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GST – Scope of Section 129 and Section 130 of the CGST Act, 2017 - Incomplete Part-B of E-way bill, Levy of Penalty under Section 129 of CGST Act - Whether Section 129 of the CGST Act, which provides for detention and seizure of goods and conveyances in transit, entails an inevitable levy of tax and penalty, or whether it is subject to the principles of moderation and proportionality laid down in Section 126 of the CGST Act - HELD – The Section 129 is principally concerned with the release of goods and conveyances which may have been detained or seized. The Section 129 cannot be construed as envisaging an inevitable levy of tax and penalty. While Section 129 provides for the detention and seizure of goods and conveyances in transit, the principles of moderation and proportionality enshrined in Section 126 must guide the imposition of penalties under the CGST Act - The non-obstante clause in Section 129 cannot be interpreted to override the statutory mandate in Section 126, which requires the officers to desist from imposing penalties for minor breaches, omissions or mistakes in documentation that are easily rectifiable and not tainted by fraudulent intent or gross negligence - the CBIC had also recognized that proceedings under Section 129 should not be initiated for minor discrepancies in E-way bills, and penalties should be imposed judiciously. Consequently, the impugned orders and set aside the demands of tax and penalty - The writ petitions were allowed, and the impugned orders were quashed. The demands of tax and penalty under Section 129 were set aside - Scope of Section 129 of the CGST – HELD – The Section 129 is principally concerned with the release of goods and conveyances which may have been detained or seized. That is clearly not a subject which is regulated or controlled by any of the other provisions contained in Chapter XIX of the Act. The use of the non-obstante clause is thus liable to be appreciated and construed in the aforesaid light - Since the subject of levy of penalty in connection with goods being transported in contravention of the Act had not been previously dealt with, the Legislature thought it fit and appropriate to deploy the non-obstante in order to deal with that subject. The extent of the “notwithstanding” phrase which introduces Section 129 into the statute book is thus liable to be construed in that light and thus the limit of its essay acknowledged accordingly - Confiscation of goods, Intent to evade tax - The writ petitioners challenged the authorities' actions under Section 130 of the CGST Act, which provides for the confiscation of goods and conveyances - Whether the authorities can straightaway issue a notice of confiscation under Section 130 of the CGST Act without applying their mind to the nature of the contravention and the intent to evade tax - HELD - The decision of the Gujarat High Court in Synergy Fertichem P. Ltd. v. State of Gujarat, held that the authorities cannot straightaway issue a notice of confiscation under Section 130 without closely examining the nature of the contravention and whether it was with an intent to evade tax. Confiscation is a penal measure and should only be invoked in cases where there is clear evidence of an intent to evade tax, and not for mere procedural lapses or trivial breaches - the authorities must adopt a reasoned and fair approach to avoid the unnecessary detention of goods and conveyances. Section 130 should not be invoked without proper grounds or evidence of an intent to evade tax - Section 130 reinforced the need for the authorities to distinguish between serious contraventions and minor breaches, and to exercise their powers judiciously - Whether the levy of penalties under the CGST Act must be guided by the principles of proportionality and reasonableness as enshrined in Article 14 of the Constitution - HELD - The harsh consequences of confiscation under the CGST Act warrant an interpretation that is fair, reasonable, and in consonance with the requirements of Article 14 of the Constitution. Levy of penalties must be guided by the principles of moderation, restraint, and proportionality, as embodied in Section 126 of the CGST Act.
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