2025-VIL-1269-GUJ
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SGST High Court Cases

GST - Detention, seizure and confiscation of goods under Sections 129 and 130 of the CGST Act, 2017, Amendment to Sections 129 and 130 of the CGST Act, made effective from 01.01.2022 by virtue of the Finance Act, 2021 - The petitioners challenged the action of the respondent-authorities for confiscation of goods seized during transit under Section 129 of the CGST Act – Petitioners contend that confiscation of goods cannot be resorted to by invoking Section 130 of the CGST Act without completing the entire procedure contemplated under Section 129 of the CGST Act - Whether the respondent-authority/Proper Officer, who seizes and detains goods and conveyance in transit by exercising powers under Section 129 of the CGST Act, is required to complete the entire procedure prescribed under Section 129 before invoking Section 130 of the CGST Act for confiscation of the goods or conveyance – HELD - On the deletion of the sub-section (2) of Section 129, vide Finance Act, 2021, the provisional release of goods as provided under Section 67(6) for the goods seized and detained under Section 129 will no longer will be available - The legislative intent behind the amendments to Sections 129 and 130 of the CGST Act was to delink the transit-related proceedings under Section 129 from the proceedings of confiscation under Section 130. There is no statutory bar on the authorities from invoking Section 130 of the CGST Act for confiscation of goods that were initially seized and detained under Section 129 of the CGST Act. The 129 and 130 are independent and mutually exclusive provisions, and the authorities can resort to Section 130 even if the goods or conveyance is released upon payment of tax and penalty under Section 129 - The retention of the non-obstante clause in Section 129 only means that the entire procedure prescribed under Section 129 has to be followed, and the action of seizure of goods and conveyance is required to be brought to its logical end as per the provisions of Section 129. However, the goods and conveyance which are seized can still be confiscated under Section 130 of the CGST Act, if they involve an element of "intention to evade payment of tax". The deletion of the non-obstante clause from Section 130 does not create any conflict between the two sections, as they operate in different spheres – While upholding the independent and mutually exclusive nature of Sections 129 and 130 of the CGST Act, the respondent-authorities are directed to re-examine the notices issued for confiscation under Form MOV-10 or orders under Form MOV-11 – The petition is disposed of - Effect of deletion of non-obstante clause from Section 130 of the CGST Act – HELD - Albeit the non-obstante clause has been retained in Section 129 of the Act, and will have an overriding effect on other provisions of the Act including Section 130, however, it will have no impediment on the operation of the Section 130 of the Act. On an overall analysis of the scope and sphere of operation of both the Section, it is evident that there is no conflict in both the Sections. The quintessential feature which distinguishes and enlarges the scope of Section 130 from Section 129 of the Act is the “intent to evade the payment of tax”. There is no conflict between the sections as far as the forming an opinion on intention of evasion of tax. The provisions of Section 129 are stand alone provisions as far as no element of intention of evasion of tax is involved - As held by this Court in case of Synergy Fertichem Private Ltd, there is no bar in invoking the provision of Section 130 of the act for confiscation at threshold, if on the seizure of goods and conveyance it is found that the entire transaction reveals the intention to evade the tax. We are not convinced to take a different view as expressed by the coordinate bench, merely because the provisions have been amended, by deleting the non-obstante clause from Section 130 of the Act, while retaining it in Section 129 - Limitations for examining evasion of tax for goods and conveyance seized during transit – HELD - The proper officer, at the time of seizure and detention of the goods under Section 129 of the Act has to form an opinion regarding “intention” to evade payment of tax, and such intention can be gathered from the attendant circumstances. Since the action of confiscation is the last resort, and invites serious consequences, the same cannot be resorted to only on suspicion, bereft of any concrete material, and on ipse dixit. The proper officer has to examine the genuineness of the documents, invoices, e-way bills, consignment note, registration particulars produced at the time of interception. The formation of opinion of ‘intent to evade tax’, on the act or omission of a person, who is not proximately or directly linked to such activity with the dealer cannot be made the foundation for confiscation of goods – Further, the proper officer cannot venture into the assessment and valuation of goods at the time of interception of vehicle, and resort to seizure and confiscation of goods and conveyance by resorting to the entries in portal, and digging out the evasion of tax, etc of third parties - Time line for forming the opinion of evasion of tax for the goods in transit – HELD - the limitation of preparing the final report FORM- MOV-04, after inspection and verification of the conveyance and goods cannot be extended beyond the period of six days. In case, it is found that there is blatant evasion of tax, then the goods and conveyance can be seized, and FORM MOV-10 can be issued. Hence, for the goods which are in intercepted and are in transit, the opinion of “intention to evade the payment of tax’, has to be confined within the aforesaid period for confiscation, and if no opinion is formed, the goods and conveyance are required to be released by resorting to the provisions of Section 129 of the CGST Act.
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