Facts of the Case

The appellant, a registered dealer under the IGST and SGST Acts trading as Indian Scrap Supplier, sold 12,860 kg of iron scrap to a GST-registered dealer in Goa, transported under cover of an e-way bill in vehicle KL-66-8061. While passing through Kayamkulam on 07.07.2023, the consignment was intercepted; after physical verification (Ext.P8 report), the first respondent issued Ext.P9 show cause notice proposing confiscation, and despite the appellant's reply (Ext.P10), passed Ext.P12 confiscating both goods and conveyance directly, without first proceeding under Section 129 of the CGST Act. The appellant's writ petition (W.P.(C) No. 24656/2023) challenging this was dismissed by a learned Single Judge, holding that Sections 129 and 130 were independent, and relegating the appellant to the alternate remedy of appeal.

Issues Involved

  1. Whether the respondents were obliged to proceed sequentially through Section 129 (detention/release on payment of tax and penalty) before resorting to confiscation under Section 130 of the CGST Act.

Petitioner's Arguments

  • The provisions of Section 129 of the CGST Act had to be exhausted first, since Sections 129 and 130 were dependent upon each other, and the respondents could not leap directly to confiscation under Section 130 without first following the detention/release procedure.

Respondent's Arguments

  • Sections 129 and 130 are independent, self-contained provisions, and an order could validly be passed directly under Section 130 without first invoking Section 129; since the confiscation order was itself appealable, the appellant ought to pursue the statutory appellate remedy under the GST Act.

Court Order / Findings

  • The Division Bench agreed with the learned Single Judge that it is well settled that Sections 129 and 130 of the CGST Act are independent provisions, and there is no requirement in law that proceedings under Section 130 must be preceded by proceedings under Section 129.
  • The Court held that the confiscation order (Ext.P12) itself permitted the appellant to seek release of the goods and conveyance on payment of penalty and fine within fourteen days, which sufficed for an immediate release pending final disposal of any appeal preferred against the confiscation order before the appellate authority.
  • Finding no infirmity in the Single Judge's view, the writ appeal was dismissed, leaving the appellant to avail the statutory appellate remedy and, in the interim, the option to seek release on payment of the fine/penalty specified in the confiscation order.

Important Clarification

Sections 129 (detention and seizure) and 130 (confiscation) of the CGST Act operate as independent, self-contained codes; a taxing authority is not statutorily required to first invoke Section 129 before proceeding directly to confiscation under Section 130 where the ingredients for confiscation are otherwise made out, and an assessee aggrieved by a direct confiscation order must ordinarily pursue the statutory appeal, while availing the option to seek interim release of goods/conveyance on payment of the fine and penalty specified in the confiscation order itself.

Sections Involved

  • Section 129, CGST Act, 2017 — provides for detention, seizure and release of goods and conveyances in transit.
  • Section 130, CGST Act, 2017 — provides for confiscation of goods or conveyances and levy of penalty.

Decision – In Favour of

In favour of the Department — the writ appeal was dismissed, upholding the direct confiscation order, with the appellant relegated to the statutory appellate remedy.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case Number: WA NO. 1422 OF 2023
  • CNR / Citation: WA No. 1422 of 2023
  • Coram: Hon'ble Dr. Justice A.K. Jayasankaran Nambiar & Hon'ble Justice Mohammed Nias C.P.
  • Date of Order: 9 August 2023

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.