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TMI Blog2024 (7) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... bali Stone Gallery Vs. State of Gujarat [ 2020 (3) TMI 697 - GUJARAT HIGH COURT] - In Synergy Fertichem Pvt. Ltd Vs. State of Gujarat, the Division Bench of the Hon ble High Court of Gujarat was considering a similar question of whether proceedings under Section 130 of the CGST Act can be initiated without any prior proceedings under Section 129 of the CGST Act. Section 129 applies only when goods are being transported. The provisions of Section 129 would not apply in relation to a situation where the goods are not in transit. The language of Section 129(1) specifically states that detention or seizure of goods can be carried out while the goods are in transit, in contravention of the Provisions of the Act or the Rules made there under. In the case of Section 130 confiscation of goods or conveyances and levy of penalty can be done subject to any of the five conditions enumerated in Section 130 (1) being available. In the present case, the conveyances and goods were stopped and detained on 27.04.2024. Thereafter, a statement was taken from the driver of the conveyances, in FORM GST MOV-01 on 27.04.2024. After recording the statement, the 2nd respondent issued FORM GST MOV-10 dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent issued a notice in Form GST MOV-10, under Section 130 of the Central Goods and Service Tax Act, 2017 [for the short the CGST, Act ], on 01.05.2024 calling upon the petitioners to show-cause why the goods under transport and as well as the vehicle in which the goods have been transported should not be confiscated. These notices were served on the driver of the vehicle. 5. Thereafter, the petitioners have filed their objections dated 08.05.2024, setting out the grounds why the proposed action should be dropped. After receipt of these objections, the 1st respondent passed orders, in both cases, dated 25.05.2024, confiscating the goods as well as the vehicle under Section 130 of the CGST, Act, Section 130 of the State Goods and Services Act /Section 21 of the Union Territory Goods and Service Tax, Act and under Section 20 of the Integrated Goods and Service Tax Act, 2017. The petitioners were also informed that the above said goods and conveyance could be released on payment of the penalty and fine set out in the said orders. 6. Aggrieved by these two orders, the petitioners have approached this Court by way of the present Writ Petitions. 7. Sri V. Bhaskar Reddy, learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be done on issuance of Form MOV-6 under Section 129 of the CGST Act and there is no provision under Section 130 of the CGST Act for detention of the goods. He would submit that detention of the goods without issuance of such Form MOV-6 is clearly impermissible and beyond of the jurisdiction and authority of the 1st respondent. 11. He would also contend that Central Board of Indirect Taxes and Customs had issued a circular bearing No. 128/47/2019-GST, dated 23.12.2019 instructing all officials of the respective GST Departments that all communications/orders should contain Document Identification Numbers so as to authenticate the issuance of such communications/orders. He would further submit that in the present case no such DIN is available on the order of confiscation dated 25.05.2024 and consequently, the said orders would have to be set aside. 12. The learned senior counsel, in summation of the above contentions would submit that orders of confiscation suffer from lack of jurisdiction apart from a clear violation of the principles of natural justice. 13. The learned Government Pleader for Commercial Tax, in reply, would submit that the provisions of Sections 129 130 of the CGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth sides have relied upon the Judgment of the High Court of Gujarat at Ahmedabad, in the case of Siddhbali Stone Gallery Vs. State of Gujarat, which had followed its own Judgment in the Case of Synergy Fertichem Pvt. Ltd Vs. State of Gujarat [Special Civil Application No.4730 of 2019]. Consideration of the Court: 19. The contentions raised on both sides gives rise to the following issues. 1) Whether action can be taken under Section 30 of the CGST Act only after action had been initiated under Section 129 of the CGST Act? 2) Whether action taken under Section 130 of the CGST Act, without a prior invocation of Section 129 of the Act would render the proceedings under Section 130 of the CGST Act invalid? 3) Whether non affixture of DIN Number on the order of confiscation would render the said order invalid? 20. At the outset, it is clarified that this Court is not going into the merits of the case in as much as the said merits of the case require a determination of facts and this Court declines to go into these facts. 21. Section 129 and 130 of the Act reads as follows: 129. Detention, seizure and release of goods and conveyances in transit. (1) Notwithstanding anything contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3): Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less; Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer. 130. Confiscation of goods or conveyances and levy of penalty: (1) Where any person (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nveyance to show that there has been no contravention of the Act or Rules. The provisions of Section 130 would also be invoked, in the event of the detaining authority, coming to a further conclusion that there has been a contravention of the Act and Rules in the transport of the concerned goods on account of the attempt of the dealer to evade tax. The learned Senior Counsel would show that any other interpretation would not be in accordance with the scheme of Section 129 and 130 of the Act. He would submit that the conditions for invocation of Section 129 and 130 are essentially the requirement that there has been a contravention of the provisions of the Act or the Rules. It is only after such a finding is given and a further question of whether the transport of goods was done in contravention of the Act and Rules for the purposes of evading tax arises that the provisions of Section 130 of the CGST Act can be applied. The learned Senior Counsel would further submit that, leaving it open to the authority on the spot, to decide whether he will proceed under Section 129 or section 130 of the CGST Act, would give uncanalised and arbitrary power to the authority to initiate, either the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Gujarat in Special Civil Application No.17533 of 2019 . In Synergy Fertichem Pvt. Ltd Vs. State of Gujarat, the Division Bench of the Hon ble High Court of Gujarat was considering a similar question of whether proceedings under Section 130 of the CGST Act can be initiated without any prior proceedings under Section 129 of the CGST Act. The view taken by the Hon ble High Court of Gujarat has been summarised in paragraphs 101 and 102 of the said Judgment which are extracted. 101. We are of the view that at the time of detention and seizure of goods or conveyance, the first thing the authorities need to look into closely is the nature of the contravention of the provisions of the Act or the Rules. The second step in the process for the authorities to examine closely is whether such contravention of the provisions of the Act or the Rules was with an intent to evade the payment of tax. Section 135 of the Act provides for presumption of culpable mental state but such presumption is available to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision Bench of the Hon ble High Court of Gujarat, after observing, as extracted above, had cautioned that a simple statement that the goods were being transported with an intention to evade tax, in notices of confiscation would not be sufficient and there would have to be specific reasons, recorded in writing as to why Section 130 of the Act is being invoked at the very threshold and that there must be material based on which alone the authority could have formed such an opinion and invocation of Section 130 becomes necessary. 28. In the present case, the conveyances and goods were stopped and detained on 27.04.2024. Thereafter, a statement was taken from the driver of the conveyances, in FORM GST MOV-01 on 27.04.2024. After recording the statement, the 2nd respondent issued FORM GST MOV-10 dated 01.05.2024, invoking the provisions of Section 130 of the CGST Act. In this notice, the discrepancies which were noticed by the 2nd respondent, were set out, and it was stated that these discrepancies lead to a prima facie conclusion that the transport of goods was done with an intention to evade tax. Thereafter, objections were submitted by the petitioner on 08.05.2024 and the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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