Goods and Services Tax Regime lays significant emphasis on contravention of provisions envisaged in the related law while transporting or storing any goods when they are in transit and has provided strong measures to deal with such situation . Section 129 of the Central Goods And Services Tax Act , 2017 ( similar provisions are embodied in Uttar Pradesh Goods And Services Tax Act , 2017 ) envisages the provisions relating to detention , seizure and release of goods and conveyances in transit . This section also envisages the amount of tax and penalty that is to be paid in case of detention or seizure of goods , as a result of contravention of provisions of the aforesaid Act and the rules made thereunder , to obtain the release of such goods .
Following are the provisions embodied in section 129 of the aforesaid Act :
“129(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyances shall be liable to detention or seizure and after detention or seizure, shall be released,––
(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of
exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed.
Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.
(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c ).
(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in subsection (3) shall be deemed to be concluded.
(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within fourteen days of such detention or seizure, further proceedings shall be initiated in terms of section 130.
Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fourteen days may be reduced by the proper officer.
Thus it is quite evident from the provisions of the aforesaid section that these provisions apply only in the following conditions
- the goods are in transit
- the goods are being transported in contravention of the provisions of the Act or Rules made thereunder .
It is also further envisaged by sub-section (1) of the aforesaid section that if the aforesaid conditions are satisfied then such goods , related documents and the conveyance carrying them shall be liable for detention or seizure .
Proviso to this sub-section further clarifies that no such detention or seizure shall be made without serving an order of detention or seizure on the person transporting the goods. Thus this sub-section whereas clearly envisages that an order has to be pronounced prior to detention or seizure of goods and the conveyance in question but it does not embody any requisite to issue notice to the concerned person before passing the order of detention or seizure . Thus according to the provisions contained in the proviso to sub-section (1) if the aforesaid mentioned two conditions are satisfied then the proper officer shall issue the order of detention or seizure without issuing any notice to the concerned person indicating the reasons for such detention or seizure .
It is also significant to note that order under sub-section (1) of section 129 detaining or seizing the goods or conveyance in question is an appellable order in the GST Regime by virtue of the provisions contained in sub-section (1) of section 107 of the CGST Act , 2017 ( similar provisions are embodied in UPGST Act , 2017 ) unlike the legal scenario of VAT regime where seizure was beyond the scope of appeal . Sub-section (1) of section 107 reads as follows :
“107(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.”
The aforesaid sub-section makes it quite evident that an appeal may be filed against any decision or order passed under this Act or the State Goods and Services Tax Act or the Union territory Goods and Services Tax Act . There is no restriction in this sub-section as was embodied in sub-section (1) of section 55 of the U.P. Value Added Tax Act , 2008 which envisaged following provisions :
“55(1) Any dealer or other person aggrieved by an order made by the assessing authority other than an order mentioned in sub-section (7) of section 48 may , within thirty days from the date of service of the copy of the order , after serving a copy of appeal memo on the assessing authority or the commissioner , appeal to such authority ( hereinafter referred to as an appellate authority ) , as may be prescribed ;”
Thus it was a clear restriction in the erstwhile Act that the appeal could be filed only against the order of assessing authority and no appeal could be filed against the order passed under section 48(7) . However an order section 48(7) which followed the action under section 48(2) could be placed before the Commissioner or any such officer , not below the rank of a Deputy Commissioner, as may be authorised in that behalf for suitable redress . But the scope of such redress was limited to release of goods without depositing any amount or such lesser amount , or furnishing security in such form other than cash or indemnity bond as such authority deemed fit.
Thus the legal scenario of the present Act is abundantly clear with respect to appeal against an order passed under sub-section (1) of section 129 regarding detention or seizure of goods and conveyance and it is absolutely clear that such an order is appellable under sub-section (1) of section 107 .
It is also pertinent to note sub-section (1) further envisages that the goods and the conveyance detained or seized under this sub-section may be released :
(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such taxable goods and in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
Thus the all important condition , for the amount of tax and penalty mentioned in this clause to be paid for release of goods and conveyance , is that the owner must have come forward not only owning the goods but also have intended to pay such amount .
(b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
Thus this clause describes the amount of tax and penalty for release of goods and conveyance in the circumstances where contrary to clause (a) , the owner of the goods does not come forward for payment of such tax and penalty
(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed.
The provisions of clause (c) provide for another mode of release of goods and the conveyance where a security is furnished equivalent to the amount payable under clause (a) or clause (b) as the case may be .
It is quite significant that the provisions of clause (a) or clause (b) or clause (c) have nothing to do with the issuance of order for detention or seizure of goods and the conveyance . These clauses become operative only after the detention or seizure is made by the proper officer on the basis of suitable order .
It is also significant that section 68 of the CGST Act , 2017 ( similar provisions are embodied in UPGST Act , 2017 ) embodies following provisions :
“68. Inspection of goods in movement :
(1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.
(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed.
(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.”
It is significant to note that Rule 138 of the CGST Rules , 2017 ( similar provisions are embodied in UPGST Rules, 2017 ) envisages the provisions regarding information to be furnished prior to commencement of movement of goods and generation of e-way bill and Sub-rule(1) of Rule 138A describes the documents and devices to be carried by a person-in-charge of a conveyance while transporting any goods in the following manner:
“138A: (1) The person in charge of a conveyance shall carry –
(a) the invoice or bill of supply or delivery challan , as the case may be ; and
(b) a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner :
Provided that nothing contained in clause (b) of this sub-rule shall apply in case of movement of goods by rail or by air or vessel :
Provided further that in case of imported goods , the person in charge of a conveyance shall also carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of Form GST EWB-01 . “
It is also significant to note that provisions regarding verification of documents and conveyances are envisaged by Rule 138B in the following manner :
“138B : Verification of documents and conveyances :
(1) The Commissioner or an officer empowered by him in this behalf may authorize the proper officer to intercept any conveyance to verify the e-way bill in physical form or electronic form for all inter-State and intra-State movement of goods .
(2) The Commissioner shall get Radio Frequency Identification Device readers installed at places where the verification of movement of goods is required to be carried out and verification of movement of vehicles shall be done through such device readers where the e-way bill has been mapped with the said device .
(3) The physical verification of conveyance shall be carried out by the proper officer as authorized by the Commissioner or an officer authorized by him in this behalf .”
Thus any violation of the aforesaid provisions shall attract detention and seizure of goods and conveyance under sub-section (1) of section 129 of the Act .
Sub-section (2) of section 129 envisages that the provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. It is significant to note that section 67 embodies provisions regarding power of inspection , search and seizure and sub-section (6) of this section embodies following provisions :
“67(6) The goods seized under sub-section (2) shall be released , on a provisional basis , upon execution of a bond and furnishing of a security , in such manner and of such quantum , respectively , as may be prescribed or on payment of applicable tax , interest and penalty payable , as the case may be . “
It is reiterated that clause (a) , clause(b) and clause (c) of sub-section (1) of section 129 envisage the amount of tax and penalty to be paid in respect of the goods and conveyance seized , to get them released .
Sub-section (3) of section 129 is very important as together with the provisions embodied in sub-section (4) of this section , it envisages that the proper officer detaining or seizing the goods or conveyance shall issue a notice specifying the amount of tax and penalty payable and provide an opportunity of being heard to the concerned person in this regard . Thereafter such proper officer shall pass an order for the payment of the amount of tax and penalty as provided under clause (a) or clause (b) or clause (c ) as the case may be , to obtain the release of such goods and conveyance .
It is to be noted that sub-section (4) of this section envisages that no tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
It is significant to note that sub-section (4) of this section mentions the words “tax , interest or penalty ” whereas clauses (a) and (b) of sub-section (1) only embody the words “tax and penalty” and clause (c) also relates to such amount only . There is no mention of the word “interest” in these clauses . Thus the amount determined by an order under sub-section (3) of section 129 should be restricted to the amount mentioned in clause (a) or clause(b) or clause(c) , as the case may be .
It is also quite evident that the order under sub-section (3) is different from the order under sub-section (1) and both the orders are appellable under sub-section (1) of section 107 . It should also be clearly borne in mind that the provisions of sub-section (5) do not bar the concerned aggrieved person to file an appeal under section 107 against orders passed under sub-section (1) and sub-section (3) of section 129.
It is reiterated that sub-section (5) of section 129 embodies following provisions :
“(5) On payment of amount referred in sub-section (1) , all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded ”
Thus this sub-section simply envisages that once the amount determined according to sub-section (3) of section 129 is deposited by the concerned person , all the departmental proceedings shall be deemed to be concluded . It does not mean that the concerned person shall not be able to avail an opportunity to file an appeal under section 107 against the aforesaid orders passed under sub-section (1) and sub-section (3) if he has deposited the amount determined under sub-section (3).
Thus it is significant to note that the proper officer shall pass orders both under sub-section (1) and sub-section (3) separately and the person aggrieved shall have to file appeals against both such orders which have been passed under the aforesaid sub-sections to get the legal redress or remedy against such orders .
Sub-section (6) of section 129 further envisages that if the concerned person does not comply with the order passed under sub-section (3) of section 129 i.e. such person fails to pay the amount mentioned in such order within fourteen days of such seizure or detention , further proceedings under section 130 for the confiscation of goods or conveyance and levy of penalty shall be initiated . The proviso to this sub-section clarifies that where the detained or seized goods are perishable or hazardous in nature or are likely to be depreciate in value with passage of time , the said period of fourteen days may be reduced by the proper officer .
However it is to be noted that according to the provisions of sub-section (6) of this section the period of fourteen days is not to be counted from the date of order under sub-section (3) but is to be counted from the date of order under sub-section (1) i.e. from the date of detention or seizure of goods .
Yogendra Kumar
The PEN TALKS 