Case Note & Summary
The petitioner, M/s. Shree Pampapathy Enterprises, a proprietorship firm represented by its proprietor Sri Imamahusen Majaresab Mannanavar, was transporting goods from Mundgod, Uttara Kannada to Ongloe Prakasham, Andhra Pradesh. The goods and conveyance were seized near Ananthpur Bypass Toll Plaza, Ballari by the Commercial Tax Officer (Enforcement)-7, the third respondent. Proceedings were initiated and an order of confiscation of goods and conveyance along with demand of penalty and fine was passed under Section 130 of the Central Goods and Services Tax Act, 2017 (CGST Act) read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (IGST Act) vide order No.27/2022-23 dated 07.02.2023 in Form GST MOV-11. Aggrieved by this order, the petitioner filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka, Dharwad Bench, seeking to quash the notice dated 24.01.2023 in Form GST MOV-10 and the impugned order dated 07.02.2023. The petitioner contended that the order under Section 130 was without jurisdiction as there was no intent to evade tax. The court, after hearing the parties, observed that Section 130 of the CGST Act requires an element of mens rea or intent to evade payment of tax, and in the absence of any such finding, the order of confiscation cannot be sustained. The court distinguished between Sections 129 and 130 of the CGST Act, noting that Section 129 deals with detention of goods in transit where there is a contravention of provisions, while Section 130 deals with confiscation where there is an intent to evade tax. Since the impugned order did not establish any intent to evade tax, the court quashed the order and directed the respondents to release the goods and conveyance upon payment of tax and penalty as applicable under Section 129 of the CGST Act. The writ petition was allowed accordingly.
Headnote
A) Goods and Services Tax - Confiscation of Goods and Conveyance - Section 130 of Central Goods and Services Tax Act, 2017 - Mens Rea Requirement - The petitioner's goods and conveyance were seized during inter-state transport and an order of confiscation was passed under Section 130 of CGST Act. The court held that Section 130 requires an element of mens rea or intent to evade tax, and in the absence of any such finding, the order of confiscation cannot be sustained. The court quashed the impugned order and directed release of goods and conveyance on payment of tax and penalty as per Section 129 of CGST Act. (Paras 1-5) B) Goods and Services Tax - Distinction between Sections 129 and 130 of CGST Act - Section 129 deals with detention of goods in transit where there is a contravention of provisions, while Section 130 deals with confiscation where there is an intent to evade payment of tax. The court clarified that proceedings under Section 130 cannot be initiated merely on the ground of technical irregularities without establishing mens rea. (Paras 4-5)
Issue of Consideration
Whether an order of confiscation of goods and conveyance under Section 130 of the CGST Act, 2017 can be sustained without establishing any intent to evade tax on the part of the petitioner.
Final Decision
The writ petition is allowed. The impugned order dated 07.02.2023 passed by respondent No.3 under Section 130 of CGST Act is quashed. The respondents are directed to release the goods and conveyance of the petitioner upon payment of tax and penalty as applicable under Section 129 of the CGST Act.
Law Points
- Confiscation under Section 130 of CGST Act requires mens rea or intent to evade tax
- mere technical irregularities not sufficient
- Section 129 is for detention of goods in transit with proper documents
- Section 130 is for confiscation when there is intent to evade tax
- order passed under Section 130 without establishing mens rea is illegal
