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TMI Blog2021 (1) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... ed subsequent notice under sub-clause (4) of Section 130 of the Act (the impugned Show Cause Notice dated 07.09.2020) observing that the earlier notice has abated and calling upon the petitioner to show cause against confiscation and why the tax, penalty and other charges payable in respect of such goods and the conveyance should not be paid by the petitioner. The chief contention is that there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under way in accordance with the provisions of Section 129 of the Act in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit. It is settled that a decision is an authority for what it decides. The Hon ble Supreme Court in ROYAL MEDICAL TRUST AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2017 (9) TMI 1849 - SUPREME COURT] has held that every judgement must be read as applicable to the particular fact proved, or assumed to be proved, since the generality of the expressions which may be found are not intended to the expositions of the whole law, but are governed and qualified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges payable in respect of such goods/conveyance. In SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] , a Division bench of the Gujarat High Court, whileconsidering the question whether both Sections 129 and 130 of the Act are independent of each other or they could be used interchangeably at the discretion of the authorities, after a conspectus reference to the decisions by the Hon ble Apex Court on different aspects given the specific features of these provisions such as both the provisions beginning with the non-obstante clauses, the cross reference in each of these provisions to the liability to pay the applicable tax, penalty and fine, the conditions attached for initiation of proceedings for confiscation under Section 130 of the Act, the need for restraint in the authorities to initiate proceedings for confiscation for every infraction and to initiate such proceedings only if it could from the circumstances of the case form an informed opinion. Thus, this Court is of the considered view that the it cannot be held that the provisions of Section 130 of the Act could be invoked in cases of conveyance/ goods detained/ seized while i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcised despite opportunity under section 130(7) of the Act, the Proper officer will have to take and hold possession of the things confiscated subject to consequences as contemplated the re-under. The writ petition is disposed of restoring the Show Cause Notice directing the respondent to decide, in accordance with law, on the proposed levy of tax, penalty and cess as proposed therein with reasonable opportunity of hearing to the petitioner, who shall have the liberty to seek provisional release of goods/conveyance as provided for under sub-clause (2) of Section 129 of the Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoices but the details of discount are not mentioned; the Consignor has procured the Goods from M/s Uttam Corporation, Delhi under [two] 2 Invoices/e-Way Bills but [eight] 8 Invoices/e-Way Bills are generated in favour of the Consignee; the Consignee is recently registered under the GST. The respondent has opined that, in the circumstances of the case, the existence of the Consignor and the Consignee in the declared places of business in the state of Delhi and Tamil Nadu is to be ascertained and there could be violations of the provisions of Sections 138, 138 (A) of the Act and Section 20 of IGST Act. 4.The petitioner responded to the detention order dated 10.08.2020 asserting that the driver of the conveyance was carrying valid documents, the necessary details were available in the Tax Invoices, the price as mentioned in the Tax Invoices was as agreed upon by the Consignor and the Consignee and there was neither contravention of law nor evasion of taxes in the transaction. Thereafter, the Show Cause Notice dated 25.8.2020 is issued in Form GST MOV-07 (Annexure-E) under Section 129(3) of the Act and Section 20 of the IGST Act/Compensation to States Act, 2017 - hereafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the respondent, who at the first instance issued the earlier Show Cause Notice dated 25.8.2020 (Annexure-E) under Section 129(3) of the Act, has not passed any orders thereon as required despite the petitioner's detailed response; without orders on the petitioner's representations/responses filed in response to such Notice dated 25.08.2020, it would not be permissible in the Scheme of Act for the respondent to issue the impugned Show Cause Notice dated 07.09.2020 under Section 130 of the Act: as such, the impugned Show Cause Notice dated 07.09.2020 is null and void ab initio. In support of this proposition, Sri Arvind Kamath has placed reliance on the decision of this Court in Shree Enterprises and another v. The Commercial Tax Officer (GM) (ENF) (Writ Petition No. 6445/2019 and Writ Petition No. 7370/2019 (T-Res) decided on 14.03.2019) and emphasis is laid on paragraph 11 which reads as follows: "In the present set of facts, it is not in dispute that the notice under section 129 (1) (b) of CGST/KGST 2017 was issued by the respondent on 2.01.2019, to which objections were filed by the petitioners. In such circumstances, it was incumbent on the part of the respondent to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransit, in contravention of the provisions of the Act or the Rules made thereunder, such goods and conveyance would be liable for seizure and detention, but should be released on payment of the applicable tax and penalty as contemplated under 129(1)(a) or 129(1)(b), or under 129(1)(c): subject to the provisions of 129(2)-(4) there would be conclusion of such proceedings, as mandated under 129(5) on payment of the applicable tax and penalty as provided under 129(1)(a) or (b). If the mandated applicable tax and penalty as aforementioned are not paid within a period of [fourteen] 14 days of detention or seizure, further proceedings for confiscation, as provided under Section 129(6), shall be initiated in accordance with the provisions of Section 130 of the Act. In the case of interception of goods in transit there cannot be two separate proceedings: one under Section 129 and another under Section 130 of the Act. 9. Sri. Arvind Kamath further contends that the impugned Show Cause Notice dated 07.09.2020 is issued invoking Section 130 of the Act holding that the Show Cause Notice dated 25.08.2020 has abated in the premise that in cases of interception of goods in transit there could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 130 of the Act, in lieu of confiscation, penalty under Section 122 of the Act as also a separate fine, in addition to the liability to pay Tax and Charges, are imposed. This wider liability is not postulated when the goods intransit by conveyance are intercepted. Therefore, initiation of confiscation proceedings under Section 130 of the Act when a conveyance in transit is intercepted with the allegations of breach of the provisions of the Act, or the Rules thereunder, would be without jurisdiction and in violation of the Scheme under the Act. 10. Sri. Arvind Kamath submits that it is often reiterated, and it is also reiterated by the Hon'ble Supreme Court of India in Mathuram Agarwal v. State of Madhya Pradesh (1999) 8 Supreme Court Cases 667 that in tax matters, the letter of law must prevail however different it might apparently be in terms of the spirit of the law, and interpreting tax statutes beyond the plain language amounts to supplementing by including something which the Legislature has not stated through the provisions. The learned Counsel also places reliance on the decision of the Hon'ble Supreme Court in Commercial Taxes Officer v Bombay Machineries (2020) 77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As regards the other contention by Sri Arvind Kamath, Sri Dyan Chinnappa relying upon the decision of the Division Bench of the Gujarat High Court in Synergy Fertichem Pvt. Ltd. v. State of Gujarat (2020) 76 GSTR 81 (Gujarat), submits that the provisions of Section 129 and Section 130 of the Act are mutually exclusive and independent of each other. There must be a harmonious reading of these two provisions keeping in mind the object and purpose behind the enactment thereof. The proceedings under Section 129 of the Act are to ensure compliance with the provisions of the Act and the Rules made thereunder in the event there is breach thereof by providing for detention and seizure of the conveyance and goods, and the release of the conveyance and goods if the applicable tax and prescribed penalty are paid under Section 129. If the amount of applicable tax and penalty as prescribed under section 129(1)(a) or section 129(1)(b) as determined for the purposes of release of the goods and conveyance are not deposited within the statutory period, then the consequence would be confiscation under Section 130 of the Act because of Section 129(6). On the other hand, when the intent to evade tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. In Shree Enterprises suprathe order of quantification under Section 130 and penalty under Section 122 of the Act was called in question in the factual matrix of that case where, notice under section 129(3) of the Act was issued calling upon the concerned to show cause against quantification of the applicable Tax and Penalty in terms of Section 129(1) of the Act. Upon receipt of objections/ response, the impugned order in the prescribed Form under Section 130 of the Act was issued. The authorities tried to justify issuance of such order on the ground that there was a bona fide error in mentioning the provisions and the quantification in the impugned order was in effect quantification under section 129 of the CGST Act. 16. This Court, considering these circumstances has opined that it was incumbent on the part of the authority to consider the objections and pass a speaking order quantifying the tax and penalty and thereafter to release the goods subject to payment of tax and penalty or to confiscate the goods: insofar as reference to section 160 of the Act to treat the said order as an order of penalty under Section 129 of the Act, this Court has opined the same could not be coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court must hold that the question which is presented for consideration in the present case did not come up for consideration before this Court in such case and therefore, this decision is not helpful to the petitioner. 19. The merits of the chief contention in this case (Whether there cannot be independent or simultaneous confiscation proceedings under Section 130 of the Act with the detention and seizure proceedings under the provisions of Section 129 of the Act, in the case of contravention of the provisions of the Act/Rules when the goods are being transported, or goods are stored in transit.) will have to be examined not just in the light of the provisions of Section 129 of the Act (about which there is no dispute) but also in the light of the provisions of Section 130 of the Act. If a person transports any goods, or store any goods while they are in transit in contravention of the provisions of the Act or the rules made thereunder consequences would have to follow to ensure there is substantial deterrent in continuing with such contravention. There cannot be any doubt, or quarrel, that the provisions of Section 129 of the Act are intended to achieve this object. The provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 21. Insofar as proceedings for confiscation under Section 130 of the Act, there is no provision for the provisional release of the detained conveyance and seized goods. But, with confiscation, the title to the goods and conveyance vests in the government Section 130 (5) subject to an option to the owner of the goods, as well as the owner of the conveyance, to pay Fine in lieu of confiscation apart from the liability to pay applicable tax and penalty Section 130 (2) and the third proviso. If, after an opportunity of being heard, Fine is determined and such Fineas well as the applicable tax, penalty and charges, are not paid, there will be confiscation of the goods and conveyance with the vesting of title thereto in the government. The proper officer upon adjudging confiscation shall take and hold possession of the goods/conveyance confiscated and every officer of police, on the requisition of such proper officer shall assist him in taking and holding such possession with further recourse as contemplated under sub-clause (7). Thedifferences in Sections 129 and 130 of the Act can be brought to in a tabular column thus: Section 129 Detention and seizure of conveyance and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to pay Tax and Penalty Section 130 The consequence insofar liability to pay Tax, Penalty, Fine and other charges Sub-clause (1)(a) On payment of the applicable Tax and Penalty equal to one hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; Sub-clause (2) a. To the owner of the goods: 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: b. The owner of the conveyance Option to pay in lieu of the confiscation of the conveyance a Fine equal to the Tax payable on the goods being transported thereon Sub-clause (1)(b) On payment of the applicable Tax and Penalty equal to the fifty per cent of the value of the goods reduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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, theharmonious 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. (v) Even if the goods or the conveyance is releasedupon payment of the tax and penalty under Section 129of the Act, later, if the authorities find something incriminating against the owner of the goods in the course of the inquiry, if any, then itwould 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the person shall be liable to penalty under section 122." If in the use of conveyance for transportation of goods or storing of goods in transit, the contravention of the provisions of the Act/Rules is established, there can be no doubt, with the provisions of Section 130(1)(v) of the Act, the consequence of confiscation would be visited. If the intention to evade payment of tax in transporting the goods by conveyance is established, would be it outside the purview of the provisions of Section 130(1)(iv) of the Act which stipulates that if any person contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax then there shall be confiscation (without limiting to the goods). 26. The Hon'ble Supreme Court in J K Synthetics Limited vs. CTO (1994) 4 Supreme Court Cases Page 276 has observed that: "It is well-known that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible under Section 129(2)] must first conclude and then the confiscation proceedings under Section 130 of the Act must commence. 28. The provisions of Section 130 of the Act, as Section 129 of the Act, begin non-obstante clause. The Hon'ble Supreme Court in Shri Sarwan Singh & Anr. v. Shri Kasturi Lal (1977) 1 SCC 750 and referred to by the Division Bench of the Hujarat High Court in Synergy Fertichem P. Ltd., v. State of Gujarat supra), while resolving the controversy on whether the provisions of Slum Clearance Act must have precedence over the Delhi Rent Act, and the significance of non-obstante clauses, has held that: "When two or more laws or provisions operate in thesame field and each contains a non-obstante clause stating that its provision will override those of any other provisions or law, stimulating and intricate problems of interpretation arise. In resolving such problems ofinterpretation, no settled principles can be applied except to 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 conflic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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