Bhavani Trading Vs Commercial Tax Officer

Shorn off lengthy arguments at the Bar from both the sides, the short question that falls for consideration is: whether pending conclusion of delayed confiscation proceedings in terms of Sec.130 of CGST Act, 2017, the subject goods can be released to the apparent owner thereof on his depositing the amount that may become payable by him in terms of demand notice, of course subject to outcome of the said proceedings.

2. The above question of law arises for consideration in the following fact matrix:

(a) Petitioner being a dealer registered under the Karnataka Goods & Services Tax Act, 2017 and under the Central Goods & Services Tax Act, 2017, having purchased pan masala and cented chewing tobacco was transporting the same in the goods vehicle bearing No.TN77 L 4639 on 26.3.2021; the said vehicle having been intercepted at around 1.30 pm on that day at Bidadi industrial area, the statement of its driver recorded, it had been seized.

(b) The physical verification of the goods having been accomplished after more than a week i.e., on 3.7.2021, the order of detention of goods and the vehicle came to be made on the same day in Form GST MOV -06 as per Annexure-D; however, no notice in Form GST MOV -07 was issued and therefore, petitioner sent a letter dated 12.7.2021 by Speed Post to the JCCT (Vigilance) seeking release of the goods in detention on the ground that they were perishable; no decision thereon not taken, he is knocking at the doors of Writ Court grieving against continued detention of the goods and the vehicle, indefinitely.

3. After service of notice, the respondents entered appearance through the learned AGA who vehemently opposes the Writ Petition contending that the transport of goods has been made to the recipients place twice on 23.6.2021, illegally; same day, a request was made to the CEO of Bidadi Industrial Association to furnish the CCTV footages of the goods conveyance and the said footages have been furnished on 28.6.2021; a request was also made to the Commissioner of Police, Bengaluru on 7.7.2021 to provide call details of the mobile phone numbers belonging to the persons associated with the transaction in question and the information is furnished on 17.7.2021 & 2.8.2021; on the basis of the information collected, confiscatory proceedings are initiated u/s 130 of the Act by trigerring the notice in Form GST MOV -10 dated 13.8.2021; it is open to the petitioner to participate in the said proceedings; instead of doing that, petitioner has unjustifiably moved the Writ Court; so contending, he seeks dismissal of the Writ Petition.

4. Having heard the learned counsel for the parties and having perused the Petition Papers, this Court is inclined to grant a limited indulgence in the matter as under and for the following reasons:

(a) The text of provision of Sec. 129 of the Act provides for detention of the goods along with the transport vehicle and Sec.130 provides for the confiscation of the same on certain grounds, as contended by learned AGA is true; however, sub-section (2) of Sec. 130 providing for redemption of confiscated goods & conveyances reads as under:

“(2) Whenever confiscation of any goods or conveyances is authorized by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit:”

The first & second Proviso to the said sub-section provide for levy of fine & penalty which the owner of the goods has to pay for seeking redemption; the third Proviso gives similar right to the owner of the conveyance/transport vehicle; thus, the confiscation is in the nature of mala prohibita as contradistinguished from mala in se; in other words, the confiscation of the goods and the conveyances does not render them res extra commercium or res nullius; even after confiscation order is passed, thus, it is open to the owner to seek redemption of the confiscated goods/conveyance, as rightly submitted by Mr. K.G.Raghavan, learned Sr. Advocate appearing for the petitioner.

(b) There is also force in the submission of Mr.Raghavan that even when Sec.130 proceedings culminate in confiscation, the sin does attach to the goods or the conveyance but only may attach to their owner who can purge it by making payment of tax & penalty as provided by sub-sec.(2) of Sec.130 and therefore, if the owner comes forward to pay the amount comprised in the demand notice, the goods and the conveyances may be released pending conclusion of the long drawn confiscation proceedings; an argument to the contrary would rob off the elements of justice which the said provisions have loaded in favour of owner that eventually warrant reprieve being granted to him, more particularly, when the longevity of such proceedings being indefinite.

(c) The request of the petitioner for release of the goods and the conveyance in detention is also supported by the Central Board of Indirect Taxes and Customs Circular No.41/15/2018-GST, New Delhi dated 13.4.2018 which prescribes the procedure to be followed by the authorities for interception of conveyances for inspection of goods; the said Circular in so many words prescribes a very short period for concluding the inspection proceedings i.e., three working days plus the time extended in writing by the Commissioner or his designate; clauses (h), & (l) which read as under lend support to the claim of petitioner for release of the goods and the vehicle:

“(h) Where the owner of the goods or any person authorized by him comes forward to make the payment of tax and penalty as applicable under clause (a) of sub-section (1) of section 129 of the CGST Act, or where the owner of the goods does not come forward to make the payment of tax and penalty as applicable under clause (b) of sub­section (1) of the said section, the proper officer shall, after the amount of tax and penalty has been paid in accordance with the provisions of the CGST Act and the CGST Rules, release the goods and conveyance by an order in FORM GST MOV-05. Further, the order in FORM GST MOV-09 shall be uploaded on the common portal and the demand accruing from the proceedings shall be added in the electronic liability register and the payment made shall be credited to such electronic liability register by debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act.

(l) Where the proper officer is of the opinion that such movement of goods is being effected to evade payment of tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum of tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equal to the tax payable on the goods being transported in lieu of confiscation of the conveyance.”

In the above circumstances, this writ petition is allowed in part; a Writ of Mandamus issues to the respondent to release the goods and the conveyance in detention immediately to the petitioner after ascertaining his prima facie ownership and on his depositing the total amount comprised in Sec.130 Notice dated 13.08.2021 in GST MOV 10, subject to outcome of the confiscation proceedings; petitioner shall not put forth any grounds of equity by virtue of this order and the release of subject goods and the conveyance.

All contentions are kept open.

Costs made easy.