Case Note & Summary
This writ petition before the High Court of Karnataka Dharwad Bench concerned a challenge to an appellate order confirming the confiscation of goods and conveyances under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner, M/S Rajeev Traders, a registered taxable person, was involved in the transportation of areca nuts. On 13 September 2021, seven trucks carrying the goods on behalf of the petitioner were intercepted at Yamanuru by the proper officer. The officer noted that the person in charge of the conveyance had not tendered any documents and no E-way bill had been generated, leading to an order for physical verification. The physical verification conducted on 14 September 2021 revealed a discrepancy in the quantity of areca nuts as compared to the invoice. On 28 September 2021, the proper officer passed an order of detention under Section 129 of the CGST Act in Form GST MOV-06. The very next day, a notice for confiscation under Section 130 was issued. After considering the petitioner’s reply and granting a personal hearing, the Deputy Director passed an order of confiscation on 24 November 2021. The petitioner’s appeal to the Joint Commissioner under Section 107(11) was dismissed, leading to the present writ petition under Articles 226 and 227 of the Constitution, as the Appellate Tribunal had not been constituted. The petitioner contended that once goods are detained under Section 129, the proper officer cannot convert the proceedings into one under Section 130 confiscation unless the tax and penalty are not paid within the stipulated 14 days. It was argued that the confiscation provisions apply only to persons who are not taxable persons, not to registered suppliers. The Revenue countered that the absence of an E-way bill, undervaluation of goods as per a CAMPCO valuation report, misdeclaration of weight and grade, and the alleged non-existence of the supplier and recipient clearly indicated an intent to evade tax, justifying direct invocation of Section 130. The Court framed the core legal issue as whether a proper officer detaining goods under Section 129 can simultaneously or subsequently initiate confiscation proceedings under Section 130. While the judgment recorded the arguments and framed the issue, the final reasoning and decision are not available in the extracted portion of the judgment.
Headnote
A) Goods and Services Tax - Detention and Confiscation - Interplay between Sections 129 and 130 Central Goods and Services Tax Act, 2017 - The petitioner, a registered taxable person, challenged the confiscation of goods and conveyances after the proper officer had initially detained them under Section 129 for lack of E-way bill and discrepancies in quantity. The petitioner contended that once detention is initiated, the proper officer cannot convert it into confiscation unless the owner fails to pay the tax and penalty within 14 days. The Revenue argued that Section 130 can be directly invoked upon detecting intent to evade tax based on undervaluation and misdeclaration. The Court framed the issue to determine the extent of the proper officer's power to proceed with confiscation after detention (Paras 11-18).
Issue of Consideration
Whether the Proper officer, while detaining the goods which are in transit in the exercise of his power under Section 129 of the Act, possess the power to initiate proceedings to confiscate under Section 130 of the Act and thereafter conduct an enquiry and proceed to order confiscation of the goods?
Law Points
- detention under Section 129
- confiscation under Section 130
- jurisdiction of proper officer
- requirement of E-way bill
- intent to evade tax
- undervaluation of goods
- interpretation of CGST Act provisions
- distinction between detention and confiscation proceedings
- appeal under Section 107(11)
- absence of Appellate Tribunal
Case Details
2022 LawText (KAR) (08) 31
WRIT PETITION No.100849 OF 2022 (T-RES)
Sri. Venkatesh Kumar.S., Sri. M.B. Kanavi, Sri. G.S. Hulmani
M/S Rajeev Traders, Represented by its Proprietor Sri. Rajeev Ranjan
Union of India, The Joint Commissioner of Central GST & Central Excise (Appeals), The Deputy Commissioner of Central Tax
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution challenging the appellate order that upheld confiscation of goods and conveyances under the CGST Act
Remedy Sought
Petitioner sought to quash the order passed by the 2nd Respondent under Section 107(11) of the CGST Act and the underlying confiscation orders, and prayed for consequential reliefs
Filing Reason
Goods were detained and subsequently confiscated by the tax authorities for alleged violations including absence of E-way bill, discrepancy in quantity, undervaluation, and intent to evade tax
Previous Decisions
The Deputy Director passed an order of confiscation under Section 130 on 24.11.2021; the petitioner's appeal to the Joint Commissioner under Section 107(11) was dismissed on 22.02.2022
Issues
Whether the Proper officer, while detaining the goods which are in transit in the exercise of his power under Section 129 of the Act, possess the power to initiate proceedings to confiscate under Section 130 of the Act and thereafter conduct an enquiry and proceed to order confiscation of the goods?
Whether confiscation under Section 130 can be initiated against a taxable person who is a registered supplier?
Whether the proceedings under Section 129 must be concluded before initiating proceedings under Section 130?
Submissions/Arguments
Petitioner argued that once goods are detained under Section 129, the proper officer cannot convert the proceedings into confiscation under Section 130; the only remedy is to release the goods upon payment of tax and penalty within 14 days, failing which confiscation may follow
Petitioner contended that the confiscation provisions in Section 130 are not applicable to a taxable person who is a registered supplier and can only be invoked against persons who are neither taxable persons nor liable to tax
Revenue argued that the absence of an E-way bill, undervaluation of goods, misdeclaration of weight and grade, and the alleged non-existence of the supplier and recipient clearly indicated an intent to evade tax, justifying direct invocation of Section 130
Revenue relied on a circular dated 13.04.2018 which stated that the proper officer could directly invoke Section 130 if the movement of goods was effected with the intent to evade payment of tax
Revenue submitted that the petitioner was given an opportunity of hearing and the findings of undervaluation and misdeclaration were correctly arrived at by the proper officer
Judgment Excerpts
the person in charge of the conveyance had not tendered any documents for the goods in movement and prima facie the documents tendered were found to be defective
the E-way bill had not been generated and the goods appeared to be grossly undervalued when compared with the Valuation Report submitted by CAMPCO, which indicated the intent to evade the payment of tax
Whether the Proper officer, while detaining the goods which are in transit in the exercise of his power under Section 129 of the Act, possess the power to initiate proceedings to confiscate under Section 130 of the Act and thereafter conduct an enquiry and proceed to order confiscation of the goods?
Procedural History
On 13.09.2021, the proper officer intercepted seven trucks carrying areca nuts on behalf of the petitioner. Physical verification on 14.09.2021 revealed quantity discrepancy. An order of detention under Section 129 was passed on 28.09.2021. The next day, 29.09.2021, a notice for confiscation under Section 130 was issued. The petitioner submitted a reply on 27.10.2021, and after a personal hearing, the Deputy Director passed an order of confiscation on 24.11.2021. The petitioner appealed to the Joint Commissioner under Section 107(11), which was dismissed on 22.02.2022. The petitioner then filed the present writ petition before the High Court, which was heard and reserved for orders on 20.04.2022, and judgment was pronounced on 16.08.2022.
Acts & Sections
- Central Goods and Services Tax Act, 2017: 129, 130, 107(11), 112(1), 35
- Central Goods and Services Tax Rules, 2017:
- Constitution of India: 226, 227
