Facts of the Case

The petitioner, an unregistered trader dealing in scrap (battery, aluminium, brass and copper scrap) with an annual turnover of about Rs. 20-30 lakhs, was informed by GST officers at the time of rollout that registration was not required below Rs. 40 lakhs turnover. On 10.09.2021, while transporting about 11,989 kgs of scrap in vehicle No. AP 02 TC 7299 towards a weighbridge, the vehicle was intercepted and Form GST MOV-02 was issued for physical verification on the ground that the goods were being transported without an e-way bill. This was followed by an order of detention and a notice for confiscation. Despite the petitioner's written reply explaining his stand, the respondent passed an order dated 22.09.2021 confiscating the goods and conveyance under Section 130 of the SGST Act, 2017, directing release only on payment of tax, fine and penalty within 45 days. The petitioner approached the Andhra Pradesh High Court under Article 226 challenging the confiscation order as violative of Sections 129(3), 129(6) and 130(4) of the SGST Act.

Issues Involved

  1. Whether the procedure under Section 129 of the SGST Act, 2017 must necessarily precede invocation of Section 130 for confiscation.
  2. Whether the confiscation order was passed without affording the petitioner an opportunity of hearing under Section 130(4).
  3. Whether the quantum of fine imposed in lieu of confiscation of the goods and conveyance was excessive.

Petitioner's Arguments

  • The authorities failed to follow the procedure mandated under Section 129(3) before proceeding to confiscation under Section 130, including the requirement of notice specifying tax and penalty payable.
  • Sections 129 and 130 are interdependent, and confiscation under Section 130 cannot be invoked without first exhausting Section 129.
  • No opportunity of personal hearing was afforded before passing the confiscation order, in violation of Section 130(4).
  • Even if liable, the fine imposed for confiscation of both the goods and the conveyance was disproportionately high, almost equal to their respective values.

Respondent's Arguments

  • The vehicle was intercepted on the highway without any accompanying e-way bill, contrary to Section 68 read with Rule 138A of the SGST Rules.
  • Rule 138(1) casts the obligation to generate an e-way bill on the registered person causing movement of goods above Rs. 50,000/-, and does not exempt unregistered persons from carrying one.
  • The proceeding was one of confiscation under Section 130, distinct from assessment of tax, and the value of goods was not the relevant criterion.
  • The action of the authorities could not be faulted on facts.

Court Order / Findings

  • Relying on the Gujarat High Court's Division Bench ruling in Synergy Fertichem Pvt. Ltd. v. State of Gujarat, 2020(33) G.S.T.L. 513, the Court held that Sections 129 and 130 of the SGST Act are mutually exclusive and independent of each other; Section 129 need not be invoked or exhausted before proceeding under Section 130.
  • This view had already been affirmed by a Division Bench of the same High Court in W.P. No. 7078 of 2020.
  • On the hearing point, the record showed the petitioner had submitted written objections and had himself stated no personal hearing was required; disputed factual questions on this score were held to lie within the domain of the statutory appeal, not writ jurisdiction.
  • The order of confiscation and demand of tax and penalty was upheld, but the fine for confiscation of goods was reduced from Rs. 9,00,000/- to Rs. 4,00,000/-, and the fine for confiscation of the conveyance was reduced from Rs. 1,40,774/- to Rs. 1,00,000/-, having regard to the long period the vehicle had already remained with the authorities.

Important Clarification

  • Sections 129 (detention/seizure in transit) and Section 130 (confiscation) of the CGST/SGST Act operate in independent spheres; the department is not obliged to complete Section 129 proceedings before invoking Section 130 where the ingredients of confiscation are made out.
  • Where a party has expressly waived personal hearing on record, an Article 226 challenge premised on denial of hearing will not succeed; such factual disputes belong to the appellate forum.

Sections Involved

  • Section 129, SGST Act, 2017 — detention, seizure and release of goods and conveyances in transit.
  • Section 130, SGST Act, 2017 — confiscation of goods or conveyance and levy of tax, fine and penalty.
  • Section 68, SGST Act, 2017 read with Rule 138A — requirement of documents, including e-way bill, to accompany goods in transit.

Decision – In Favour of

Disposed of substantially in favour of the Department — the confiscation and demand of tax and penalty was upheld — with partial relief to the assessee in the form of a reduction in the quantum of fine imposed on both goods and conveyance.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No. 22975 of 2021
Coram: Hon'ble Sri Justice C. Praveen Kumar and Hon'ble Smt. Justice V. Sujatha
Date of Order: 29.03.2022

Link to Download the Order

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