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TMI Blog2021 (12) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statute, vests with the Government. The use of the present continuous words officer adjudging it and the words owner of the goods is clearly indicative of the intention behind incorporating section 130(2) of the Act. The intent of section 130(2) of the Act is to provide an option to the owner to redeem the goods before he is divested of his ownership and while the process of adjudication is going on. The two different stages in which the goods can be released - during adjudication and post-adjudication are obviously created with a purpose. The purpose of the two-stage release is that, if the owner of the goods, even before being deprived of his title to the goods or conveyance, is ready to pay the fine stipulated by the officer, then without further wrangles, if the goods and or conveyance can be released to the said owner, the same avoids unnecessary procedural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130(7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily - section 130(2) of the Act applies before the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JAMES, SR.GOVERNMENT PLEADER RESPONDENT: SRI.K.SRIKUMAR (SR, SRI.K.MANOJ CHANDRAN AND SMT.AMMU CHARLES ORDER BECHU KURIAN THOMAS, J. An interim order is the cause of this review petition. By the interim order, this Court directed release of goods that were the subject matter of proceedings for confiscation under the Central Goods and Services Tax Act, 2017 (for brevity 'the Act'). A review petition against the interim order is preferred by the State Tax Officer, leading to seminal questions on the scope and ambit of the powers of release of goods while the confiscation proceedings are going on. 2. The primary question for consideration is whether section 130(2) of the Act contemplates the release of goods by payment of fine in lieu of confiscation, even before orders of confiscation are issued. In addition, an incidental question that arises is on the quantum payable as fine in lieu of confiscation. 3. The genesis of the dispute emerges from an inspection conducted by the officers of the Kerala State GST Department on 03-08-2021, who seized, as per Rule 139(2) of the Central Goods and Services Tax Rules, 2017, (for brevity 'the Rules'), beedis, stored by the respondent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or confiscation and that perishable goods cannot be detained indefinitely. It was claimed that the goods were liable to be released on a provisional basis, upon execution of a bond or a bank guarantee. 8. After hearing the learned counsel for the dealer as well as the learned Senior Government Pleader, this Court by order dated 07-09-2021 directed the Tax Officer to release the goods in favour of the dealer, on payment of the amounts contemplated under section 130(2) of the Act, after adverting to the plea of the dealer that, the Tax Officer is refusing to abide by the mandate of the Statute, despite the dealer offering to pay the amounts in lieu of confiscation. 9. Soon thereafter, the Tax Officer preferred the present review petition, seeking to review the interim order dated 07-09-2021 in W.P. (C) No.18169 of 2021. Arguments: 10. The learned Senior Government Pleader Dr.Thushara James, contended that section 130 of the Act does not envisage a provisional release, and the option to pay the fine in lieu of confiscation can arise only after the Tax Officer issues an order of confiscation. The conspicuous absence of the time within which an order to release the goods or conveya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel Sri. Srikumar argued that, the language of section 130 of the Act leaves no room for doubt that the fine in lieu of confiscation alone needs to be paid to get release of the goods, while the remaining amounts mentioned in the statute will only become payable. It was further argued that the phrase 'market value' used in section 130(2) has to be understood in the light of the definition of the word as defined in section 2(73) of the Act and therefore, the intention of the legislature is unambiguous that, MRP is not to be used for calculating the fine in lieu of confiscation. Reference was made to the decisions in Collector of Customs Bombay v. M/s.Elephanta oil and industries Ltd. [(2003) 4 SCC 325)] 12. Two main contentions are raised by the Tax Officer in the review petition. However based upon the contentions raised in the review, the following three issues arise for consideration: Issues (i) Whether the provisions of section 130 of the Act contemplate any provisional release of goods, as directed in the interim order of this Court? (ii) Whether the amount payable for release of the goods under section 130 of the Act is fine alone or is it fine, penalty and tax to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government." 14. As the subtitle of the section indicates, the provision deals with two facets of penalising evasion or attempt to evade ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the owner of the goods. In cases where the goods are perishable or where the goods are of extreme significance in terms of time, should the owner of the goods be left to a possible long drawn-out process of adjudication, the period of which is left to the discretion of the officer and wait till the entire adjudication process is completed, to pay that 'fine in lieu of confiscation'?. The hurdle of storing the goods and conveyances until adjudication is completed is one of the reasons for incorporating a provision to redeem the goods on payment of a fine. 19. The issue under consideration, no doubt, requires an interpretation of the provisions of section 130 of the Act. While interpreting a taxing statute, it is elementary that the court has to merely look at what is clearly written. There is no room for any intendment. The Statute is, in fact, a fiat of the Legislature. It should be read as it is, without deforming or distorting its language. There is no latitude, under any circumstances whatsoever, to interpret taxing statutes based upon any assumption or presumption. The approach of the court, while considering the interpretation to be given to the provisions of a taxi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip of the goods vests with the Government, by operation of law and the goods will change their colour and character to "confiscated goods". An appreciation of the tenor and purport of the words employed in the statute obligates this Court to conclude that section 130(7) of the Act, deals with a post-adjudicatory situation. 23. In contradistinction, when the phraseology of section 130(2) of the Act is examined, it reveals a different set of words employed therein vis-a-vis section 130(7) of the Act. The intention behind the said sub-clause can be gathered from the words: (a) whenever confiscation of goods or conveyance is authorised by this Act (b) the officer adjudging it, and (c) give to the owner of the goods an option. 24. The words 'authorised by this Act', 'officer adjudging it' and 'owner of the goods', employed in section 130(2) of the Act are decisive in understanding the meaning of the said statutory provision. Of course, the words 'officer adjudging it' is seen in section 130(6) also. However, when the words 'officer adjudging it', is followed by the words 'owner of the goods' as evident from Section 130(2) of the Act, there cannot be any contrary interpretation. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional release or absence of reference to section 67(6) of the Act is not determinative when section 130(2) of the Act itself is manifest of such a release. 27. The two different stages in which the goods can be released - during adjudication and post-adjudication are obviously created with a purpose. The purpose of the two-stage release is that, if the owner of the goods, even before being deprived of his title to the goods or conveyance, is ready to pay the fine stipulated by the officer, then without further wrangles, if the goods and or conveyance can be released to the said owner, the same avoids unnecessary procedural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130(7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily. Thus, in view of the above deliberations, I am of the firm view that section 130(2) of the Act applies before the order of confiscation is issued. 28. The decision relied upon by the learned Senior Government Pleader rendered by the Karnataka High Court in M/s.Meghdoot Logistics case, according to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall, in addition to the fine imposed, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. The question for consideration is whether the amount of tax, penalty and charges payable by a person is at the time when the fine is imposed or can it be paid at a stage, subsequent thereto. 32. As mentioned earlier, though there is no equity in tax, the statute must be fair to both the assessee as well as to the revenue. As observed by the Supreme Court in Rajasthan Rajya Sahakari Spinning and Ginning Mills Federation Limited v. Deputy Commissioner of Income Tax, Jaipur [(2014) 11 SCC 672] hardship or equity is not relevant in interpreting provisions in a taxing statute and the court should not concern itself with the intention of legislature when the language is plain and unambiguous. 33. While understanding the scope of Section 130(3), this Court cannot ignore the interplay between section 130(2) and 130(3) of the Act. To enable release of goods under section 130(2) of the Act, fine in lieu of confiscation has to be imposed. When the owner of the goods opts to pay a fine in lieu of confiscation, while the adjudication is continuing, an obligation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (See the decision in Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC 1] and Radha Krishan Industries v. State of Himachal Pradesh and Others, [(2021) 6 SCC 771]. Thus the constitutional principle of fairness must be inherent in every statutory provision and be even infused into the statutory provisions by courts when called upon to do so. 38. The words in a statute often take their meaning from the context of the statute as a whole, as is clear from the legal maxim 'exposition ex visceribus actus'. The words cannot be construed in isolation. The words 'be liable' in the context in which it occurs in section 130(3) of the Act only imports a possibility of attracting liability. Merely because the owner of goods or conveyance opts to pay fine in lieu of confiscation does not mean that the facts essential for incurring the liability to order confiscation automatically stands proved. That proof has to come out through the process of adjudication, as otherwise, there would be conferment of unbridled powers upon the Proper Officer to coerce every dealer to pay fine, tax, penalty and other charges without even any adjudication. Such a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods confiscated. The term 'market value' is defined in section 2(73) to mean "the full amount which a recipient of a supply is required to pay in order to obtain the goods or services or both of like kind and quality at about the same time and at the same commercial level where the recipient and the supplier are not related". 43. The definition of the term market value clearly indicates that the term is not referable to the maximum retail price and on the contrary, it is a sale price that is agreed to between a bonafide supplier and a bonafide purchaser, who are not related to each other. 44. If the goods that are subject to confiscation proceedings carries an invoice and the Proper Officer has no dispute on the value mentioned in the invoice based upon a preliminary appreciation of the amount payable for goods or services of a like kind or quality, at or about the same time and at the same commercial level, then that shall be the market value. If on the other hand, the tentative amount or the amount assumed to be the market value preliminarily is disputed by the taxpayer, it calls for a determination during adjudication, where an opportunity for showing the true market value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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