.
(b) The phrase “with an intent to evade the payment of tax” in Section 130 of the Act assumes importance. When the law requires an intention to evade payment of tax, then it is not mere failure to pay tax. It must be something more. The word “evade” in the context means defeating the provisions of law of paying tax. It is made more stringent by use of the word “intent”. The assessee must deliberately avoid the payment of tax which is payable in accordance with law. However, the element of mensrea cannot be read into Section 130 of the Act.
(c) For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e., at the stage of detention and seizure of the goods and conveyance, the case has to be of such a nature that on the face of the entire transaction, the authority concerned should be convinced that the contravention was with a definite intent to evade payment of tax. The action, in such circumstances, should be in good faith and not be a mere pretence. In other words, the authorities need to make out a very strong case. Mere suspicion may not be sufficient to invoke Section 130 of the Act straightway.
(d) 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.
(e) 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.
(f) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act.
(g) Sections 129 and 130 respectively of the Act are mutually exclusive and independent of each other. If the amount of tax and penalty, as determined under Section 129 of the Act for the purpose of release of the goods and the conveyance, is not deposited within the statutory time period, then the consequence of the same would be forfeiture of the goods and the vehicle with the Government. This does not necessarily imply that the confiscation proceedings can be initiated only in the event of the failure on the part of the owner of the goods or the conveyance in depositing the amount towards the tax and liability determined under Section 129 of the Act.
(h) For the purpose of Section 129(6) of the Act, it would not be necessary for the department to establish any intention to evade payment of tax. If the tax and penalty, as determined under Section 129, is not deposited within the statutory time period, then the goods and the conveyance shall be liable to be put to auction and the sale proceeds shall be deposited with the Government.
(D) With due respect to hon’ble high court of Gujarat it is most respectively submitted that ;-
(a) In para 186 of Order hon’ble court has made a disclaimer that it has not gone through the merit of petition,and the court has have laid down general principles with regard to the applicability of Sections 129 and 130 of the Act. Whether the remarks issued by hon’ble court in para 183, 184, 185 and 186 are “order” or “obiter dictum”.
(b) In para 188 of order hon’ble court has concluded that :- 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 thereunder 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.
(c) At the same time at para no 190 hon’ble court has issued a remark that 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. Now question is if there is any incongruity in section 129 and 130 of Act then why should not position favorable to assesse , be followed as already decided by apex court in this regard.
(d) It is also pertinent to draw kind attention to the Article 20(2)of the Constitution of India as in parimateria, which has the principles of “autrefois convict” or Double jeopardy which means that person must not be punished twice for the offence. Thus, you cannot be tried and punished for the same crime twice. When a person has been assessed to tax and penalty under section 129 and also same was paid by him , then same person how can be assessed to fine in lieu of confiscation of goods and conveyance under section 130 of Act.
It light of above, initiation of proceeding under section 130 of Act , where tax and penalty has been paid by assesse as determined by department under section 129 of Act, will cause a genuine hardship on the assesse accordingly the Oder passed by hon’ble Gujrat High court requires review and revision.
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