The Karnataka High Court held that the proper Officer is empowered to hold possession of confiscated goods if the option to pay Fine in addition to the tax payable, penalty, and other charges is not exercised despite the opportunity.
After the goods are seized in transit with the conveyance being detained, the respondent formed an opinion that there is an eort to evade payment of tax. The respondent, who had issued a notice under sub-clause (4) of Section 129 of the Act subsequently issued a notice under sub-clause (4) of Section 130 of the CGST Act.
The Petitioner, Meghdoot Logistics contended that there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings underway in accordance with the provisions of Section 129 of the Act in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit.
The issue raised was in respect of scope, objective, and ambit of Section 129 and 130 of CGST Act, Detention, Seizure, and Confiscation of Goods or Conveyance in Transit, whether there can be simultaneous confiscation proceedings under Section 130 of the CGST Act with the detention and seizure proceedings under the provisions of Section 129 of the CGST Act, in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit.
The Single Judge Bench of Justice M. Shyam Prasad clarified that the object of the provisions of Section 130 of the CGST Act, when seen with the object of the provisions of section 129 of the Act, are wider – The provisions of Section 129 and Section 130 of the CGST Act are carved with specific objectives and contemplate different procedures insofar detaining the conveyance and seizing goods and taking and holding possession of the things confiscated.
The court held that if after interception of conveyance with goods in transit and detention of the conveyance and seizure of the Goods with issuance of notice under section 129(3) of the Act, and when there is information about the intent to evade payment of tax, it is not open to the proper officer to treat the notice under section 129(3) of Act as having abated or truncate such proceedings and initiate proceedings under 130 of the Act for conscation with the issuance of notice thereunder.
“The proper officer, who has detained the conveyance and seized the goods, when he is able to form opinion that there is an attempt to evade payment of tax, will have to determine the applicable tax and penalty under Section 129 of the Act while simultaneously initiating proceedings for adjudging conscation under Section 130 of the Act. If during the pendency of these proceedings, a request for provisional release as contemplated under sub-clause (3) of Section 129 of the Act, is submitted, the same will have to be considered in the light of the provisions of Section 129 read with sub-clause (6) of Section 67 of the Act,” the court said.
“If after adjudging confiscation, the option to pay Fine in addition to the tax payable, penalty and other charges is not exercised despite opportunity under section 130(7) of the Act, the Proper officer will have to take and hold possession of the things confiscated subject to consequences as contemplated thereunder,” the court added.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
