GTI 365 (Guj)
[IN THE HIGH COURT OF GUJARAT]
HON’BLE J.B.PARDIWALA & HON’BLE BHARGAV D. KARIA, JJ.
Special Civil Application No. 6121 of 2019
RELEASE OF DETAINED GOODS ALONG WITH TRUCK— SECTION 129 AND 130 OF CGST ACT
While issuing notice, this Court directed that the vehicle as well as the goods be released, upon payment of the tax, in terms of the impugned notice. The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law – reliance can be placed in the case of SYnergy Fertichem Pvt. Ltd Vs. State Of Gujarat [2020 (2) 1159 – GUJARAT HIGH COURT]. It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV-10, deserves to be discharged – petition disposed off.
Shri D K. PUJ, for the Petitioner.
Shri Chintan Dave, for the Respondent.
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. Rule, returnable forthwith Mr.Chintan Dave, the learned Assistant Government Pleader waives service of notice of rule for and on behalf of the respondents.
2. By this Writ Application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:
“A. This Hon’ble Court may kindly be pleased to issue a writ of mandamus, or any other appropriate writ, order and/or directions in the nature of mandamus quashing and setting aside the order of detention passed by the respondent No.2 under section 129(1) of the GST Act of the goods and conveyance bearing Truck No. RJ-19-GF-6225 at Unjha Highway at about 5:45 p.m. on 9.3.2019 as well as the notice dated 10.3.2019 issued by the respondent No. 2 for confiscation of goods or conveyance and levy of penalty under section 130 of the GST Act as the said actions of the respondent no.2 are absolutely illegal, unlawful, contrary to the facts and evidence on record, violative of principles of natural justice and against the provisions of the Act and Rules framed thereunder
“1. Leave to delete the respondents No.3, 4 and 5 from the array of the respondents.
2. Mr. D. K. Puj, learned advocate for the petitioner has invited the attention of the court to the notice for confiscation of goods or conveyance and levy of penalty under section 130 of the Central Goods and Services Act, 2017 read with the relevant provisions of State/Union Territory Goods and Services Act, 2017/The Integrated Goods and Service Tax Act, 2017 and Goods and Services Tax (Compensation to States) Act, 2017 issued in FORM GST MOV-10, to submit that despite the fact that under section 129 of the Central Goods and Services Tax Act, 2017, the concerned officer is required to issue a notice as contemplated under sub-section (3) thereof and thereafter, after affording an opportunity of hearing to the person concerned, pass an order thereunder. It was submitted that it is only if there is no compliance of the order passed under section 129 of the Act, that the provisions of section 130 of the IGST Act can be resorted to.
Referring to the impugned notice, it was pointed out that the same seeks to impose penalty, redemption fine and confiscation under section 130 of the Act without initiating any proceedings under section 129 of the Act, which is not permissible in law.
Direct service is permitted.”
“99. It is practically impossible to envisage various types of contravention of the provisions of the Act or the Rules for the purpose of detention and seizure of the goods and conveyances in transit. The contravention could be trivial or it may be quite serious sufficient enough to justify the detention and seizure.
This litigation is nothing but an outburst on the part of the dealers that practically in all cases of detention and seizure of goods and conveyance, the authorities would straightway invoke Section 130 of the Act and thereby would straightway issue notice calling upon the owner of the goods or the owner of the conveyance to show-cause as to why the goods or the conveyance, as the case may be, should not be confiscated. Once such a notice under section 130 of the Act is issued right at the inception, I.e, right at the time of detention and seizure, then the provisions of Section 129 of the Act pale into insignificance. The reason why we are saying so is that for the purpose of release of the goods and conveyance detained while in transit for the contravention of the provisions of the Act or the rules, the section provides for release of such goods and conveyance on payment of the applicable tax and penalty or upon furnishing a security equivalent to the amount payable under clause (a) or clause
(b) to Clause (1) of Section 129. Section 129(2) also provides that the provisions of sub-section (6) of Section 67 shall mutatis mutandis apply for detention and seizure of goods and conveyances. We quote Section 67(6) as under;67(6) The goods so seized under sub-section(2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.
100. Section 129 further provides that the proper officer, detaining or seizing the goods or conveyances, is obliged to issue a notice, specifying the tax and penalty payable and, thereafter, pass an order for payment of such tax and penalty. Clause (4) provides that no tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. Clause (5) provides that on payment of the amount, referred to in sub-section (1) of the proceedings in respect of the notice, specified in sub-section (3) are deemed to be concluded, and in the last, 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.
101. We are of the view that at the time of detention and seizure of goods or conveyance, 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. Section 135 of the Act provides for presumption of culpable mental state but such presumption is available to the department only in the cases of prosecution and not for the purpose of Section 130 of the Act.
What we are trying to convey is that in a given case, the contraven-tion may be quite trivial or may not be of such a magnitude which by itself would be sufficient to take the view that the contravention was with the necessary intent to evade payment of tax.
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.
104. In the aforesaid context, we would like to clarify that we do not propose to lay down, as a proposition of law, or we should not be understood to have taken the view that, in any circumstances, 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 straightway. If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking Section 130 of the Act.
Any opinion of the authority to be formed is not subject to objective test. The language of Section 130 of the Act leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act or proceed for the purpose of confiscation at the very threshold. But, at the same time, there must be material based on which alone the authority could form its opinion in good faith that it has become necessary to call upon the owner of the goods as well as the owner of the conveyance to show-cause as to why the goods and the conveyance should not be confiscated under section 130 of the Act. The notice for the purpose of confiscation must disclose the materials, upon which, the belief is formed. It could be argued that it is not necessary for the authority under the Act to state reasons for its belief. For the time being, we proceed on the basis of such argument. But, if it is challenged that the notice is bereft of the necessary details or the satisfaction of the authority is imaginary or based on mere suspicion, then the author-ity must disclose the materials, upon which, his belief was formed as it has been held by the Supreme Court in Sheonath Singhs case [AIR 1971 SC 2451]. In Sheonath Singh (supra), the Supreme Court held that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court. The formation of the opinion by the authority that the goods and the conveyance are liable to be confiscated should reflect intense application of mind. We are saying so because it is not any or every contravention of the provisions of the Act or the Rules which may be sufficient to arrive at the conclusion that the case is one of an intention to evade payment of tax. In short, the action must be held in good faith and should not be a mere pretence.
1. Sheo Nath Singh Vs. Appellate Assistant Commissioner Of Income-tax (central) , Calcutta, And Others – Supreme Court
2. Synergy Fertichem Pvt. Ltd Vs. State Of Gujarat – 2020 (2) 1159 – GUJARAT HIGH COURT
3. Kabir Enterprise Through Proprietor Govindbhai Bhagubhai Patel Vs. State Of Gujarat – Gujarat High Court
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