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TMI Blog2019 (12) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... ants is that the proceedings for confiscation of goods or conveyance cannot be initiated under Section 130 of the Act without first complying with the procedure as prescribed under Section 129 of the Act and the second limb of the submission is that once the tax and the penalty is paid under Section 129 of the Act, then the authority has no power to proceed further under Section 130 of the Act for the purpose of confiscation of the goods and the conveyance. HELD THAT:- AS PER J. B. PARDIWALA, J: [Concurrent] (i) 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. . (ii) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. (viii) 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. (ix) Similarly, the reference to Sections 73 and 74 respectively of the Act is not warranted for the purpose of interpreting Sections 129 and 130 of the Act, more particularly, when they all are independent of each other. The provisions of Sections 73 and 74 of the Act are similar to the provisions of Section 11A of the Central Excise Act and Section 28 of the Customs Act, which deal with the adjudication proceedings. Despite this, Section 110 is present in the Customs Act, which speaks abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the goods pending the confiscation proceedings. is not tenable. In addition to the above, even otherwise, the provisions of Section 110A of the Customs Act, which deal with the 'provisional release' of the goods, do not contemplate the release of the goods only on payment of penalty and interest but the proposed amount of fine is also to be included for provisional release of the goods. In view of this, the amount of fine should be taken into account while directing the provisional release of the goods/ conveyance as per Section 129(2) read with Section 67(6) of the Act read with Rule 140 of the Rules. (xiii) Although there is no serious challenge to the validity of the provisions of Sections 129 and 130 respectively of the Act, yet it is a settled principle of law that the power to levy tax includes all the incidental powers to prevent the evasion of such tax. The power to seize and confiscate the goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and is intended to operate as a deterrent against the tax-evaders and are, therefore, ancillary or incidental to the power to levy tax on the goods and thus, fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 R/SPECIAL CIVIL APPLICATION NO. 6118 of 2019 R/SPECIAL CIVIL APPLICATION NO. 9105 of 2019 R/SPECIAL CIVIL APPLICATION NO. 10018 of 2019 - - - Dated:- 23-12-2019 - HONOURABLE MR.JUSTICE J.B.PARDIWALA And HONOURABLE MR.JUSTICE A.C. RAO MR. UCHIT N SHETH, LD. ADV. MR. D.K. PUJ, LD. ADV. MR. PARESH M. DAVE, LD.ADV. MR. TUSHAR HEMANI, LD ADV. with MS. VAIBHAVI K. PARIKH, LD ADV. for the Petitioner MR. KAMAL B. TRIVEDI, LD. ADV. GENERAL with MS. MAITHILI MEHTA, LD. AGP with MR. SOHAM JOSHI, LD. AGP for the Respondent JUDGMENT ( Per : Honourable Mr. Justice J. B. Pardiwala ) 1. Since the issues raised in all the captioned writ applications are the same, those were heard analogously and are being disposed of by this common judgment and order. 2. We have been called upon to look into and interpret the provisions of Sections 129 and 130 respectively of the Central Goods Services Tax Act, 2017 (for short the CGST Act ) amidst lot of hue and cry at the instance of the writ applicants (dealers) redressing the grievance that the authorities concerned are invoking the power to confiscate the goods and the conveyance under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber GJ-07-UU-7250 along with goods contained therein seized by the learned Respondent authorities. Copy of the impugned notice dated 1.3.2019 is annexed herewith and marked as Annexure A. 2. The relevant facts giving rise to the present petition are briefly stated herein below: The 1st Petitioner is a Private Limited Company having place of business at Synergy House-2, Subhanpura, Gorawa, Vadodara. The 2nd Petitioner is Director and Authorized Signatory of the 1st Petitioner and his rights and interest are directly affected by the impugned communication of the learned Officer. The 1st Respondent is the State of Gujarat. The 2nd Respondent is an officer of the State of Gujarat entrusted with the task of collecting tax under the GST Acts and is amenable to the writ jurisdiction of this Hon. Court. 3. 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, Pobla Tornesa, Castellon, Spain. The Petitioners are one of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehouse of the Petitioners in Vadodara without even waiting for the e-way bill in respect of the goods. This was particularly considering the fact that the proof of payment of GST on the transaction itself was accompanying the goods in the form of bill of entry for home consumption. 10. The transporter had duly prepared transport receipt in respect of the vehicle for transport of goods from Ahmedabad Airport to the warehouse of the Petitioners in Vadodara. Copy of transport receipt in relation to the goods is annexed herewith and marked as Annexure E. 11. `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. Copies of such notices served to the transporter are annexed herewith and marked as Annexure F. 12. On b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72 on which customs duty of ₹ 3,00,526 and IGST of ₹ 7,09,789 have already been paid, the learned Respondent authorities are demanding an amount of ₹ 60,72,639 for release of goods. 18. The Petitioners inquired from the learned Respondent authorities the basis for such huge demand since they had only received detention notices in Forms GST MOV-01 and GST MOV-06. Upon such inquiry the learned 2nd Respondent authority has issued the impugned show cause notice dated 1.3.2019 (annexed at Annexure A) requiring payment of ₹ 60,72,639 for release of goods failing which it is informed that the goods with the vehicle will be confiscated and auctioned. 19. In the respectful submission of the Petitioners the impugned notice demanding payment of ₹ 60,72,639 for securing release of goods which are admittedly worth ₹ 39,43,272 on which customs duty of ₹ 3,00,526 and IGST of ₹ 7,09,789 have already been paid is manifestly arbitrary, without application of mind, illegal and violating Article 14 of the Constitution of India. 20. At the outset the provisions of Section 130 of the GST Acts are ex-facie not applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as e-way bill is missing at the time of verification, this would at the most only create a rebuttable presumption that there was intention to evade payment of tax. If the taxable person is able to establish that there was no intention of evading payment of tax then the provisions of Section 129 of the GST Acts is not permissible. 24. The Petitioners point out that the Government itself has clarified by Circular No. 64/38/2018-GST dated 14.9.2018 that in case of technical errors in the documents accompanying the goods, provisions of Section 129 of the GST Acts may not be resorted to but instead goods may be released on payment of nominal penalty under Section 125 of the GST Acts. Copy of circular dated 14.9.2018 issued by the Government of India is annexed herewith and marked as Annexure I. 25. It is respectfully submitted that Section 129 and Section 130 of the GST Acts are provisions enacted to curb evasion of tax under the GST Acts. They are drastic measures whereby goods can be seized en-route and they would be released only on payment of tax, huge penalty and huge redemption fine. Application of such provisions to technical breaches of statutory prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds under Section 130 of the Act, the writ applicants had to come before this Court with the present writ application. 11. On 6th March, 2019, a Coordinate Bench of this Court passed the following order; 1. Mr. Uchit Sheth, learned advocate for the petitioners invited the attention of the court to the provisions of sections 129 and 130 of the Central Goods and Services Tax Act, 2017, to point out the procedure which is required to be followed by the respondent authorities in case where any goods are in transit in contravention of the provision of the Act or the rules made thereunder. It was pointed out that firstly, under section 129 of the Act, the 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. The attention of the court was invited to the impugned show cause notice dated 1.3.2019, to submit that the same seeks to impose penalty, redemption f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents. 3. The learned Assistant Government Pleader has invited the attention of the Court to the detention order dated 14.02.2019 issued by the proper officer under subsection (1) of section 129 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act ) and other relevant statutes. It was submitted that the goods in question were not accompanied by an Eway bill during the course of transit and therefore, the respondents are fully justified in passing the detention order under section 129(1) of the CGST Act. 4. Subsection (3) of section 129 of the CGST Act provides that the proper officer detaining or seizing the goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). Subsection (4) provides that no tax, interest or penalty shall be determined under subsection (3) without giving the person concerned an opportunity of being heard. 5. In the present case, the show-cause notice dated 01.03.2019 has been issued under section 130 of the CGST Act calling upon the petitioner to show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment of tax in respect of the goods in question. In the present case admittedly the goods were being accompanied by the bill of entry for home consumption which evidenced payment of IGST on the transaction even before commencement of movement of the goods. Thus there was no question of they being unaccounted goods or there being intention to evade payment of tax. Invoking the provisions of Section 130 of the GST Acts in the facts and circumstances of the case without there being any allegation of evasion of tax and demanding maximum redemption fine equal to the value of goods is wholly without jurisdiction, arbitrary and illegal. C. Even in so far as Section 129 of the GST Acts is concerned the said provision allows detention of goods and subsequent release thereof on payment of applicable tax and penalty equal to 100% of tax payable on such goods if there is contravention of the provisions of the GST Acts and the rules made thereunder. Thus the provision is also as such applicable when tax is payable on the transaction. However in the facts of the present case when tax under the GST Acts is already paid in advance at the time of clearance of the goods for home cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Acts 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 (herein after referred to as the GST Acts ) is a special provision providing for detention and seizure of goods in transit. While Section 129(1) of the GST Acts provides for detention of goods being transported in contravention of the provisions of the GST Acts, 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 gods on payment of an amount equal to 2% of the value of goods or ₹ 25,000 whichever 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 GST Acts 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 of an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that there is any major discrepancy in the documents, then even though the taxable event i.e. supply is yet to be completed, Section 129 of the GST Acts allows detention of goods since the transportation is in contravention of the provisions of the GST Acts. Further Section 129(1) of the GST Acts mandates release of goods on payment of tax and penalty equal to 100% of tax where owner comes forward to make payment of such tax and penalty. Thus even though supply is yet to be completed and even though time limit for payment of tax is yet to lapse payment of tax as well as penalty is provided in section 129 of the GST Acts. It is further germane to note that the rate of penalty of 100% of tax is the rate which is stipulated under Section 74 of the GST Acts for instances of fraud or evasion vis- -vis 10% penalty provided for routine cases not involving penalty or evasion under Section 73(9) of the GST Acts. Moreover as per Section 17(5)(i) of the GST Acts 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 GST Acts is grouped together with Section 74 and Section 130 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Acts provides a simple method of determination of tax and penalty and ensuring quick recovery Thus while the purpose of Section 129 of the GST Acts 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 GST Acts 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 GST Acts 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on payment of tax along with 100% penalty. It could never have been legislative intention to provide for opportunities of reduced payment of penalty in case of adjudication on prompt payment of tax and penalty while allowing direct confiscation proceedings if the goods are detained in transit. Such interpretation will be contrary to the legislative policy and scheme of the GST Acts. The rational and contextual interpretation would therefore be that confiscation proceedings can be initiated under Section 130 of the GST Acts only if the assessee fails to pay tax and penalty as demanded under Section 129 of the GST Acts within the stipulated time period. (7) There cannot be confiscation with detention and seizure. Hence before proceeding under Section 130, Section 129 has to be invoked and followed in entirety There cannot be confiscation of goods without detention and seizure. Since Section 129 of the GST Acts is the only provision providing for detention and seizure of goods in transit, detention/seizure has to be made under Section 129(1) of the GST Acts. If that be so then the remaining part of the same sub-section as well as the remaining sub-sections of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when required by the proper officer duly authorized under the Act. Such bond is required to be produced only if goods are released on the basis of security. No such bond is required as per Section 67(6) if goods are released on payment of tax, interest and penalty which shows that in such case the release of goods is final. (3) Rule 140 of the Central Goods and Services Tax Rules, 2017 (herein after referred to as the GST Rules ) which provides for provisional release of goods also refers to the eventuality of provisional release only in case of furnishing security along with bond of the value of goods. (4) In case of perishable commodity since it would not be possible for the assessee to give undertaking that he will produce the goods on demand, there is no concept of provisional release. Rule 141 of the GST Rules provides for final release of perishable goods on payment of tax, interest and penalty amount or market value of the goods whichever is lower. Thus in case of perishable commodity the final liability is restricted to the amount of tax, interest and penalty. This again shows that if tax, interest and penalty is paid forthwith then there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 129 of the GST Acts can be said to be a special provision dealing with detention of goods in transit and thus even on such count it should prevail over Section 130 of the GST Acts. (12) General non-obstante clause has to be interpreted contextually It is further respectfully submitted that a general non-obstante clause such as that appearing in Section 130 of the GST Acts needs to be interpreted contextually. There needs to be determination as to which provisions would stand overridden by such non-obstante clause and which would not. The provision cannot be interpreted as standing all by itself. Reliance is placed in this regard on the judgement of Hon. Supreme Court in the case of Indra Kumar Patodia and Another v/s Reliance Industries Ltd. AIR 2013 SC 426 (2nd Compilation - Page 41, Relevant Observations Page 45 para 12). Similar view has also been taken by this Hon. Court in the case of Raajratna Metal Industries Ltd. v/s State of Gujarat Special Civil Application No. 15093 of 2018 decided on 20.6.2019. (13) Direct invocation of Section 130 of the GST Acts will render Section 129(6) of the GST Acts redundant It is further respectfully submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be released at least on provisional basis on furnishing of security or on payment of amount as determined under Section 129 of the GST Acts. Hence even if the learned authorities are empowered to subsequently invoke Section 130 of the GST Acts under the belief that the goods are being supplied with the intention to evade payment of tax, even then the goods ought to be released on provisional basis on furnishing of security or payment of the amount as determined under Section 129 of the GST Acts. Confiscation proceedings under Section 130 of the GST Acts require full fledged adjudication after examination/cross-examination of evidences. The vehicle and the goods cannot be kept seized pending such long drawn adjudication process. This would be the position even if it is presumed for the sake of argument that Section 67(6) of the GST Acts refers to provisional release in its entirety. Refusal on the part of the learned Respondent authorities to even provisionally release the goods and conveyance even though tax and penalty are fully paid is without jurisdiction, arbitrary and illegal. (16) From any angle impugned action of the learned Respondent authorities untenable Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rket value of the goods. Section 15 of the GST Acts provides for valuation of supplies and it is principally leviable on price actually paid or payable in respect of the goods or services. Thus as such it is not even open for the adjudicating authority to impose tax on market value. He would have to establish that the assessee has unrecorded receipts for the purpose of enhancing the valuation of supplies made by the assessee. In the context of sales tax statutes Hon. Supreme Court has in fact held in the case of State of Rajasthan v/s Rajasthan Chemist Association (2006) 147 STC 542 (SC) (2nd Compilation - Page 55) that imposition of tax on maximum retail price of the goods is beyond the legislative competence of the State legislature. Thus when even the adjudicating authority cannot impose tax on market value of goods without establishing that this was in fact the transaction value, the question of enhancement of value by the authority intercepting the goods in transit does not arise. In fact this would lead to granting extremely arbitrary powers to the authorities in as much as thousands of varieties of goods are moved across the country having different values which may in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of goods under Section 130 of the GST Acts in such facts and circumstances is in any case arbitrary, mechanical, bad and illegal. (21) Confiscation of goods on the ground of non-production of documents is in fact unconstitutional It is in fact respectfully submitted that if Section 130 of the GST Acts is allowed to be directly invoked on the ground of absence of necessary documents during transportation then such provision will be unconstitutional as held by Hon. Supreme Court while interpreting similar provision in the case of The Checkpost Officer, Coimbatore v/s K.P. Abdulla and Bros. (1971) 27 STC 1 (SC) (1st Compilation - Page 1) (22) Additional grounds raised in affidavit in reply not forming part of the detention orders/confiscation notices required to be outrightly rejected It is further respectfully submitted that some additional grounds raised in some of the affidavits in reply in support of detention orders/confiscation notices which are not forming part of the notices are required to be out rightly rejected. It is well settled that the learned Respondents cannot be allowed to improve upon the impugned orders/notices by way of affidavits in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers 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. The major distinction between S.129 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption of culpable mental state is not available to Revenue department when dealing with S. 130. In the present case, even Form GST MOV -10 categorically states that As the goods were transported without any valid documents, it is presumed that the goods were being transported for the purposes of evading the taxes. This clearly shows that the conclusion as to 'intent to evade tax' is purely based on presumption which is not permissible. S. 129(5) states that on payment of amount referred to in sub-section (1) i.e. tax and 100% penalty on such tax, all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. Therefore, for this default or contravention or cause of action, revenue cannot once again initiate proceedings u/s 130. This interpretation is supported by the Explanation 1 appended to S.74 of the Act which reads:: Explanation 1- For the purpse of section 73 and this section,- (i) the expression all proceedings in respect of the said notice shall not include proceedings under section 132; (ii) where the notice under the same proceedings is issued to the main pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving to be confiscated. Confiscation u/s 130 brings with it the fine apart from tax, interest and penalty. Therefore, the same can only be invoked when conditions stated in the said section are fulfilled. In fact goods seized u/s 67 of the Act also are treated and sold, if need be, as prescribed u/s 79 of the Act without the same having to be confiscated first. 17. We have also heard Mr. Paresh M. Dave, the learned counsel appearing for the writ applicants of the Special Civil Application No.9105 of 2019. According to Mr. Dave, the three broad issues involved in this litigation could be 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel, is not permissible in law. The argument is that both the provisions are independent of each other. Confiscation proceedings can be initiated at the threshold only if the authority is convinced having regard to the materials on record that the party concerned had contravened the provisions of the Act and the rules with an intent to evade the payment of tax. It is argued that there is an element of mens rea, i.e., the culpable mental state in Section 130 of the Act. A mere technical irregularity or lapse on the part of the owner of the goods or the driver of the vehicle may not be sufficient to impute mens rea so as to come to the conclusion that the intention was to evade payment of tax. In such circumstances, referred to above, it is prayed that appropriate directions may be issued to the authorities concerned as regards Sections 129 and 130 respectively of the Act. Submissions on behalf of the State; 19. All the writ applications have been vehemently opposed by Mr. Kamal Trivedi, the learned Advocate General appearing for the State. 20. Broadly, the submissions of the learned Advocate General may be summarized as under; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (VI) It is submitted that the reliance placed by the writ applicants on Explanation 1 appended to the provisions of Section 74 of the Act, for contending that Section 130 of the Act cannot be invoked by the department for the transaction with respect to which, assessee has already paid the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that specific inclusion of sub-section (2) in Section 129 of the Act has a purpose which suggests that while framing the provisions of Sections 129 and 130 of the Act, the legislature was conscious of the fact that the detention/seizure of the goods/ conveyance under the provisions of Section 129(1) of the Act continues, till an order of release is passed by the concerned authority under the provisions of Section 129 of the Act or an order of confiscation is passed under the provisions of Section 130 of the Act. However. in the meanwhile, i.e. during the continuation of detention/ seizure. till the same culminates into the final order of release or confiscation, the said goods/conveyance can be released on provisional basis upon execution of bond and furnishing of a security of such quantum, as may be prescribed. However, the exercise of such a discretion by the authority in the case of provisional release would once again depend upon the genuineness of the transaction and not in all cases like where the consignor or the consignee is not registered or the same is not traceable. (IX)` It is submitted that considering the object and purpose of the Act, one has to read the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions are operating in different sphere. (XII) It is submitted that the comparison of the provisions of Customs Act/ Excise Act on one hand and the provisions of the Act on the other, as sought to be drawn on behalf of the writ applicants, is not correct. Section 110(1) of the Customs Act is not comparable to Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/ seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. (XIII) It is further submitted that the provisions of Sections 110(2) and 124 of the Customs Act do not contemplate that the goods which are seized are to be released in a specific time limit, much less, within a period of six months. Apropos this, the said sections merely cast a duty on the department to issue a show cause notice within a period of six months from the date of seizure of goods, but the same does not contemplate as to in how much time, the same has to be adjudicated upon. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in Form MOV-06 2 Section 129(3)-Issuance of Show Cause Notice in Form MOV-07 3. Section 129(3)- Rendition of order on the said Show Cause Notice in Form MOV-09 i.e. either confirming or dropping the said notice. 4. Section 129(5)- If confirmed, then upon payment of tax and penalty, and if dropped, then directly release of goods and conveyance in Form MOV-05. 1. Section 129(1)- Detention /Seizure Order in Form MOV-06 2 Section 129(3)-Issuance of Show Cause Notice in Form MOV-07 3. Section 129(3)- Rendition of order on the said Show Cause Notice in Form MOV-09 i.e. either confirming or dropping the said SCN. 4. Section 129(6)- If confirmed, then upon non/payment of tax and penalty. 5. Initiation of Section 130 proceedings. 3 rd Eventuality 4 th Eventuality 1. Section 129(1)- Detention /Seizure Order in Form MOV-06 2. Section 129(3)- Issuance of Show Cause Notice in Form MOV-07 3. Section 129(3)- Rendition of order on the said Show Cause Notice in Form MOV-09 i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and collection of GST envisages compliance of applicable law inter alia through these documents. The entire mechanism is meant to ensure that there is no leakage of revenue by way of supply/movement of goods and are devised to thwart any unscrupulous move of using the same e-way bill twice. The system is devised in such a way to self-sufiiciently proceed on the basis of claimed information furnished in the documents. Any offence (in the present scheme of taxation) through detection during interception has to be dealt in accordance with the facts and circumstances of the individual case. Absence of physical control makes it incumbent upon the taxpayer to strictly follow the prescribed procedure. It is a settled legal position that the legislature can freely choose its objects of taxation, fix the rate and classify persons and properties and make machinery provisions for that purpose. Further, CGST Act, 2017 is a complete code in itself and a Special Act. Having envisaged the relevant situations a mechanism has been devised in law and wherein, depending upon the concomitant factors, penalties confiscation commensurate with the role and responsibility have been prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The entire mechanism is meant to ensure that there is no leakage of revenue by way of supply/movement of goods. It appears that in the instant case there was an attempt to violate the provision of law, which if undetected, could have resulted in defrauding government revenue. 0n interception of the vehicle and ascertaining commitment of violations by the concerned persons, mandatory penal provisions were invoked. Essentially, the procedure prescribed under law has not been complied with and the action taken thereafter has been challenged. It is to mention the Hon'ble Supreme Court in the matter of Indian Alluminium Company Limited Vs. Thane Municipal Corporation, (1991) ELT 454 (SC) has essentially ruled that non-observance of even a procedural condition not to be condoned if likely to facilitate commission of fraud and introduce administrative inconveniences. The line of distinction between the bonafide mistake and unscrupulous act has to be construed in the light of attending circumstances and evaluated on the basis of applicable law. Law in this regard is very clear and has specific provisions to deal with such as situation. The violations of this sort are not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that every legislation particularly in economic matters is essentially empiric and it is based on experimentation. It was further held and observed as under :- 7. Now while considering the constitutional validity of a statute said to be violative of Article 14, it is necessary to bear in mind certain well established principles which have been evolved by the courts as rules of guidance in discharge of its constitutional function of judicial review. The first rule is that there is always a presumption in favour of the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. This rule is based on the assumption, judicially recognised and accepted, that the Legislature understands and correctly appreciates the needs of its own people, its laws are directed to problems made manifest by experience and its discrimination are based on adequate grounds. The presumption of constitutionality is indeed so strong that in order to sustain it, the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he supplier/owner of the goods. However, where the supplier of the goods is non-traceable or obscure, there appears to be more stronger apprehension of intention of evasion and therefore the penal provisions are much more onerous. As stated above, CGST Act, 2017 is a complete code in itself and a Special Act. Having envisaged the relevant situations a mechanism has been devised in law and wherein, depending upon the concomitant factors, penalties confiscation commensurate with the role and responsibility have been prescribed. The provisions relating to mandatory requirement of movement of the goods under the cover of valid e-way bill are duly specified in the Rule 138 of the CGST Rules, 2107. Non compliance of the legal requirements of the law renders the goods/vehicle liable to confiscation as enumerated in the law. The requirement of proper documents is to be fulfilled before commencement of the act of transportations. Law does not provide relaxation as may be claimed by the petitioner. It was incumbent upon the petitioner to ensure that all the requirements are duly met with. His claims appear after thought and the rationale put forth by him is not potent enough to alter the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion regimes. This amendment, perhaps, marks the crest of cooperative federalism. It has created even a constitutional institution-GST Council. 27. As constitutional democracies have gained experience, Utopian vision of justice has given way to utilitarian view. Material comfort or upliftment has become the hallmark of good governance. So economic analysis of law substitutes the notion of simple justice with that of economic efficiency and wealth maximisation. True, nations like France successfully embraced GST regimes in the 1950s. Even federal polities like Canada replaced MST (Manufacturer's Sales Tax) with GST (Goods and Services Tax) in the 1980s. India joined the fiscal reform bandwagon a little late. Tentative it was to begin with, but determined it is in this new federal fiscal path. 28. To put the concept in perspective, GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the later stage of value addition. This process makes GST a tax on value addition at each stage. The consumer will thus bear only the GST charged by the last dealer in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST began. It resulted in the Constitution (One Hundred and Fifteenth Amendment) Bill, 2011 After that one got lapsed, came the 2014 Amendment Bill (as passed by Parliament). Passed on 8 September 2016, this Bill became the Constitution (One Hundred and First Amendment) Act, 2016 . 35. The GST Council, constituted in September 2016, is a constitutional institution comprising as its members the Finance Ministers of the Union and the SMteS3 including Union Territories with Legislatures. It has the authority to recommend to the Union and the States on various facets of GST, including Model GST laws, principles to determine the place of supply, levy of the tax, design of GST, dispute settlement, special provisions for a special category of States, and so forth. 36. Adopting the recommendation of the GST Council, Parliament has enacted these pieces of legislation: (1) The Central Goods and Services Tax Act, 2017: it levies a tax on intra-State supplies of goods and services in all supplies within a State (2) the Integrated Goods and Goods and Services Tax Act, 2017: it levies a tax on inter-State supplies of goods and services; (3) the Union T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable from a date to be recommended by the GSTC. (ix) Tobacco and tobacco products would be subject to GST. Besides, the Centre will have the power to levy Central Excise duty on these products. (x) A common threshold exemption would apply to both CGST and SGST. Taxpayers with an annual turnover not exceeding ₹ 20 lakh (₹ 10 Lakh for special category States) would be exempted from GST. For small taxpayers with an aggregate turnover in a financial year up to 50 lakhs, a composition scheme is available. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a State during the year without the benefit of Input Tax Credit. This scheme will be optional. (xi) The list of exempted goods and services would be kept to a minimum, and it would be harmonized for the Centre and the States and across States as far as possible. (xii) Exports would be zero-rated supplies. Thus, goods or services that are exported would not suffer input taxes or taxes on finished products. (xiii) The credit of CGST paid on inputs may be used only for paying CGST on the output, and the credit of SGST paid on inputs may be used only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution. Inserted are the Articles 246A, 269A, and 279A; repealed is the Article 268A; amended are Articles 248, 249, 250, 268, 269, 270, 271, 286, 366, and 279A. Besides that the Sixth and the Seventh Schedules, too, have been amended. 43. Article 246A, inserted through Section 2 of the Amendment Act, is a marvel of the federal fiscal mechanism. By this Article, the State Legislatures now have the power to make laws regarding GST tax imposed by the Union or by that State and to implement them in intra-state trade. The Centre, of course, continues to have exclusive power to make GST laws regarding inter-state trade. Both the Union and States in India now have simultaneous powers to make law on the goods and services. 44. Article 269A, inserted through Section 9 of the Act, deals with levy and collection of goods and services tax in the course of inter-State trade or commerce. That is, in case of inter-state trade, the amount collected by the Centre is to be apportioned between the Centre and the States as per the GST Council's recommendations. Under the GST, if the Centre collects the tax, it assigns State's share to the State concerned; on the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel, and alcoholic liquor for the human consumption have been included, unless the sale is in the course of inter-State or International trade and commerce. Entry tax and Advertisement taxes have been removed. Taxes on entertainment are only to be included to the extent of that imposed by local bodies. (entries 52, 54, 55, 62). 48. To be explicit, in Article 366 of the Constitution, after clause (12), clause (12A) Was inserted: goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption. After clause (26), clauses (26A) and (26B) were inserted: Services means anything other than goods; Staten with reference to Articles 246A, 268, 269, 269A and Article 279A includes a Union territory with Legislature. 49. Section 18 of the Amendment Act provides for compensation to States for loss of revenue because of the introduction of goods and services tax. Parliament shall, by law, on the recommendation of the GST Council, provide for compensation to the States for loss of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Parliament to enact any law applicable to states on the matters mentioned even in states list. GST, no mentioned in States list, now explicitly mentioned. 250 Power of Parliament to legislate regarding any matter in the State List if a Proclamation of Emergency is in operation Amended It has a similar impact as does the amended Article 249. 268 Duties levied by the Union but collected and appropriated by the States Amended Additional Duties of Excise (Medicinal and toilet preparations) Stand subsumed into GST. 268A Service tax levied by Union and Collected and appropriated by the Union and the States: Omitted Service tax has been subsumed into GST. So Entry No. 92C of List-I too stands omitted. 269 Taxes levied and collected by the Union but assigned to the States ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution: (12A) Goods and Services Tax; (26A) Services; and (26B) State. 368 Power of Parliament to amend the Constitution and procedure therefore Amended As regards provisions and laws regarding GST Council, Parliament has been vested with the power to amend the Constitution. Sixth Schedule Provisions on the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura, and Mizoram 8. Powers to assess and collect land revenue and to impose taxes. Amended It concerns powers to assess and collect land revenue and to impose taxes in the Tribal Areas of a few States. Seventh Schedule List I : Entry 84 Barring those excluded, the Union could levy excise duty on all other goods, including tobacco, manufactured or produced in India. The excluded ones are these: (a) alcoholic Amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry 62 Taxes on luxuries, including taxes on entertainments, amusements, betting, and gambling. Amended Taxes on Luxury betting, and gambling have been subsumed into GST. Right to levy Tax on entertainments and amusements has been restricted to Panchayats, municipalities, Regional Councils, and District Councils. The State Enactments: 53. In the above background, the States have enacted the respective State Goods and Services Tax Acts. These laws, among Other things, (i) Carry out the transition to GST; (ii) provide for the levy of GST on intrastate within the State; and also (iii) modify/repeal the earlier State enactments which have to be modified/repealed because of transition to GST. Notable is the repeal of the VAT/Entry Tax/Luxury Tax, and so on, which earlier provided for levy of these taxes within the States. Gujarat Enactment 54. The Gujarat Goods Services Tax Act, 2017 (Act No.25 of 2017) received the Governor's assent on the 16 th Day of September, 2017. It provides for, as the preamble suggests, levy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub-section (1), all proceedings in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. (3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act or in any law for the time being in force, or in any contract is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the nonobstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the nonobstante clause or any contract or document mentioned the enactment following it will have its full operation or that the provisions embraced in the nonobstante clause would not be an impediment for an operation of the enactment. See in this connection the observations of this Court in The South India Corporation (P.) Ltd., v. The Secretary, Board of Revenue, Trivandrum Anr., AIR 1964 SC 207 at 215[1964] 4 SCR 280. 64. In Vishin N. Kanchandani v. Vidya Lachmandas Khanchandani, AIR 2000 SC 2747, at Paragraph 11, the Supreme Court held that, There is no doubt that by nonobstante clause the Legislature devices means which are usually applied to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all alone by itself. A search has, therefore, to be made with a view to determining which provision answers the description and which does not. 69. In R.S. Raghunath v. State of Karnataka and another, [(1992) 1 SCC 335], a threeJudge Bench referred to the earlier judgments in Aswini Kumar Ghose v. Arabinda Bose [AIR 1952 SC 369], Dominion of India v. Shrinbai A. Irani [AIR 1954 SC 596], Union of India v. G.M Kokil [1984 (Supp.) SCC 196], Chandravarkar Sita Ratna Rao v. Ashalata S. Guram [(1986) 4 SCC 447] and observed: ... The nonobstante clause is appended to a provision with a view to give the enacting part of the provision an overriding effect in case of a conflict. But the nonobstante clause need not necessarily and always be co extensive with the operative part so as to have the effect of cutting down the clear terms of an enactment and if the words of the enactment are clear and are capable of a clear interpretation on a plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o refer to the object and purpose of each of the two provisions, containing a non obstante clause. Two provisions in same Act each containing a non obstante clause, requires a harmonious interpretation of the two seemingly conflicting provisions in the same Act. In this difficult exercise, there are involved proper consideration of giving effect to the object and purpose of two provisions and the language employed in each. [See: for relevant discussion in para 20 in Shri Swaran Singh Anr. v. Shri Kasturi Lal; (1977) 1 SCC 750] 73. Normally the use of the phrase by the Legislature in a statutory provision like 'notwithstanding anything to the contrary contained in this Act' is equivalent to saying that the Act shall be no impediment to the measure [See: Law Lexicon words 'notwithstanding anything in this Act to the contrary']. Use of such expression is another way of saying that the provision in which the nonobstante clause occurs usually would prevail over the other provisions in the Act. Thus, the nonobstante clauses are not always to be regarded as repealing clauses nor as clauses which expressly or completely supersede any other provision of the law, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available or tax should be collected. If a dealer shows such indulgence as to delivery of ST-1 Forms for a particular period, he takes the risk. It would have been further the best advised to insist on their supply even for the transaction intended to be completed by them. 35. This Court in A.V. Fernandez vs. The State of Kerala, AIR 1957 SC 657 opined that, however great the hardship may appear to the judicial mind, In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substances of the law. If the revenue satisfies the Court that the case falls strictly within the law, the subject can be Taxed. A few years later another Constitution Bench in the case of Commissioner of Sales Tax, U.P. vs. Modi Sugar Mills Ltd., AIR 1961 SC 1047 observed thus In interpreting a taxing statute, equitable consideration are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of contextual scene when an ambiguity has arisen. 77. In V.L.S.Finance Ltd., v. Union of India, reported in 2013 (6) SCC 278, at Paragraph 18, the Hon'ble Supreme Court, held as follows: As is well settled, while interpreting the provisions of a statute, the court avoids rejection or addition of words and resort to that only in exceptional circumstances to achieve the purpose of Act or give purposeful meaning. It is also a cardinal rule of interpretation that words, phrases and sentences are to be given their natural, plain and clear meaning. When the language is clear and unambiguous, it must be interpreted in an ordinary sense and no addition or alteration of the words or expressions used is permissible. As observed earlier, the aforesaid enactment was brought in view of the need of leniency in the administration of the Act because a large number of defaults are of technical nature and many defaults occurred because of the complex nature of the provision. 78. In Hardeep Singh v. State of Punjab, reported in 2014 (3) SCC 92, at Paragraphs 43 and 44, the Hon'ble Supreme Court held as follows: 43. The court cannot proceed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11) SCC 451, wherein, the Hon'ble Supreme Court, at Paragraphs 27 to 29, held as follows: 27. The Court has to keep in mind the fact that, while interpreting the provisions of a Statute, it can neither add, nor subtract even a single word A section is to be interpreted by reading all of its parts together, and it is not permissible, to omit any part thereof. The Court cannot proceed with the assumption that the legislature, while enacting the Statute has committed a mistake; it must proceed on the footing that the legislature intended what it has said; even if there is some defect in the phraseology used by it in framing the statute, and it is not open to the court to add and amend, or by construction, make up for the deficiencies, which have been left in the Act 28. The Statute is not to be construed in light of certain notions that the legislature might have had in mind, or what the legislature is expected to have said, or what the legislature might have done, or what the duty of the legislature to have said or done was. The Courts have to administer the law as they find it, and it is not permissible for the Court to twist the clear language of the ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the ordinary rules of construction, that is to say, in accordance with the clear intention of the legislature which is to make a charge levied effective. In deciding Gursahai Saigal's case (supra) the Court followed the observations made by the Privy Council in Commissioner of Income-tax v. Mahaliram Ramjidas and by the House of Lords in Whitney v. Commissioners af Inland Revenue. In the case of Mahaliram Ramjidas (supra) the Privy Council observed: The section, although it is a part of a taxing Act, imposes no charge on the subject, and deals merely with the machinery of assessment. In interpreting provisions of this kind the rule is that construction should be preferred which makes the machinery workable utres valeatpotius quam Pereat. In Whitney's case (supra), Lord Dunedin made the following observations: My Lords, I shall now permit myself a general observation. Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable, and the interpretation thereof by a Court should be to secure that ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce as a means of transport/for carriage of taxable goods In contravention of the Act or rules made thereunder 83. 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. 84. 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. 85. 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. 86. Where the conveyance is used for transportation of goods or passenger on hire, the owner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted below:- General disciplines related to penalty. 126. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 consign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained for reason of there being no declaration made under R.138. The resultant finding that mere infraction of the procedural rules cannot result in detention of goods though they may result in imposition of penalty cannot also be sustained. If the conditions under the Act and Rules are not complied with, definitely S.129 operates and confiscation would be attracted. 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contravention 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. 102. In such circumstances, referred to above, we propose to take the view that in all cases, without any application of mind and without any justifiable grounds or reasons to believe, the authorities may not be justified to straightway issue a notice of confiscation under Section 130 of the Act. For the purpose of issuing a notice of confiscation under Section 130 of the Act at the threshold, i.e,. at the stage of Section 129 of the Act itself, the case has to be of such a nature that on the face of the entire transaction, the authority concerned is convinced that the contravention was with a definite intent to evade payment of tax. We may give one simple example. The driver of the vehicle is in a position to produce all the relevant documents to the satisfaction of the authority concerned as regards payment of tax etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared before the respondent on 24.8.2019 and showed willingness to pay the amount of tax and penalty for the purpose of securing release of the vehicle in question. Thereafter, the second respondent, without affording any opportunity of hearing to the petitioner as contemplated under sub-section (4) of section 130 of the CGST Act, has proceeded to pass the impugned order on 24.8.2019. It appears that merely because the petitioner appeared before the respondent and showed willingness to pay the tax and penalty for the purpose of securing release of the vehicle in question, the second respondent has proceeded to pass the impugned order without hearing the petitioner on the question of confiscation of the goods and conveyance. 9. As can be seen from the impugned order, it is in the format provided therefor, viz. in FORM GST MOV-11. In paragraph 1 of the impugned order all the blanks have been filled up which indicate the registration number of the conveyance and the time, place and date and by whom the conveyance came to be intercepted. Paragraphs 3 and 4 thereof do not contain any details in the blank spaces meant to be filled in. One of the significant paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122. 12. Thus, in terms of clauses (i) and (iv) of sub-section (1) section 130 of the CGST Act, the goods can be confiscated provided that the person supplies or receives goods in contravention of the provisions of the Act or the rules made thereunder with the intent to evade payment of tax; or contravenes any provisions of the Act and the rules made thereunder with the intent to evade payment of tax respectively. Insofar as clauses (ii) and (iii) are concerned, the very fact that the person does not account for the goods on which he is liable to pay tax under the Act; or supplies any goods which are liable to tax under the Act without having applied for registration, would be sufficient for ordering confiscation of the goods. Therefore, while making an order of confiscation under section 130 of the CGST Act, the officer adjudging it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (2) of section 130 of the CGST Act, which reads thus: (2) Whenever confiscation of any goods or conveyance is authorised by the Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: PROVIDED that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon. PROVIDED FURTHER that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129. PROVIDED ALSO that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. Thus, sub-section (2) of section 130 of the CGST Act provides that the fine leviable shall not exceed the market value of the goods, less the tax chargeable thereon. It is, therefore, clear that the fine provided under the first proviso to sub-section (2) of section 130 of the CGST Act is the maximum fine lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason is the soul of justice. (i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery (j) Insistence on reason is a requirement for both judicial accountability and (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or rubber-stamp reasons is not to be equated with a valid decision-making (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, set aside the order of the Tribunal as the findings recorded by the Tribunal were cryptic and non-speaking, and remitted the matter back to the Tribunal for taking a fresh decision by a speaking order in accordance with law after affording due opportunity to both the 19. In State of Punjab v. Bhag Singh, 2004 (164) ELT 137 (SC), the Supreme Court was considering a case where the High Court had dismissed the appeal without giving any reasons. The court held that reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court order not sustainable. The court further held that right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionary, the word evade is capable of being used in two senses, one which suggest underhand dealing and another which means nothing more than the intentional avoidance of something disagreeable. We should be conscious of the fact that the legislature has used the words with intent to evade payment of tax in Section 130 of the Act. When the law requires an intention to evade payment of duty, then it is not mere failure to pay duty. It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word evade in the context means defeating the provisions of law of paying duty. It is made more stringent by use of the word intent . In other words, the assessee must deliberately avoid the payment of duty which is payable in accordance with law. 107. The learned counsel appearing for the petitioners would argue that as Section 130 talks about an intent to evade payment of tax and also talks about penalty under Section 122 of the Act, the order for confiscation and penalty cannot be imposed without recording the finding of fact that the person concerned intended to avoid tax as mens rea was suggested to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... large enough to mean, is intended to mean and does mean, is intended to mean, and does mean, any punishment whether by imprisonment or otherwise.... Penalty in a broad sense may be defined as any suffering in person or property by way of forfeiture, deprivation or disability, imposed as a punishment by law or judicial authority in respect of... an act prohibited by statute. The Oxford Dictionary echoes the same wide conception by referring to 'a loss, disability or disadvantage of some kind.... fixed by law for some offence.' The meaning of the word 'penalty' as given in the Collins English Dictionary such as a term of imprisonment, some other form of punishment, such as a fine or forfeit for not fulfilling a contract, loss, suffering, or other unfortunate result of one's own action, error etc., Sport, games etc. a handicap awarded against a player or term for illegal play, such as a free shot at goal by the opposing team, loss of point, etc. ........A penalty may refer to both criminal and civil liability, being denied as penal retribution, punishment for crime of offence, the suffering in person, rights or property which is annexed by law of judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, as understood in the general context. They perform quasi-judicial functions and do not act a 'Courts' but only as 'administrators' and 'adjudicators.' In the proceedings before them, they do not try 'an accused' for commission of 'any crime' (not merely an offence) but determine the liability of the conlravenor for the breach of his 'obligations' imposed under the Act. They imposed 'penalty' for the breach of the 'Civil obligations' laid down under the Act and not impose any 'sentence' for the commission of an offence. The expression 'penalty' is a word of wide significance. Sometime, it means recovery of an amount as a penal measure even in civil proceedings. An exaction which is not compensator in character is also termed as 'penalty'. When penalty is imposed by an adjudicating officer, it is done so in 'adjudicatory proceedings;' and not by way of fine as a result of 'prosecution' of an 'accused' for commission of an 'accused' for commission of an 'offence' in a criminal Court. Therefore, merely because penalty clause exists in Section 23 (1) (a), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e then what the statute specified. We have words like 'voluntarily', 'intentionally', 'negligetly', 'knowingly', fraudulently', 'dishonestly', 'rashly', 'omits', 'without lawful authority' ect., 'omits', 'without lawful authority' ect., used in various sections of the Indian Penal Code defining various offence. Proof of the State of mind or of the conduct of the person as indicated by the aforesaid word establishes the offence and no further guilty intent or mens rea need be proved. In fact there are many acts which are offences and do not require proof any mens rea or guilty intention, for example possession of illicit fire arm. 113. A Full Bench of Andhra Pradesh High Court, in Additional, Commissioner, Income Tax v. Durga Pandari Nath Tulijayya Co., 1977 Tax LR 258, observed as under:- The doctrine of mens rea is of common law origin developed by Judge-made law. It has no place in the Legislator's law. It has no place in the Legislator's law where offences are defined with sufficient accuracy.... Mens rea is an essential ingredient of an offence. However, it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature is to emphasis the fact of loss of revenue and to provide a remedy for such loss, although, no doubt, an element of coercion is present in the penalty. In this connection, the term in which penalty falls to be measured, is significant. Unless there is something in the nature of statute indication the need to establish the element of mens rea, it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provisions..... Accordingly, we hold that the element of mens rea was not required to be proved in the proceedings taken by the Income Tax Officer under Section 271(1)(a) of the Income Tax Act against the assessee. 116. A Constitution Bench of the Hon'ble Supreme Court in Jain Bros. and Ors. v. The Union of India and Ors., AIR 1970 SC 778, while examining a case of imposing the penalty under the Income Tax Act, held that penalty was merely an additional tax being a civil liability under the Tax Statute, and observed as under:- Although penalty has been regarded as an additional lax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. 122. Following the aforesaid provisions, while interpreting the provisions of the Madhya Pradesh General Sales Tax Act, 1959, the Hon'ble Supreme Court, in the Cement Marketing Co. of India Ltd. v. The Asstt. Commissioner of Sales Tax, Indora and Ors., AIR 1980 SC 346, held that imposition of penalty is penal in character and unless the filing of an inaccurate return is accompanied by a guilty mind, the Section cannot be invoked for imposing penalty. If the contrary view is taken, the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act. 125. The Constitution Bench of the Supreme Court in Maqbool Hussain v. State of Bombay, AIR 1953 SC 325, considering the nature of proceedings under the Sea Customs Act and FERA, 1947, dealing with the principle and scope underlying in Article 20(2) of the its Constitution of India, held as under: - The Sea Custom Authorities were not a judicial tribunal and the adjudging of confiscation, increased rate of duty or penalty under the provisions of the Sea Customs Act did not constitute a judgment or order of a Court of judicial tribunal necessary for the purpose of supporting a plea of double jeopardy. 126. A Seven Judges Bench of the Hon'ble Supreme Court, in R.S. Joshi etc. v. Ajit Mills Ltd. and Anr. etc., AIR 1977 SC 2279, considered the scope of mens-rea while interpreting the provisions of Bombay Sales Tax Act, 1959, and also considered various facets of the expression 'penalty'. The Court observed as under; - There was a contention that the expression 'forfeiture' did not denote a penalty. Thus, perhaps, may have to be decided in the specific setting of a statute. But speaking generally, and having i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalties, have created severe punishments even where the offences have been defined to exclude mens rea. Therefore, the contention that Section 37(1) fastens a heavy liability regardless of fault has no force in depriving the forfeiture of the character of penalty. 127. In State of Rajasthan v. D.P. Metals, AIR 2001 SC 3076, the Hon'ble Supreme Court considered the validity of the provisions of Section 78 (5) of the Rajasthan Sales Tax Act, 1994, which provides for imposing the penalty if the goods being carried in a vehicle are being found without documents required under the Act and the Rules framed thereunder, or the documents are found to be false or forged. The Court held as under:- Person Incharge of the goods should have all the requisite documents relating to the title or sale of the goods, which are being transported. Penalty under Section 78 (5) is leviable under two circumstances: firstly, if there is non-compliance with Section 78(2)(a), i.e. not earring the documents mentioned in that clause; and secondly, if false or forged documents or declaration is submitted. This Sub-section cannot relate to personal belongings which are not meant for sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty can be imposed without proving mens rea, expressed the view the mens rea is not necessary for imposing penalty for default covered by Clause (g), observing as under: - ....though mens rea is a necessary ingredient of an offence but the Legislature can free any provision relating to an offence in a statute from this fetter. Clause(g) is free from the bonodage of mens rea. 130. In Sai Electricals (P) Ltd. v. Commissioner of Sales Tax, 1997 UPTC 721, while dealing with the provisions of Section 4-B of the U.P. Trade Tax, 1948, the Allahabad High Court observed that mens rea is not intended by the legislature for imposing the penalty, and held as under:- A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. 131. In M/s. Rama and Sons, General Merchant, Ballia (supra), the Allahabad High Court, while dealing with the provisions of Section 10-A of Central Sales Tax Act, 1956, observed that penalty is leviable if a person being a registered dealer, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the element of mens rea in export of fertilizer bags without a valid permit was, therefore, not a necessary ingredient for convicting person for contravention of the order made under Section 3 of the F.M.C.O. if the factum of export or attempt to export is proved by the evidence adduced. This judgment is an authority to show that mens rea may be an essential ingredient in a case of offence for punishing a person, but legislature is competent to provide for punishment including the imprisonment even in a criminal case, excluding the scope or attraction of mens rea. 136. In C.A. Abrahim v. Income Tax Officer, AIR 1961 SC 609, the Apex Court laid down the guidelines in interpreting the provisions of Fiscal Statutes, observing as under:- In interpreting a fiscal statute, the Court cannot proceed to make good the deficiency, if there be any; the Court must interpret the Statute as it stands and in case of doubt, in a manner favourable to the tax-paper. But whereas in the present case, by use of the words 'capable of comprehensive import, provision is made for imposing liability for penalty upon tax- paper guilty of fraud, gross negligence orm contumacious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be determined by such officer which ever is less. Provided that where the goods are being carried without proper documents as required by Sub-section (3) or with any false declaration or statements and the owner or the incharge or the driver of the vehicle, boat or animal carrying such goods is found in collusion for such carrying of goods, the vehicle boat or animal shall also be seized by the officer empowered under Sub-section (7) and such officer, after affording an opportunity of being heard to such owner, incharge or driver may impose a penalty not exceeding 30% of the value of the goods being carried and shall release the vehicle, boat or animal on the payment of the said penalty, or on furnishing such security in such form as prescribed under Clause (b) of Sub-section (7). ............... 139. In Mahaveer Conductors v. Assistant Commercial Taxes Officer, 1997 (104) STC 65, this Court has interpreted the provisions of Section 22-A(7) holding that mens rea was a necessary ingredient, observing as under: - ....Any order imposing penalty for failure to carry out statutory obligation is quasi-criminal in nature. The Statute has not provided any pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay duty, It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word 'evade' in the context means defeating the provision of law of paying duty. It is made more stringent by use of the word 'intent'. In other words the assessee must deliberately avoid payment of duty which is payable in accordance with law. In Padmini Products v. Collector of Central Excise , it was held that where there was scope for doubt whether case for duty was made out or not the proviso to Section 11A of the Act would not be attracted. The appellant is a statutory body. It had taken out licence for concrete as it was being sold to outsiders. No licence was taken out for wood products as according to it it was advised so by the Excise Department itself. It would have been better if the appellant would have examined the officer who was advised not to take licence. But mere non-examination of officer could not give rise to an inference that the appellant was intentionally evading payment of duty. When the appellant was found not to have been making any profit and it had taken out licence for concrete unit then in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities may be justified in issuing notice under Section 130 of the Act for the purpose of initiating confiscation proceedings. In other words, at the stage of Section 129 of the Act, there may not be sufficient evidence for the purpose of coming to the conclusion that the case is one where the owner of the goods or the driver of the vehicle had the intention to evade payment of tax. A further inquiry in this regard may reveal of such intention to evade tax. In such circumstances also, the authority may be justified in initiating the confiscation proceedings. 146. It was vociferously argued before us that Section 130 of the Act can be invoked only if the person, transporting any goods, or the owner of the goods, fails to pay the amount of tax and penalty as provided in sub-section (1) of Section 129 within 14 days of detention or seizure. In other words, the argument is that the goods or the conveyance are liable to be confiscated only in the event of non-compliance of the provision of Section 129(6) of the Act. We are afraid, such argument is not sustainable in law. We have already taken the view that Sections 129 and 130 of the Act are mutually exclusive and independent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that without any notice, as contemplated under Section 129(3) of the Act, there is no scope for the authority to straightway proceed to Section 130 of the Act for the purpose of confiscation. 150. The aforesaid submission can be looked into and answered in two ways. First, the word shall should be read in conjunction with clause (4) of Section 129. Clause (4) provides that no tax, interest or penalty can be determined under sub-section (1) without giving the person concerned an opportunity of hearing. Thus, for the purpose of giving an opportunity of hearing, notice under sub-section (3) is a must. This does not necessarily imply that there cannot be proceedings for confiscation in the absence of any action under Section 129 of the Act first in point of time. The second way of looking at this submission is to construe the word shall as may . In other words, the word shall should be read as directory and not mandatory. In this regard, Mr. Trivedi, the learned Advocate General invited the attention of this Court to a decision of the Supreme Court in the case of May George vs. Special Tahsildar Ors., reported in (2010) 13 SCC 98. Mr. Trivedi placed reliance on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of legislature, it has been the practice of the Courts to hold such provisions to be directory only the neglect of them not affecting the validity of the acts done. 17. A Constitution Bench of this Court in State of U.P. Ors. Vs. Babu Ram Upadhya AIR 1961 SC 751, decided the issue observing :- For ascertaining the real intention of the Legislature, the Court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. 18. In Raza Buland Sugar Co. Ltd., R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer though no specific power had been conferred upon the Corporation to transfer the property. 23. In State of Haryana Anr. Vs. Raghubir Dayal (1995) 1 SCC 133, this Court has observed as under:- The use of the word `shall' is ordinarily mandatory but it is sometimes not so interpreted if the scope of the enactment, on consequences to flow from such construction would not so demand. Normally, the word `shall' prima facie ought to be considered mandatory but it is the function of the Court to ascertain the real intention of the legislature by a careful examination of the whole scope of the statute, the purpose it seeks to serve and the consequences that would flow from the construction to be placed thereon. The word `shall', therefore, ought to be construed not according to the language with which it is clothed but in the context in which it is used and the purpose it seeks to serve. The meaning has to be described to the word `shall; as mandatory or as directory accordingly. Equally, it is settled law that when a statute is passed for the purpose of enabling the doing of something and prescribes the formalities which are to be attended for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h an eventuality, he may approach the Collector to make a reference to the Court under section 30 of the Act. 151. However, to say that confiscation is permissible only in the event of failure to comply with Section 129(6) of the Act is not tenable in law. At this stage, we may refer to a decision of the Kerala High Court, upon which, strong reliance has been placed by the learned counsel appearing for the petitioners. We are referring to the decision in the case of Noushad Allakkat vs. State Tax Officer (WC), (2019) 101 taxmann.com 75 (Kerala). Reliance is sought to be placed on the following observations; 7. We notice from Section 129 that the confiscation proceedings under Section 130 would be possible only if the dealer fails to pay the applicable tax and penalty imposed by an order under Section 129(3). Confiscation is hence a coercive measure to ensure payment of the tax and penalty levied on a delinquent dealer; who otherwise is at threat of loosing the goods itself. Confiscation is not an automatic consequence ensuing from detention and an order passed under Section 129(3), of there being a contravention of the provisions of the Act or rules made ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elpful to the petitioners in any manner. We are of the view that Section 130 of the Act can be invoked even in cases where the amount of tax and penalty is paid in terms of the provisions of Section 129 of the Act. This would be provided, the case is falling in any of the five eventualities prescribed in Section 130(1) of the Act. When it comes to confiscation over and above the tax and penalty, fine can be imposed. Such fine leviable shall not exceed the market value of the goods confiscated, and at the same time, the aggregate of such fine and penalty leviable will not be less than the amount of penalty leviable under sub-section (1) of Section 129. 155. We are at one with Mr. Trivedi, the learned Advocate General appearing for the State that it is incorrect on the part of the petitioners to contend that the provisions of Sections 129 and 130 of the Act are sub-sets of Section 122 of the Act. Rather, the said Sections 129 and 130 of the Act can be invoked for the eventualities which are not mentioned in Section 122 of the Act and hence, the same cannot be said to be related to the provisions of Section 122 of the Act, except for quantification of the amount of penalty. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inds that the returns are not in order, subject to giving notice to the assessee, he is entitled to pass appropriate assessment orders. However, in cases falling under Section 16-D where evasion is detected at the check-post by the Sales Tax Officer (Vigilance) and in order to get the goods released, which goods have been seized by the said officer, the person(s) named in the section offers to pay the tax, then, in such a case, the Sales Tax Officer is expressly given the authority to compute the tax and call upon such person(s) to make the payment. On such payment of tax together with penalty, the Sales Tax Officer (Vigilance) is required to release the goods which have been seized. Hence it is the case of computation of tax of and incidental to the recovery of tax on the spot. 17. The main argument advanced on behalf of the respondent is that the Sales Tax Officer (Vigilance) has no power to assess the tax. It is contended that the power to assess tax exists only in Section 12 of the Act. It is contended that the Sales Tax Officer (Vigilance) who carries out search and who seizes the goods under Section 16-D has no power to assess the tax and, in the circumstances, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kerala High Court observed as under; 24. Detention under the KSGST Act has an elaborate remedial mechanism. Now, we focus on the release of the product, and it lies in narrow confines. Suffice it for me to examine this singular issue: Can the State Tax Officer invoke Section 129 of the Act and detain goods on the ground the tax paid on the product is less? Here, the documents are in order and the product description accords with what the first petitioner has already declared, say, in his returns before the assessing authority. Then, can the ASTO still hold up the consignment because the declaration already made does not suit his notion of what the product is? 25. True, a literal reading of Section 129 of the Act presents a different picture and, perhaps, lends support to the State's view. But purposive interpretation and the practical commercial considerations trump that view. 26. Chapter XVI of the Combined Acts deals with inspection, search, and seizure. Section 129 under Chapter XIX provides the mechanism for detention, seizure, and release of goods and conveyances in transit. It begins with a non-obstante clause and goes on to lay down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler being guilty of willful omission. The dealer, according to J. K. Synthetics Limited, must deposit the full tax due, based on the information furnished. And that information must be correct and complete to the best of the dealer's knowledge and belief. If the dealer has furnished full particulars regarding his business, without willfully omitting or withholding any particular information affecting the assessment of tax, and if he honestly believes to be 'correct and complete', the dealer is said to have acted 'bona fide' in depositing the tax due and filing the return. Of course, the tax so deposited is to be deemed to be provisional and subject to necessary adjustments under the final assessment. 31. To support its ratio, J.K. Synthetics Limited accepts the minority of view in Associated Cement Co. Ltd.. v. CTO, (1981) 4 SCC 578 And it has finally held that if the assessee pays the tax, which according to him is due based on the information supplied in his return, there would be no default on his part to meet his statutory obligation. Therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' and that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has emphatically held that if the dealer furnishes all particulars about his business, assesses the tax as he honestly believes to be correct, and pays it; his conduct cannot be faulted as mala fide or as an effort to evade tax. Here, the Exts.P8 and P8(a) are the returns for two recent months. The first petitioner declared the HSN Code he has felt his product would attract and paid the tax accordingly. The returns are very much on record before the assessing officer. Therefore, to that extent the first petitioner's conduct cannot be faulted, nor can he be accused of evading the tax. 36. Then, I may examine the dictum of Rams, a judgment rendered by this Court. In somewhat an analogous situation as we face here, Rams held that the inspecting authority may entertain a suspicion that there is an attempt to evade tax. But if the records he seizes truly reflect the transaction and the assessee's explanation accords with his past conduct, for example, the returns he has filed earlier, the detention is not the answer. In the words of Rams, at best the inspecting authority can alert the assessing authority to initiate the proceedings for assessment of any allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of the Petitioners that the goods which are seized are to be released within a short span of time and that the legislature has not contemplated to retain the goods pending the confiscation proceedings, is not tenable. 164. In addition to the above, even otherwise, the provisions of Section 110A of the Customs Act, which deal with the 'provisional release' of the goods, do not contemplate the release of the goods only on payment of penalty and interest but, the proposed amount of fine is also to be included for the provisional release of the goods. In view of this, the amount of fine should be taken into account while directing the provisional release of the goods/conveyance as per Section 129(2) read with Section 67(6) of the Act read with Rule-140 of the Rules. 165. We shall now proceed to deal with the last submission as regards the physical availability of the goods and the conveyance for the purpose of redemption of fine. This submission has been canvassed by Mr. P.M. Dave, the learned counsel appearing for the writ applicants of the Special Civil Application No.9105 of 2019. The argument of Mr. Dave is that the concept of redemption fine i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine. The contention therefore, of the appellants there that the redemption cannot be imposed because the goods were not available for custody of the respondent authorities was rejected. 5. In our opinion, the concept of redemption fine arises in the event the goods are available and are to be redeemed. If the goods are not available, there is no question of redemption of the goods. Under Section 125 a power is conferred on the Customs Authorities in case import of goods becoming prohibited on account of breach of the provisions of the Act, rules or notification, to order confiscation of the goods with a discretion in the authorities on passing the order of confiscation, to release the goods on payment of redemption fine. Such an order can only be passed if the goods are available, for redemption. The question of confiscating the goods would not arise if there are no goods available for confiscation nor consequently redemption. Once goods cannot be redeemed no fine can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Vs. Commissioner of Customs, New Delhi (supra) and the judgment of the Tribunal in the case of Ram Khazana Electronic v. CC ( Air Cargo ), Jaipur ( supra ) and held that there is no error in the impugned orders, which are based upon the judgment of the Hon'ble Apex Court. 12. It may also be noticed here that in the case of M/s Weston Components Ltd. Vs. Commissioner of Customs, New Delhi (supra) , the goods were released to the assessee on an application made by it and on the execution of a bond by the assessee and in those circumstances, the Hon'ble Apex Court held that the mere fact that the goods were released on the bond being executed would not take away the power of custom authority to levy redemption fine. A reading of the judgment/order of the Hon'ble Apex Court in M/s Weston Components Ltd. Vs. Commissioner of Customs, New Delhi (supra), would show that the Apex Court has taken the view that redemption fine can be imposed even in the absence of the goods as the goods were released to the appellant on an application made by it and on the appellant executing a bond. Since the goods were released on a bond the position is as if the goods were availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of confiscation proceedings, then in that case, though confiscation or redemption may not be physically possible, the terms of the bond and undertaking/bank guarantee can be enforced by seeking to recover the full value of the goods. Hence, in nutshell, it could be said that if the goods are available for confiscation, then only the question of giving an option of redemption fine in lieu of confiscation arises and not in cases where the goods are not available for confiscation. 170. At this stage, we must look into the decision of the Supreme Court in the case of Weston Components Ltd. vs. Commissioner of Customs, New Delhi, 2000 (115) ELT 278 (S.C.), wherein the Supreme Court, in a very short order, has observed as under; this contended by the learned counsel for the appellant that redemption fine could not be imposed because the goods were no loger in the custody of the respondent-authority. It is an admitted fact that the goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vention of the provisions of the Act or the Rules. We must also bare in mind that the owner of the goods is liable to pay penalty under Section 122 of the Act. The fine contemplated is for redeeming the goods, whereas the owner of the goods is penalized under Section 122 for doing or omitting to do any act which rendered such goods liable to be confiscated under Section 130 of the Act. In the aforesaid context, we may refer to and rely upon a decision of the Madras High Court in the case of M/s. Visteon Automotive Systems vs. The Customs, Excise Service Tax Appellate Tribunal, C.M.A No.2857 of 2011, decided on 11th August, 2017, wherein the following has been observed in para-23; 23. The penalty directed against the importer under Section 112 and the fine payable under Section 125 operate in two different fields. The fine under Section 125 is in lieu of confiscation of the goods. The payment of fine followed up by payment of duty and other charges leviable, as per sub-section (2) of Section 125, fetches relief for the goods from getting confiscated. By subjecting the goods to payment of duty and other charges, the improper and irregular importation is sought to be regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents praying for the passing on of the necessary documents to the purchasers of the goods in Japan and on the respondents giving a bank guarantee that the full f.o.b. value to be released from the said parch would be paid to the customs authorities towards penalty or fine in lieu of confiscation that might be imposed upon the respondents by the adjudicating authority. The customs authorities had seized the goods when they were within their jurisdiction. It is immaterial where the seized goods be kept. In the circumstances of the case, the seized goods remained on the ship and were carried to Japan. The seizure was lifted by the Additional Collector only when the respondents requested and gave bank guarantee. 'The effect of the guarantee was that in case the Additional Collector adjudicated that part of the goods exported was not in accordance with the licence and had to be confiscated, the respondents, would, in lieu of confiscation of the goods, pay the fine equivalent to the of the bank guarantee. Section 183 of the Act provides that whenever confiscation is authorised by the Act the Officer adjudging it would give the owner of the goods option to pay in lieu of confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d lead to positive injustice. Times without number, it has been held by the High Courts that only under condition of a person establishing that substantial injustice has or is likely to ensue, such extraordinary powers can be exercised. It needs no adumbration by this date that the plenary powers of the High Court have only to be exercised in the interest of justice. 179. Thus, an order of release of goods or conveyance may be passed under Article 226 of the Constitution of India, even pending the confiscation proceedings, but only when it is established before the Court that the procedure prescribed and the law in that regard has been completely flouted and that there is complete violation of the procedure prescribed for confiscation, viz., notice to the offender before confiscation, allowing him opportunity of giving written representation and affording hearing on the issue to him and that such injustice cannot be remedied without the exercise of the extraordinary power. 180. Needless to state that under Article 226 of the Constitution of India, the Court will not go into the disputed question of facts. 181. Thus, the powers directing for release of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (v) 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. (vi) Section 130 of the Act is not dependent on clause (6) of Section 129 of the Act. (vii) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants, is not correct. Section 110(1) of the Customs Act is not comparable to Section 129(1) of the Act inasmuch as, the provisions of Section 110 of the Customs Act contemplates that the proper officer may seize the goods which are liable for confiscation, whereas the provisions of Section 129 contemplate that the proper officer may detain/ seize the goods/ conveyance in transit in contravention of the provisions of the Act or the Rules. (xii) The provisions of Sections 110(2) and 124 of the Customs Act do not contemplate that the goods which are seized are to be released in a specific time limit, much less, within a period of six months. Apropos this, the said sections merely cast a duty on the department to issue a show cause notice within a period of six months from the date of seizure of goods, but the same does not contemplate as to in how much time, the same has to be adjudicated upon. Therefore, the contention raised on behalf of the writ applicants that the goods which are seized are to be released within a short span of time and that the legislature has not contemplated to retain the goods pending the confiscation proceedings. is not tenable. In addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be sparingly exercised under extraordinary situations and circumstances when injustice occurs because of non-fulfillment of the conditions for confiscation. 183. One and all should be mindful of the fact that the country has altogether a new tax regime. It has been just two years since the new tax regime, in the form of GST, has been implemented. Although, this path-breaking reform meets the longstanding demand of trade and industry to simplify and streamline the tax regime in the country, yet, there are many issues which need to be addressed. The assessees need to be educated so far as the new tax regime is concerned. It has been brought to our notice that the government has prepared the Model GST Law in English. Further, all the acts, rules, regulations and FAQ regarding GST are available in English language. Entrepreneurs of many establishments in India may not have proficiency in English language to understand the Model GST Law and the rules associated with it. The government must translate the existing GST rules and regulations in vernacular languages so that it can be better understood by all the assesses, especially in the MSME sector. 184. We would also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 187. I have had the benefit of going through the final conclusion drawn by my Learned Brother Justice J.B. Pardiwala in the judgment, with which, I have concurred. However, I would like to add few words of my own on the subject. 188. 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. 189. In this regard, we would like to observe as held by the Supreme Court that it would be important to notice certain well settled canons of interpretation of statutes. The primary and foremost task of a Court in interpreting a statute, is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the Court must then strive to so interpret the statute as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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