SC and HC Judgments Online at MyNation

Judgments of Supreme Court of India and High Courts

Synergy Fertichem Pvt.Ltd vs State Of Gujarat on 23 December, 2019

C/SCA/4730/2019CAVJUDGMENT

INTHEHIGHCOURTOFGUJARATATAHMEDABAD

R/SPECIALCIVILAPPLICATIONNO.4730of2019
With
R/SPECIALCIVILAPPLICATIONNO.6125of2019
With
R/SPECIALCIVILAPPLICATIONNO.6118of2019
With
R/SPECIALCIVILAPPLICATIONNO.9105of2019
With
R/SPECIALCIVILAPPLICATIONNO.10018of2019

FORAPPROVALANDSIGNATURE:

HONOURABLEMR.JUSTICEJ.B.PARDIWALASd/­

and
HONOURABLEMR.JUSTICEA.C.RAOSd/­

1WhetherReportersofLocalPapersmaybeallowedYes
toseethejudgment?

2TobereferredtotheReporterornot?Yes

3WhethertheirLordshipswishtoseethefaircopyNo
ofthejudgment?

4WhetherthiscaseinvolvesasubstantialquestionNo

oflawastotheinterpretationoftheConstitution
ofIndiaoranyordermadethereunder?

SYNERGYFERTICHEMPVT.LTD
Versus
STATEOFGUJARAT

Appearance:

SCANO.4730OF2019

MR.UCHITNSHETH,LD.ADV.forthePetitioner(s)No.1,2

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SCANO.6125OF2019

MR.D.K.PUJ,LD.ADV.forthePetitioner(s)No.1

SCANO.6118OF2019

MR.UCHITSHEHT,LD.ADV.forthePetitioner(s)No.1

SCANO.9105OF2019

MR.PARESHM.DAVE,LD.ADV.ForthePetitioner(s)No.1,2

SCANO.10018OF2019

MR.TUSHARHEMANI,LDADV.withMS.VAIBHAVIK.PARIKH,LDADV.
forthePetitioner(s)No.1

MR.KAMALB.TRIVEDI,LD.ADV.GENERALwithMS.MAITHILIMEHTA,
LD.AGPwithMR.SOHAMJOSHI,LD.AGPfortheRespondent(s)No.1,2
inallthepetitions.

CORAM:HONOURABLEMR.JUSTICEJ.B.PARDIWALA
and
HONOURABLEMR.JUSTICEA.C.RAO

Date:23/12/2019

CAVJUDGMENT

(PER:HONOURABLEMR.JUSTICEJ.B.PARDIWALA)

1.Sincetheissuesraisedinallthecaptionedwrit
applicationsarethesame,thosewereheardanalogously
andarebeingdisposedofbythiscommonjudgmentand
order.

2.Wehavebeencalledupontolookintoandinterpret
theprovisionsofSections129andSection130respectivelyofthe
CentralGoodsServicesTaxAct,2017(forshort”the
CGSTAct”)amidstlotofhueandcryattheinstanceofthe

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writapplicants(dealers)redressingthegrievancethatthe
authoritiesconcernedareinvokingthepowertoconfiscate
thegoodsandtheconveyanceunderSection130oftheGST
Actarbitrarilyandwithoutanyapplicationofmind.Insuch
circumstances,weneedtolookintothetwoprovisionsand
trytoascertainwhetherthetwoprovisionsoverlaporare
independentofeachother.Wetakenoticeofthefactthat
boththeprovisions,i.e.,Sections129and130oftheGST
Actstartwithanon-ostanteclause.

3.Forthesakeofconvenience,wetreattheSpecialCivil
ApplicationNo.4730of2019astheleadmatter.

4.BythiswritapplicationunderSectionArticle226ofthe
ConstitutionofIndia,thewritapplicantshaveprayedfor
thefollowingreliefs;

“(A)ThisHon’bleCourtmaybepleasedtoissueawrit
ofmandamusorawritinnatureofmandamusorany
otherappropriatewrit,orderordirectionquashingand
settingasidenoticedated1.3.2009(annexedat
AnnexureA)issuedbythelearnedRespondentNo.2;

(B)ThisHon’bleCourtmaybepleasedtoissueawrit
ofmandamusorawritinnatureofmandamusorany
otherappropriatewritororderdirectingthelearned
Respondentauthoritiestoforthwithreleasegoodswith
truckno.GJ-07-UU-7250byquashingandsettingaside
thedetentionnotices/ordersissueforsuchpurpose
(annexedatAnnexureF);

(C)Pendingnotice,admissionandfinalhearingofthis
petition,thisHon’bleCourtmaybepleasedtodirectthe
learnedRespondentauthoritiestoforthwithrelease
goopswithtruckno.GJ-07-UU-7250detained/seizedin

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purportedexerciseofpowersunderSection129and
130oftheGSTActs;

(D)ExparteadinterimreliefintermsofprayerCmay
kindlybegranted;

(E)Suchfurtherrelief(s)asdeemedfitinthefactsand
circumstancesofthecasemaykindlybegrantedinthe
interestofjusticeforwhichactofkindnessyour
petitionersshallforeverpray.”

5.Thefacts,givingrisetothiswritapplicationinthe
wordsofthewritapplicants,aspleadedinthewrit
application,areasunder;

“1.BywayofthispetitionunderSectionArticle226ofthe
ConstitutionofIndiathePetitionersprayforwritof
mandamusquashingandsettingasidenoticedated
1.3.2019issuedundertheCentral/GujaratGoodsand
ServicesTaxAct,2017(hereinafterreferredtoas”the
GSTActs”).ThePetitionersalsoprayforwritof
mandamusdirectingthelearnedRespondentsto
forthwithreleasetrucknumberGJ-07-UU-7250along
withgoodscontainedthereinseizedbythelearned
Respondentauthorities.Copyoftheimpugnednotice
dated1.3.2019isannexedherewithandmarkedas
AnnexureA.

2.Therelevantfactsgivingrisetothepresent
petitionarebrieflystatedhereinbelow:

The1stPetitionerisaPrivateLimitedCompanyhaving
placeofbusinessatSynergyHouse-2,Subhanpura,
Gorawa,Vadodara.The2ndPetitionerisDirectorand
AuthorizedSignatoryofthe1stPetitionerandhisrights
andinterestaredirectlyaffectedbytheimpugned
communicationofthelearnedOfficer.The1st
RespondentistheStateofGujarat.The2ndRespondent
isanofficeroftheStateofGujaratentrustedwiththe
taskofcollectingtaxundertheGSTActsandis
amenabletothewritjurisdictionofthisHon.Court.

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3.ThePetitionersareinter-aliaengagedinimport
andsaleofceramicpigmentinkwhichisusedas
colouringsubstanceinthetilesmanufacturingindustry.
ThePetitionersareauthorizedagents/distributorsof
Esmalglass-Itacagroupwhichhasitsheadofficeat
PartidaRambleta,S/N12191,PoblaTornesa,
Castellon,Spain.ThePetitionersareoneofthetwo
distributorsthatthesaidcompanyhasforIndia.

4.ThePetitionershavebeenimportinggoodssince
manyyearsandtheimportedgoodsaresoldtomajor
tilemanufacturingunitsacrossthecountry.Thegoods
areimportedthroughMundraPortinKandlaandthe
AhmedabadAirport.ThePetitionershadapproximate
annualturnoverofRs.50croresintheprevious
financialyearanditdischargescroresofrupeesbyway
oftaxundertheGSTActs.

5.Insofarasimporttransactionsareconcerned,
importerssuchasthePetitionersarerequiredtopay
customsdutyaswellastheIGSTpayableonsuch
importsbeforeclearanceforhomeconsumption.Inother
wordsforimportstheIGSTispaidpriorto
commencementofmovementofgoodsfromthe
port/airport.

6.ThePetitionershadorderedforaconsignmentof
ceramicpigmentinkfromitsprincipalinSpain.The
importtookplacethroughtheAhmedabadAirport.The
Petitionersdulyfiledbillofentryforhomeconsumption
on13.2.2019andpaidtheapplicablecustomsdutyas
wellasIGSTwhichispayableonimportsbyimporters.
Copyofthebillofentryforhomeconsumptionfiledby
thePetitionersalongwiththeexportinvoice,packinglist
andairwaybillarecollectivelyannexedherewithand
markedasAnnexureB.

7.TheassessedvalueofgoodsisRs.39,43,272on
whichthePetitionerspaidcustomsdutyamountingto
Rs.3,00,526andIGSTattherateof18%totalingtoRs.
7,09,789.Copyofe-receiptshowingpaymentofsuch
dutyandtaxon13.2.2019isannexedherewithand
markedasAnnexureC.

8.Ceramicpigmentinkhasalimitedshelflifeandit

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hastobepreservedattemperatureswhichare
preferablynottoexceed25degreescentigrade.Long
exposurestohightemperaturesandhumidityare
requiredtobeavoided.Copyoftheinformationnote
withregardtotheproductinquestionaspublishedby
theforeignmanufacturerisannexedherewithand
markedasAnnexureD.

9.Generalinstructionshadbeengivenbythe
Petitionerstotheirclearingandforwardingagents
explainingtothemurgencyoftransportingceramic
pigmentinkimmediatelyonimport.Consideringsuch
generalinstructions,sinceatransportvehiclewas
immediatelyavailable,theclearingandforwarding
agentofthePetitionersinitiatedtransportoftheceramic
inktothewarehouseofthePetitionersinVadodara
withoutevenwaitingforthee-waybillinrespectofthe
goods.Thiswasparticularlyconsideringthefactthat
theproofofpaymentofGSTonthetransactionitself
wasaccompanyingthegoodsintheformofbillofentry
forhomeconsumption.

10.Thetransporterhaddulypreparedtransport
receiptinrespectofthevehiclefortransportofgoods
fromAhmedabadAirporttothewarehouseofthe
PetitionersinVadodara.Copyoftransportreceiptin
relationtothegoodsisannexedherewithandmarked
asAnnexureE.

11.`Thetruckwiththegoodswerestoppedfor
verificationontheAhmedabad-Vadodaraexpressway
bythelearnedRespondentNo.2.Thetransporterduly
producedalldocumentsrelatingtogoodsincludingbill
ofentryforhomeconsumptionevidencingpaymentof
IGSTonthetransaction.Thetruckwiththegoodswere
howeverdetainedbythelearnedofficerontheground
ofabsenceofe-waybillinrespectofthegoods.Notices
inFormGSTMOV-1andGSTMOV-6wereservedtothe
transporterofthegoods.Copiesofsuchnoticesserved
tothetransporterareannexedherewithandmarkedas
AnnexureF.

12.Onbeinginformedaboutsuchdetentionthe
Petitionerspromptlygeneratedthee-waybillinrespect

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ofthetransaction.Copyofthee-waybillgeneratedby
thePetitionersisannexedherewithandmarkedas
AnnexureG.

13.ThePetitionersthereafterimmediatelyapproached
thelearnedRespondentauthoritiesandgave
explanation.Itwassubmittedthatthegoodsbeing
perishableandduetourgencyoftransportinggoodsthe
clearingandforwardingagenthadinitiated
transportationofgoodsimmediatelyonclearancefrom
customsauthoritieswithoutwaitingfore-waybillfrom
thePetitioners.HoweverthefactisthatIGSThadbeen
paidonthetransactionevenbeforecommencementof
movementofgoods.Billofentryforhomeconsumption
hadbeendulyfiledinrespectofgoodswhichwas
admittedlypossessedbythetransporter.Thusthere
wasnoquestionofthegoodsbeingunaccountedor
therebeinganyintentionofevadingpaymentoftax.In
facttaxundertheGSTActshadalreadybeenpaidby
thePetitioners.

14.ThelearnedRespondentauthoritieshowever
refusedtoreleasethegoodsonthegroundofabsenceof
e-waybill.ThelearnedRespondentauthoritiesinfact
insistedforpaymentofnotonlytaxand100%penalty
underSection129oftheGSTActsbutalsofineinlieuof
confiscationequaltothevalueofgoodsunderSection
130oftheGSTActs.

15.ThePetitionersmadewrittenrepresentationbefore
thelearnedDeputyCommissioneraswellasthe
learnedJointCommissionerofCommercialTaxfor
interventioninthematterashugepaymentwasbeing
demandedforagenuinetransactiononthebasisof
technicalbreachofprovisionsoflaw.Copyofwritten
lettersdated26.2.2019submittedbeforethelearned
departmentalauthoritiesarecollectivelyannexed
herewithandmarkedasAnnexureH.

16.ThePetitionersmadesimilarrepresentationeven
beforethelearnedChiefCommissionerofStateTax.The
goodswiththevehiclearehowevernotbeingreleased
bythelearnedRespondentauthorities.Thelearned
Respondentauthoritiesareinsistingforpaymentoftax

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and100%penaltyunderSection129oftheGSTActsas
wellasredemptionfineinlieuofconfiscationequalto
thevalueofgoodsunderSection130oftheGSTActsfor
securingreleaseofgoods.

17.Inotherwordsforgoodswhichareadmittedly
worthRs.39,43,272onwhichcustomsdutyofRs.
3,00,526andIGSTofRs.7,09,789havealreadybeen
paid,thelearnedRespondentauthoritiesare
demandinganamountofRs.60,72,639forreleaseof
goods.

18.ThePetitionersinquiredfromthelearned
Respondentauthoritiesthebasisforsuchhugedemand
sincetheyhadonlyreceiveddetentionnoticesinForms
GSTMOV-01andGSTMOV-06.Uponsuchinquirythe
learned2ndRespondentauthorityhasissuedthe
impugnedshowcausenoticedated1.3.2019(annexed
atAnnexureA)requiringpaymentofRs.60,72,639for
releaseofgoodsfailingwhichitisinformedthatthe
goodswiththevehiclewillbeconfiscatedand
auctioned.

19.IntherespectfulsubmissionofthePetitionersthe
impugnednoticedemandingpaymentofRs.60,72,639
forsecuringreleaseofgoodswhichareadmittedly
worthRs.39,43,272onwhichcustomsdutyofRs.
3,00,526andIGSTofRs.7,09,789havealreadybeen
paidismanifestlyarbitrary,withoutapplicationof
mind,illegalandviolatingSectionArticle14oftheConstitution
ofIndia.

20.AttheoutsettheprovisionsofSection130ofthe
GSTActsareex-facienotapplicabletothefactsofthe
presentcase.Section130oftheGSTActscanbe
invokedinthe5circumstancesasenvisagedunderthe
saidprovisionwhichareallpertainingtoevasionoftax.
Henceforinvokingthesaidprovisionithastobe
primarilyallegedandprovedthattherewasintentionto
evadepaymentoftaxinrespectofthegoodsin
question.Inthepresentcaseadmittedlythegoodswere
beingaccompaniedbythebillofentryforhome
consumptionwhichevidencedpaymentofIGSTonthe
transactionevenbeforecommencementofmovementof

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thegoods.Thustherewasnoquestionoftheybeing
unaccountedgoodsortherebeingintentiontoevade
paymentoftax.InvokingtheprovisionsofSection130
oftheGSTActsinthefactsandcircumstancesofthe
casewithouttherebeinganyallegationofevasionoftax
anddemandingmaximumredemptionfineequaltothe
valueofgoodsiswhollywithoutjurisdiction,arbitrary
andillegal.

21.EveninsofarasSection129oftheGSTActsis
concernedthesaidprovisionallowsdetentionofgoods
andsubsequentreleasethereofonpaymentof
applicabletaxandpenaltyequalto100%oftaxpayable
onsuchgoodsifthereiscontraventionoftheprovisions
oftheGSTActsandtherulesmadethereunder.Thus
theprovisionisalsoassuchapplicablewhentaxis
payableonthetransaction.Howeverinthefactsofthe
presentcasewhentaxundertheGSTActsisalready
paidinadvanceatthetimeofclearanceofthegoodsfor
homeconsumption,thesaidprovisionisinapplicable
thefactsofthePetitioners.

22.Evenotherwiseitisrespectfullysubmittedthatthe
contraventionofprovisionsoftheGSTActsas
contemplatedunderSection129oftheGSTActsisa
substantialcontraventionwhichwouldhavetheresult
ofleakageoftaxrevenue.Henceitisprovidedthatin
caseofsuchcontraventionthegoodscanbereleased
onlyonpaymentoftaxand100%penalty.Thesaid
provisioncannotbeappliedtotechnicalcontraventions
wherethetaxablepersonisinapositiontoestablish
thatthebreachistechnicalinnaturewithnopossibility
oftaxevasion.

23.PurposiveinterpretationofSection129oftheGST
Actsrequiresitsapplicationonlytocaseswhereitis
establishedthattherewasintentionorinanycase
possibilityofevasionoftaxinrespectofthegoodsbeing
transported.Evenifsomedocumentsuchase-waybill
ismissingatthetimeofverification,thiswouldatthe
mostonlycreatearebuttablepresumptionthatthere
wasintentiontoevadepaymentoftax.Ifthetaxable
personisabletoestablishthattherewasnointentionof
evadingpaymentoftaxthentheprovisionsofSection

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129oftheGSTActsisnotpermissible.

24.ThePetitionerspointoutthattheGovernmentitself
hasclarifiedbyCircularNo.64/38/2018-GSTdated
14.9.2018thatincaseoftechnicalerrorsinthe
documentsaccompanyingthegoods,provisionsof
Section129oftheGSTActsmaynotberesortedtobut
insteadgoodsmaybereleasedonpaymentofnominal
penaltyunderSection125oftheGSTActs.Copyof
circulardated14.9.2018issuedbytheGovernmentof
IndiaisannexedherewithandmarkedasAnnexureI.

25.ItisrespectfullysubmittedthatSection129and
Section130oftheGSTActsareprovisionsenactedto
curbevasionoftaxundertheGSTActs.Theyare
drasticmeasureswherebygoodscanbeseizeden-route
andtheywouldbereleasedonlyonpaymentoftax,
hugepenaltyandhugeredemptionfine.Applicationof
suchprovisionstotechnicalbreachesofstatutory
provisionswouldrenderthemvulnerableofviolating
SectionArticle14oftheConstitutionofIndiaaswellasSectionArticle
301oftheConstitutionofIndiawhichrequiresthereto
befreeflowoftradeandcommerceacrossthecountry.”

6.Thus,itappearsthatthewritapplicantNo.1isa
PrivateLimitedCompanyandthewritapplicantNo.2isits
DirectorandAuthorizedSignatory.TheCompanyis
engagedinthebusinessofimportandsaleofCeramic
PigmentInkwhichisusedasacolouringsubstanceinthe
manufacturingoftheceramictiles.Thewritapplicantshad
placedanorderforaconsignmentofCeramicPigmentInk
fromitsprincipaloperatinginSpain.Theimporttookplace
throughtheAhmedabadAirport.Thewritapplicantsduly
filedthebillofentryforhomeconsumptionandalsopaid
theapplicablecustomsdutyaswellastheIGSTpayableon
theimportsbytheimporters.Itappearsthatwhilethe
goodswerebeingtransportedfromtheAhmedabadAirport

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tothewarehouseofthewritapplicantssituatedin
Vadodara,thevehiclewasdetainedbytheGSTAuthorities,
moreparticularly,therespondentNo.2.Infact,thetruck
withthegoodswasinterceptedattheAhmedabad-Vadodara
ExpressWay.Itisthecaseofthewritapplicantsthatthe
transporterproducedallthedocumentsrelatingtothe
goodsincludingthebillofentryforhomeconsumption
evidencingpaymentoftheIGSTonthetransaction.The
truck,however,cametobedetainedbytheofficer
concernedonthegroundofabsenceofthee-waybillin
respectofthegoods.

7.Theaforesaidledtoissueofnoticestothetransporter
ofthegoodsinFormGSTMOV-1andGSTMOV-6.

8.Itisthecaseofthewritapplicantsthathavingcometo
knowaboutthedetentionofthetruck,theypromptly
generatedthee-waybillinrespectofthetransaction.The
authorities,however,declinedtoreleasethegoodsonthe
groundthatwhilethegoodswerebeingtransported,the
driverofthevehiclewasnotcarryingthee-waybill.

9.Theauthoritiesnotonlyimposed100%penaltyunder
Section129oftheActbutalsoimposedfineinlieuof
confiscationequaltothevalueofthegoodsunderSection
130oftheAct.

10.Astheauthoritiesinsistedforpaymentoftaxand
100%penaltyunderSection129oftheActaswellas

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redemptionfineinlieuoftheconfiscationequaltothevalue
ofgoodsunderSection130oftheAct,thewritapplicants
hadtocomebeforethisCourtwiththepresentwrit
application.

11.On6thMarch,2019,aCoordinateBenchofthisCourt
passedthefollowingorder;

“1.Mr.UchitSheth,learnedadvocateforthepetitioners
invitedtheattentionofthecourttotheprovisionsof
sections129and130oftheCentralGoodsandServices
TaxAct,2017,topointouttheprocedurewhichis
requiredtobefollowedbytherespondentauthoritiesin
casewhereanygoodsareintransitincontraventionof
theprovisionoftheActortherulesmadethereunder.It
waspointedoutthatfirstly,undersection129ofthe
Act,theofficerisrequiredtoissueanoticeas
contemplatedundersub-section(3)thereofand
thereafter,afteraffordinganopportunityofhearingto
thepersonconcerned,passanorderthereunder.Itwas
submittedthatitisonlyifthereisnocomplianceofthe
orderpassedundersection129oftheAct,thatthe
provisionsofsection130oftheIGSTActcanberesorted
to.Theattentionofthecourtwasinvitedtothe
impugnedshowcausenoticedated1.3.2019,tosubmit
thatthesameseekstoimposepenalty,redemptionfine
andconfiscationundersection130oftheActwithout
initiatinganyproceedingsundersection129oftheAct,
whichisnotpermissibleinlaw.Itwasfurther
submittedthattheintegratedgoodsandservicestax
hasalreadybeenpaidonthegoodsinquestionatthe
timeofimportthereofandthatthegoodsinquestionare
perishablegoodswithalimitedshelf-life.

2.Havingregardtothesubmissionsadvancedbythe
learnedcounselforthepetitioners,IssueNotice
returnableon8thMarch,2019.

DirectServiceispermittedtoday.”

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12.Thereafter,on8thMarch,2019,thisCourtpassedthe
followingorder;

“1.On06.03.2019thisCourthadpassedanorderin
thefollowingterms;

“1.Mr.UchitSheth,learnedadvocateforthe
petitionersinvitedtheattentionofthecourt
totheprovisionsofsections129and130ofthe
CentralGoodsandServicesTaxAct,2017,to
pointouttheprocedurewhichisrequiredtobe
followedbytherespondentauthoritiesincase
whereanygoodsareintransitin
contraventionoftheprovisionoftheActorthe
rulesmadethereunder.Itwaspointedoutthat
firstly,underSectionsection129oftheAct,theofficeris
requiredtoissueanoticeascontemplated
undersubsection(3)thereofandthereafter,
afteraffordinganopportunityofhearingto
thepersonconcerned,passanorder
thereunder.Itwassubmittedthatitisonly
ifthereisnocomplianceoftheorderpassed
underSectionsection129oftheAct,thatthe
provisionsofsection130oftheIGSTActcanbe
resortedto.Theattentionofthecourtwasinvited
totheimpugnedshowcausenoticedated
1.3.2019,tosubmitthatthesameseeks
toimposepenalty,redemptionfineand
confiscationunderSectionsection130oftheAct
withoutinitiatinganyproceedingsunder
Sectionsection129oftheAct,whichisnot
permissibleinlaw.Itwasfurthersubmittedthat
theintegratedgoodsandservicestaxhas
alreadybeenpaidonthegoodsinquestion
atthetimeofimportthereofandthatthe
goodsinquestionareperishablegoodswitha
limitedshelf-life.

2.Havingregardtothesubmissionsadvancedby
thelearnedcounselforthepetitioners,Issue

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Noticereturnableon8thMarch,2019.Direct
Serviceispermittedtoday.”

2.Inresponsetothenotice,Mr.SohamJoshi,learned
AssistantGovernmentPleader,hasappearedon
behalfoftherespondents.

3.ThelearnedAssistantGovernmentPleaderhas
invitedtheattentionoftheCourttothe
detentionorderdated14.02.2019issuedbythe
properofficerundersubsection(1)ofsection129
oftheCentralGoodsandServicesTaxAct,
2017(hereinafterreferredtoas”theCGSTAct”)and
otherrelevantstatutes.Itwassubmittedthatthe
goodsinquestionwerenotaccompaniedbyanEway
billduringthecourseoftransitandtherefore,the
respondentsarefullyjustifiedinpassingthedetention
orderundersection129(1)oftheCGSTAct.

4.Subsection(3)ofsection129oftheCGSTAct
providesthattheproperofficerdetainingorseizingthe
goodsorconveyancesshallissueanotice
specifyingthetaxandpenaltypayableandthereafter,
passanorderforpaymentoftaxandpenaltyunder
clause(a)orclause(b)orclause(c).Subsection(4)
providesthatnotax,interestorpenaltyshall
bedeterminedundersubsection(3)withoutgiving
thepersonconcernedanopportunityofbeingheard.

5.Inthepresentcase,theshow-causenotice
dated01.03.2019hasbeenissuedunder
section130oftheCGSTActcallinguponthepetitioner
toshowcauseastowhythegoodsinquestionaswell
asthevehicleshouldnotbeconfiscatedfornonpayment
ofanamountofRs.60,72,639/,asdetailed
therein.OnaquerybytheCourt,thelearned
AssistantGovernmentPleaderisnotinapositionto
pointoutthattheprocedure,ascontemplated
undersubsections(3)and(4)ofsection129of
theCGSTAct,hasbeenfollowed.Thus,primafacie,it
appearsthattheshowcausenoticeundersection130of
theCGSTActhasbeenissuedwithoutcomplyingwith

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therequirementsofsection129oftheCGSTAct.
Itisalsoanadmittedpositionthatthegoodsin
questionareperishableinnature.

6.Intheaforesaidpremises,intheopinionofthisCourt,
thepetitionerhasmadeoutastrongprimafaciecase
forthegrantofinterimrelief.Bywayofinterim
relief,therespondentsareherebydirectedto
forthwithreleasethegoodsinquestionandthe
Truckbearingregistrationno.GJ07UU7250
detained/seizedunderpurportedexerciseof
powersundersections129and130oftheCGSTAct.
However,thepetitionershallfileanundertaking
beforethisCourtwithinaweekfromtodayto
theeffectthatincasethepetitioner,ultimately,
doesnotsucceedinthepetition,heshallduly
cooperateinthefurtherproceedings.

7.Standoverto27.03.2019,soastoenablethe
respondentstofileaffidavitinreply,ifany,inthe
matter.

Directserviceispermittedtoday.”

13.Thegroundsofchallengetotheimpugnednoticedated
1stMarch,2019,Annexure-Atothiswritapplicationis
substantiallyonthefollowinggroundsasraisedinthe
memoofthewritapplication.

“A.TheimpugnednoticedemandingpaymentofRs.
60,72,639forsecuringreleaseofgoodswhichare
admittedlyworthRs.39,43,272onwhichcustomsduty
ofRs.3,00,526andIGSTofRs.7,09,789havealready
beenpaidismanifestlyarbitrary,withoutapplicationof
mind,illegalandviolatingSectionArticle14oftheConstitution
ofIndia.

B.TheprovisionsofSection130oftheGSTActsare
ex-facienotapplicabletothefactsofthepresentcase.

Section130oftheGSTActscanbeinvokedinthe5

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circumstancesasenvisagedunderthesaidprovision
whichareallpertainingtoevasionoftax.Hencefor
invokingthesaidprovisionithastobeprimarilyalleged
andprovedthattherewasintentiontoevadepayment
oftaxinrespectofthegoodsinquestion.Inthepresent
caseadmittedlythegoodswerebeingaccompaniedby
thebillofentryforhomeconsumptionwhichevidenced
paymentofIGSTonthetransactionevenbefore
commencementofmovementofthegoods.Thusthere
wasnoquestionoftheybeingunaccountedgoodsor
therebeingintentiontoevadepaymentoftax.Invoking
theprovisionsofSection130oftheGSTActsinthefacts
andcircumstancesofthecasewithouttherebeingany
allegationofevasionoftaxanddemandingmaximum
redemptionfineequaltothevalueofgoodsiswholly
withoutjurisdiction,arbitraryandillegal.

C.EveninsofarasSection129oftheGSTActsis
concernedthesaidprovisionallowsdetentionofgoods
andsubsequentreleasethereofonpaymentof
applicabletaxandpenaltyequalto100%oftaxpayable
onsuchgoodsifthereiscontraventionoftheprovisions
oftheGSTActsandtherulesmadethereunder.Thus
theprovisionisalsoassuchapplicablewhentaxis
payableonthetransaction.Howeverinthefactsofthe
presentcasewhentaxundertheGSTActsisalready
paidinadvanceatthetimeofclearanceofthegoodsfor
homeconsumption,thesaidprovisionisinapplicable
thefactsofthePetitioners.Purposiveinterpretationof
Section129oftheGSTActsrequiresitsapplicationonly
tocaseswhereitisestablishedthattherewasintention
orinanycasepossibilityofevasionoftaxinrespectof
thegoodsbeingtransported.Evenifsomedocument
suchase-waybillismissingatthetimeofverification,
thiswouldatthemostonlycreatearebuttable
presumptionthattherewasintentiontoevadepayment
oftax.Ifthetaxablepersonisabletoestablishthat
therewasnointentionofevadingpaymentoftaxthen
theprovisionsofSection129oftheGSTActsisnot
permissible.

D.ThecontraventionofprovisionsoftheGSTActsas

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contemplatedunderSection129oftheGSTActsisa
substantialcontraventionwhichwouldhavetheresult
ofleakageoftaxrevenue.Henceitisprovidedthatin
caseofsuchcontraventionthegoodscanbereleased
onlyonpaymentoftaxand100%penalty.Thesaid
provisioncannotbeappliedtotechnicalcontraventions
wherethetaxablepersonisinapositiontoestablish
thatthebreachistechnicalinnaturewithnopossibility
oftaxevasion.

E.Section129andSection130oftheGSTActsare
provisionsenactedtocurbevasionoftaxundertheGST
Acts.Theyaredrasticmeasureswherebygoodscanbe
seizeden-routeandtheywouldbereleasedonlyon
paymentoftax,hugepenaltyandhugeredemptionfine.
Applicationofsuchprovisionstotechnicalbreachesof
statutoryprovisionswouldrenderthemvulnerableof
violatingSectionArticle14oftheConstitutionofIndiaaswell
asSectionArticle301oftheConstitutionofIndiawhichrequires
theretobefreeflowoftradeandcommerceacrossthe
country.

F.ThePetitionerscraveleavetoadd,toalter,amend
and/ordeleteanyofthegroundsaforesaidatthetime
ofhearing.”

14.Thefactsofallotherconnectedwritapplicationsmay
notbethesamebut,ultimately,intheotherconnectedwrit
applicationsalso,theissueraisediswithregardtothe
poweroftheauthoritiestoinvokeSection130oftheActat
itsinception.

Submissionsonbehalfofthewritapplicants;

15.Mr.UchitSheth,thelearnedcounselappearingforthe
writapplicantshastenderedhissubmissionsinwriting.
Thesubmissionsareasunder;

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“(1)Section129oftheGSTActsisaspecialprovision
providingfordetentionofgoodsintransit.Oncegoods
aredetainedunderthisprovision,mandateofthe
entireprovisiontobefollowed

Section129oftheCentral/GujaratGoodsandServicesTax
Act,2017(hereinafterreferredtoas”theGSTActs”)isa
specialprovisionprovidingfordetentionandseizureofgoods
intransit.WhileSection129(1)oftheGSTActsprovidesfor
detentionofgoodsbeingtransportedincontraventionofthe
provisionsoftheGSTActs,thelaterportionoftheverysame
provisionrequiresreleaseofthegoodsiftheownerofthe
goodscomesforwardandmakespaymentoftaxandpenalty
equalto100%ofthetaxpayableonsuchgoodsifthegoods
aretaxableandincaseofexemptedgodsonpaymentofan
amountequalto2%ofthevalueofgoodsorRs.25,000
whicheverisless.Eveniftheownerofthegoodsdoesnot
comeforwardtomakepaymentoftaxandpenaltythen
Section129(1)(b)oftheGSTActsprovidesforreleaseofthe
goodsonpaymentoftaxandpenaltyequalto50%ofthe
valueofthegoodsreducedbythetaxamountpaidthereonin
caseoftaxablegoodsandincaseofexemptedgoodson
paymentofanamountequalto5%ofthevalueofgoodsor
Rs.25,000whicheverisless.Section129(5)oftheGSTActs
specificallyprovidesthatonpaymentofamountreferredin
sub-section(1),allproceedingsinrespectofthenotice
specifiedinsub-section(3)shallbedeemedtobeconcluded.
ItisfurtherprovidedinSection129(6)oftheGSTActsthat
wherethepersontransportingthegoodsortheownerofthe
goodsfailstopaytheamountoftaxandpenaltyasprovided
insub-section(1)within14daysofsuchdetentionorseizure,
furtherproceedingsshallbeinitiatedinaccordancewiththe
provisionsofSection130.Consideringsuchprovisions,itis
incumbentuponthelearnedauthoritieswhohavedetained
thegoodsunderSection129oftheGSTActstogivenoticefor
paymentoftaxandpenaltyunderSection129(1)oftheGST
Actsanditisonlyiftheownerortransporterfailstopay
suchtaxandpenaltywithin14daysofthedetentionor
seizurethatthelearnedauthoritiescanbepermittedto
initiateconfiscationproceedingsunderSection130ofthe
GSTActs.DetentionofgoodsunderSection129oftheGST

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Actsandthereafternotfollowingfurtherprocedureas
stipulatedunderthesaidprovisionanddirectlyissuing
noticeforconfiscationunderSection130oftheGSTActsis
whollywithoutjurisdiction,badandillegal.

(2)Section129andSection130oftheGSTActsare
bothprovisionsmeantforcheckingevasionoftaxand
thereforeneedtobeharmoniouslyconstrued

ItisrespectfullysubmittedthatSection129aswellas
Section130oftheGSTActsarebothprovisionswhichare
meantforcheckingevasionoftax.Section9oftheGSTActs
providesforlevyoftaxonacompletedsupplytransaction.
Further,taxonasupplytransactionispayablealongwith
themonthlyreturninFormGSTR-3Btobefiledonorbefore
the20thofthenextmonth.However,inordertoensurethat
thesuppliersdonotevadepaymentoftax,Section68ofthe
GSTActsempowerstheGovernmenttoprescribedocuments
tobecarriedalongwiththegoods.Rule138Aofthe
Central/GujaratGoodsandServicesTaxRules(hereinafter
referredtoas”theGSTRules”)stipulatesinvoice/billof
entry/deliverychallanalongwithe-waybillasdocumentsto
accompanythegoods.Ifitisfoundthateitherofsuch
documentsismissingwhilegoodsareinspectedintransitor
ifitisfoundthatthereisanymajordiscrepancyinthe
documents,theneventhoughthetaxableeventi.e.supplyis
yettobecompleted,Section129oftheGSTActsallows
detentionofgoodssincethetransportationisin
contraventionoftheprovisionsoftheGSTActs.Further
Section129(1)oftheGSTActsmandatesreleaseofgoodson
paymentoftaxandpenaltyequalto100%oftaxwhere
ownercomesforwardtomakepaymentofsuchtaxand
penalty.Thuseventhoughsupplyisyettobecompletedand
eventhoughtimelimitforpaymentoftaxisyettolapse
paymentoftaxaswellaspenaltyisprovidedinsection129
oftheGSTActs.Itisfurthergermanetonotethattherateof
penaltyof100%oftaxistheratewhichisstipulatedunder
Section74oftheGSTActsforinstancesoffraudorevasion
vis-à-vis10%penaltyprovidedforroutinecasesnotinvolving
penaltyorevasionunderSection73(9)oftheGSTActs.
MoreoverasperSection17(5)(i)oftheGSTActsnoinputtax
creditisadmissibleinrespectofanytaxpaidinaccordance

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withtheprovisionsofSection74,129and130oftheGST
Acts.ThusSection129oftheGSTActsisgroupedtogether
withSection74andSection130oftheGSTActswhichare
admittedlyinvocableincasesofevasion.Collectivereading
ofallsuchprovisionsshowsthatSection129oftheGSTActs
isenactedforcurbingevasionoftax.Thusthecontentionof
theRespondentsthatSection130oftheGSTActsisaspecial
provisionenactedforcheckingevasionoftaxiscontraryto
theschemeoftheprovisionsoftheGSTActs.Itisonlyifthe
taxandpenaltyunderSection129oftheGSTActsarenot
paidwithinthestipulatedperiodthatresortcanbemadeby
thelearnedauthoritiestoSection130oftheGSTActs.

3.AnyotherinterpretationwillrenderSection129
oftheGSTActsunconstitutional

AninterpretationofSection129oftheGSTActsthatitis
meantforpurposeotherthancheckingevasionwillrenderit
unconstitutional.ProvisionssimilartoSection129oftheGST
Actsexistedunderthesalestaxstatuteswhichwere
challengedbeforeCourtsonthegroundthattheyviolatedthe
freedomoftrade,commerceandinter-courseasguaranteed
underSectionArticle301oftheConstitution.Legislativecompetence
ofenactingsuchprovisionswasalsochallenged.Onallsuch
occasionstheconstitutionalvalidityoftheprovisions
regardingdetentionofgoodsintransithavebeenupheldby
Hon.SupremeCourtonthegroundthattheywereprovisions
meantforcheckingevasionandthereforeintra-vires.
Referencemaybemadeinthisregardtothefollowing
judgementsofHon.SupremeCourt:

(a).SodhiTransportCo.andAnotherv/sStateofUttar
Pradesh(1986)62STC381(SC)[1stCompilation-Page5,
Relevantobservationsonpage11,12]

(b).StateofRajasthanandAnotherv/sD.P.Metals(2001)
124STC611(SC)-1stCompilation-Page49,Relevant
observationsonPage72,para29]

(4)CircularoftheGovernmentshowsthatSection
129oftheGSTActsnotmeantforminordiscrepancies

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InfactCircularNo.64/38/2018-GSTdated14.9.2018(2nd
Compilation-Page1)issuedbytheCentralBoardofIndirect
TaxesandCustomsclearlyshowsthatSection129ofthe
GSTActsismeantformajordiscrepanciessuchasabsence
ofe-waybillandnotminorerrorsinthedocuments
accompanyingthegoods.Incaseofsuchminorerrorsthe
authoritieshavebeendirectedtolevygeneralpenaltyunder
Section125oftheGSTActsforwhichmaximumstatutory
capisRs.25,000.

5.Section129oftheGSTActsprovidesasimple
methodofdeterminationoftaxandpenaltyand
ensuringquickrecovery

ThuswhilethepurposeofSection129oftheGSTActsis
clearlytocheckevasionoftax,itprovidesforsimple
calculationofamounttobepaidintime-boundmannerfor
securingreleaseofgoodsdetainedunderthesaidprovision.
Theauthoritiesneednotestablishintentiontoevade
paymentoftax.Ifthegoodsareinterceptedduringtransit
andifthedocumentsaccompanyingthegoodsarefoundto
bedefectiveorabsentthentheauthoritiescanstraightaway
detainthegoodsunderSection129oftheGSTActsand
demandpaymentoftaxand100%penalty.Iftheownerof
thegoodscomesforwardandmakessuchpaymentwithin
14daysofdetentionthentheprovisionmandatesimmediate
releaseofthegoods.Ifhowevertheassesseefailstomake
suchpaymentthenconfiscationproceedingscanbeinitiated
underSection130oftheGSTActswhichrequirethe
authoritiestoestablishintentiontoevadepaymentoftaxand
thereafteralsodeterminefineinlieuofconfiscation
dependingonfactsandcircumstancesofthecase.Thusthe
schemeofboththeprovisionsifreadinentiretyrevealsthat
Section129oftheGSTActsallowstheassesseetogetthe
goodsreleasedonimmediatepaymentoftaxandpenalty
failingwhichheisunderthreatofloosingthegoodsunder
Section130oftheGSTActs.Percontraundersection129of
theGSTActstheauthoritiesarealsosavedfromestablishing
intentiontoevadepaymentoftaxwhichisapre-requisitefor
Section130oftheGSTActs.Suchviewhasalreadybeen
takenbyHon.KeralaHighCourtinthecaseofNoushad

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Allakkatv/sStateTaxofficer(2019)61GSTR297
(Ker.)(1stCompilation-Page113,Relevantobservationon
page117).

6.Iffraud,evasion,etcnoticedtheneven
adjudicatingauthorityrequiredtogiveoptionto
immediatelypaytaxandconcessionalrateofpenalty
tosecureclosureofproceedings.Section129ofthe
GSTActstobereadinlightofsuchlegislativepolicy

ThePetitionermaypointoutthatinfactiffraud,evasion,etc
isallegedduringadjudicationproceedings,Section74ofthe
GSTActsprovidesformechanismforadjudicatingand
demandingtaxwithpenalty.Evenundersuchprovisionthe
assesseeisgivenanoptionbyvirtueofSection74(5)ofthe
GSTActstomakepaymentoftax,interestand15%penalty
beforeissuanceofnoticeandifsuchpaymentismadethen
nofurthernoticeistobegivenasperSection74(6)oftheGST
Acts.ItisfurtherprovidedinSection74(8)oftheGSTActs
thatevenifnoticeisissuedallegingfraud,evasion,etcand
theassesseepaystax,interestand25%penaltythenall
proceedingsinrespectofthesaidnoticeshallbedeemedto
beconcluded.Eveniftheassesseedoesnotavailsuchoption
andthelearnedadjudicatingauthorityproceedstopass
ordereventhenSection74(11)oftheGSTActsprovidesfor
closureofproceedingsiftaxwithinterestandpenaltyatthe
rateof50%arepaidwithin30daysofcommunicationofthe
order.Thusitcanbeseenthatthelegislativepolicyistogive
incentivetotheassesseeformakingimmediatepayment
evenincasesofallegedfraudandevasionandthesoonerhe
makesthepaymentthelessamountofpenaltyheisliableto
pay.Furtheronsuchpaymentbeingmadeallproceedings
againsttheassesseearedeemedtobeclosed.Itis
respectfullysubmittedthatSection129oftheGSTActsis
alsorequiredtobereadinlightofsuchpolicy.Itallowsthe
assesseetosecureclosureofproceedingsonpaymentoftax
alongwith100%penalty.Itcouldneverhavebeenlegislative
intentiontoprovideforopportunitiesofreducedpaymentof
penaltyincaseofadjudicationonpromptpaymentoftax
andpenaltywhileallowingdirectconfiscationproceedingsif
thegoodsaredetainedintransit.Suchinterpretationwillbe
contrarytothelegislativepolicyandschemeoftheGSTActs.

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Therationalandcontextualinterpretationwouldthereforebe
thatconfiscationproceedingscanbeinitiatedunderSection
130oftheGSTActsonlyiftheassesseefailstopaytaxand
penaltyasdemandedunderSection129oftheGSTActs
withinthestipulatedtimeperiod.

(7)Therecannotbeconfiscationwithdetentionand
seizure.HencebeforeproceedingunderSection130,
Section129hastobeinvokedandfollowedinentirety

Therecannotbeconfiscationofgoodswithoutdetentionand
seizure.SinceSection129oftheGSTActsistheonly
provisionprovidingfordetentionandseizureofgoodsin
transit,detention/seizurehastobemadeunderSection
129(1)oftheGSTActs.Ifthatbesothentheremainingpart
ofthesamesub-sectionaswellastheremaining
sub-sectionsofSection129needtobefollowedinentirety.
Refusalonthepartofthelearnedauthoritiestofollow
Section129oftheGSTActsinentiretyeventhough
detention/seizureismadeundersuchprovisioniswholly
withoutjurisdictionandillegal.

8.Section129(2)oftheGSTActswhichadopts
Section67(6)alsogivesaclueregardinginterpretation
oftheprovision

ItisfurtherpertinenttonotethatSection129(2)oftheGST
ActsprovidesthattheprovisionsofSection67(6)oftheGST
ActsshallmutatismutandisapplytoSection129oftheGST
Acts.AperusalofSection67(6)oftheGSTActsshowsthatit
providesforreleaseofgoodsincaseofseizureduringsearch
proceedings.ItisrespectfullysubmittedthatSection67(6)of
theGSTActsoperatesin2partsviz.thegoodscaneitherbe
releasedonprovisionalbasisonfurnishingbondand
providingsecurityasmaybeprescribedorthegoodscanbe
finallyreleasedonpaymentoftax,interestandpenalty.
Adaptationofsuchprovisionforthepurposeofinterpreting
Section129oftheGSTActsleadstotheconclusionthatif
tax,interestandpenaltyarepaidthenthegoodsaretobe
finallyreleasedwhileifonlysecurityalongwithbondis
providedthenthegoodsaretobereleasedprovisionally.

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9.Section67(6)oftheGSTActscannotbe
interpretedasprovidingforprovisionalreleasein
entirety

ItisrespectfullysubmittedthatSection67(6)oftheGSTActs
cannotbeinterpretedasprovidingforprovisionalreleasein
entirety.Thephrase”onprovisionalbasis”isapplicableonly
incaseofreleaseofgoodsonfurnishingsecurityand
providingbond.Itisnotapplicabletothe2ndportionofthe
provisionwhichprovidesforreleaseofgoodsonpaymentof
tax,interestandpenalty.Suchinterpretationissupportedby
thefollowingreasons:

(1)Applicationofthephrase”onprovisionalbasis”evento
the2ndportionofSection67(6)willrenderthephrase”asthe
casemaybe”appearingattheendoftheprovision
redundant.

(2)”Provisionalrelease”necessarilymeansthatthe
assesseecontinuestobeaccountableforproductionofthe
goodsifrequired.ThusabondisprescribedinFormGST
INS-04therelevantextractofwhichreadsasunder:

“WhereasIundertaketoproducethesaidgoodsreleased
provisionallytomeasandwhenrequiredbytheproper
officerdulyauthorizedundertheAct.”

Suchbondisrequiredtobeproducedonlyifgoodsare
releasedonthebasisofsecurity.Nosuchbondisrequiredas
perSection67(6)ifgoodsarereleasedonpaymentoftax,
interestandpenaltywhichshowsthatinsuchcasethe
releaseofgoodsisfinal.

(3)Rule140oftheCentralGoodsandServicesTaxRules,
2017(hereinafterreferredtoas”theGSTRules”)which
providesforprovisionalreleaseofgoodsalsoreferstothe
eventualityofprovisionalreleaseonlyincaseoffurnishing
securityalongwithbondofthevalueofgoods.

(4)Incaseofperishablecommoditysinceitwouldnotbe
possiblefortheassesseetogiveundertakingthathewill

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producethegoodsondemand,thereisnoconceptof
provisionalrelease.Rule141oftheGSTRulesprovidesfor
finalreleaseofperishablegoodsonpaymentoftax,interest
andpenaltyamountormarketvalueofthegoodswhichever
islower.Thusincaseofperishablecommoditythefinal
liabilityisrestrictedtotheamountoftax,interestand
penalty.Thisagainshowsthatiftax,interestandpenaltyis
paidforthwiththenthereisnoquestionofanyfurther
liabilityoftheassessee.Itcanneverbetheintentionofthe
legislaturethatwhileforperishablecommoditiestheyare
satisfiediftax,interestandpenaltyarepaid,insofaras
non-perishablecommoditiesareconcerned,eveniftax,
interestandpenaltyarepaidtherecanbefurther
proceedingsofconfiscation.

(ThusSection67(6)oftheGSTActsprovidesforfinalrelease
ofgoodsonpaymentoftax,interestandpenaltyandsince
thisprovisionhasbeenmutatismutandisappliedtoSection
129,iftax,interestandpenaltyarepaidinrespectofgoods
detainedintransitthenthegoodsarerequiredtobefinally
releasedandtherecanbenofurtherproceedingsof
confiscationunderSection130oftheGSTActs.

(10)Itiswellsettledthatpurposiveinterpretationto
beadoptedevenintaxingstatutes

Itisrespectfullysubmittedthatitisnowwellsettledthat
principleofpurposiveinterpretationisapplicableevento
taxingstatutesparticularlywhenliteralinterpretationleads
toincongruityoranomaly.Referencemaybemadeinthis
regardtothejudgementofHon.SupremeCourtinthecaseof
SectionStateofKeralaOrs.v.A.PMammikuttyAIR2015SC
3009whereinitwasreiteratedasunder:

“16.SectionInKeshavjiRavjiandCo.v.CIT(1990)2SCC231ithas
beenheldbythisCourtthatwheninataxationstatute
whereliteralinterpretationleadstoaresultthatdoesnot
sub-servetheobjectofthelegislationanotherconstructionin
consonancewiththeobjectcanbeadopted.”

(11)SincebothSection129and130oftheGSTActs

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containnon-obstanteclauses,interpretationshouldbe
madebydecipheringschemeandintentionof
legislature

ItisrespectfullysubmittedthatsincebothSection129and
130oftheGSTActscontainnon-obstanteclauses,attempt
shouldbemadeouttointerprettheminaccordancewiththe
schemeoftheGSTActsandculloutthelegislativeintention.
Referencemaybemadeinthisregardtothejudgementof
Hon.SupremeCourtinthecaseofJ.K.CottonSpinning
andWeavingMillsCo.Ltd.v/sStateofUttarPradesh
andOthersAIR1961SC1170(1stCompilation-page93,
relevantobservationsonpage7to10).Insuch
circumstancesthemostreasonableinterpretationofboththe
provisionswillbetheirharmoniousconstructionas
suggestedhereinbefore.InfactSection129oftheGSTActs
canbesaidtobeaspecialprovisiondealingwithdetention
ofgoodsintransitandthusevenonsuchcountitshould
prevailoverSection130oftheGSTActs.

(12)Generalnon-obstanteclausehastobeinterpreted
contextually

Itisfurtherrespectfullysubmittedthatageneral
non-obstanteclausesuchasthatappearinginSection130of
theGSTActsneedstobeinterpretedcontextually.There
needstobedeterminationastowhichprovisionswould
standoverriddenbysuchnon-obstanteclauseandwhich
wouldnot.Theprovisioncannotbeinterpretedasstanding
allbyitself.Relianceisplacedinthisregardonthe
judgementofHon.SupremeCourtinthecaseofIndra
KumarPatodiaandAnotherv/sRelianceIndustries
Ltd.AIR2013SC426(2ndCompilation-Page41,
RelevantObservationsPage45para12).Similarviewhas
alsobeentakenbythisHon.CourtinthecaseofRaajratna
MetalIndustriesLtd.v/sStateofGujaratSpecialCivil
ApplicationNo.15093of2018decidedon20.6.2019.

(13)DirectinvocationofSection130oftheGSTActs
willrenderSection129(6)oftheGSTActsredundant

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Itisfurtherrespectfullysubmittedthatdirectinvocationof
Section130oftheGSTActswillrenderSection129(6)ofthe
GSTActsredundant.ThelegislaturewasawarethatSection
130oftheGSTActscontainsanon-obstanteclause.Even
thenitwasprovidedinSection129(6)oftheGSTActsthat
provisionsofSection130oftheGSTActswillbeinvokedonly
iftheownerortransporterfailstomakepaymentoftaxand
penaltywithin14daysofdetentionortseizure.Itiswell
settledthataninterpretationwhichwillrenderanypartof
thestatuteotioseistobeavoided.Relianceisplacedinthis
regardonthejudgementofHon.SupremeCourtinthecase
ofUnionofIndiaandAnotherv/sHansoliDeviAIR
2002SC3240(2ndCompilation-Page4).

(14)Section129(6)oftheGSTActscannotbe
interpretedasarecoveryprovision

Section129(6)oftheGSTActscannotbeinterpretedasa
provisionmeantforrecoveryofunpaidtaxandpenalty.The
Petitionersaysthatifatallthetaxandpenaltyarenotpaid
thenthelearnedauthoritiescanverywellattachthegoods
underSection79oftheGSTActsandthereaftersellthemoff
torecovertheamountdue.Insuchcasehowevertheexcess
saleproceedswillhavetobegiventotheassessee.Per
contraincaseofconfiscationthetitleofthegoodsitselfwill
vestwiththeGovernment.Thusforconfiscationthelearned
authoritieswillnecessarilyhavetoestablishintentionto
evadepaymentoftax.Itisthereforerespectfullysubmitted
thattheonlypossibleeffectofSection129(6)oftheGSTActs
istoactasathreattotheassesseethatifhefailsto
forthwithpaythetax,interestandpenaltythenhewillrisk
loosingthegoodsinitsentirety.Henceconfiscation
proceedingscanbeinitiatedonlyiftaxandpenaltyarenot
paidwithin14daysofdetentionandseizure.Anyother
interpretationwillnecessarilyrenderSection129(6)ofthe
GSTActsredundant.

(15)Inthealternativeinanycasethevehicleand
goodsarerequiredtobereleasedevenifindependently
Section130isinvoked

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Withoutprejudicetotheabovesubmissionsandinthe
alternativeitisrespectfullysubmittedthatevenifitis
presumedforthesakeofargumentthatpaymentoftaxand
penaltyunderSection129oftheGSTActsdoesnotpreclude
initiationofproceedingsunderSection130oftheGSTActs,
eventhenthegoodsandconveyancesarerequiredtobe
releasedatleastonprovisionalbasisonfurnishingof
securityoronpaymentofamountasdeterminedunder
Section129oftheGSTActs.Henceevenifthelearned
authoritiesareempoweredtosubsequentlyinvokeSection
130oftheGSTActsunderthebeliefthatthegoodsarebeing
suppliedwiththeintentiontoevadepaymentoftax,even
thenthegoodsoughttobereleasedonprovisionalbasison
furnishingofsecurityorpaymentoftheamountas
determinedunderSection129oftheGSTActs.Confiscation
proceedingsunderSection130oftheGSTActsrequirefull
fledgedadjudicationafterexamination/cross-examinationof
evidences.Thevehicleandthegoodscannotbekeptseized
pendingsuchlongdrawnadjudicationprocess.Thiswould
bethepositionevenifitispresumedforthesakeof
argumentthatSection67(6)oftheGSTActsrefersto
provisionalreleaseinitsentirety.Refusalonthepartofthe
learnedRespondentauthoritiestoevenprovisionallyrelease
thegoodsandconveyanceeventhoughtaxandpenaltyare
fullypaidiswithoutjurisdiction,arbitraryandillegal.

(16)Fromanyangleimpugnedactionofthelearned
Respondentauthoritiesuntenable

Thus,viewedfromanyangle,theimpugnedactionofthe
learnedRespondentauthoritiesinstraightawayresortingto
theprovisionsofSection130oftheGSTActswithout
completingprocedureasstipulatedunderSection129ofthe
GSTActsiswhollywithoutjurisdiction,arbitraryandillegal.
Inanycaserefusaltoreleasethegoodsandconveyance
eventhoughtaxandpenaltyasdeterminedunderSection
129oftheGSTActsisfullypaidiswhollywithout
jurisdictionandillegal.

(17)Authorityinterceptinggoodsintransitcannotgo
intotheissueofvaluationofgoods

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InoneofthecasethelearnedRespondentauthoritieshave
disputedvaluationofthegoodsandthereforealsodetained
thegoodsunderSection129oftheGSTActsonthegroundof
under-valuation.Itisrespectfullysubmittedthatthelearned
authoritycheckinggoodsintransithasnojurisdictiontogo
intothevaluationofthegoods.Allthatheneedstoensureis
thatthegoodsareaccompaniedbyrequisitedocuments.This
istheonlyjurisdictionhehasbyvirtueofSection68(3)ofthe
GSTActs.Valuationisamatterofadjudication.Presuming
thatthelearnedauthoritysuspectsthatthegoodshavebeen
undervalued,eventhenhecanatbestforwardsuch
informationtotheconcernedadjudicatingauthorityofthe
supplierwhocanthereafteradjudicatetheissueafter
followingdueprocessoflaw.Detentionofgoodsonthe
groundofunder-valuationiswhollywithoutjurisdictionand
illegal.Relianceisplacedinthisregardonthejudgementof
Hon.GauhatiHighCourtinthecaseofShriKamalKumar
Sharmav/sStateofAssam(2006)144STC458(Gau.)
(2ndCompilation-Page11,RelevantObservations-Page
16,Para4).Referencemayalsobemadetothejudgementof
Hon.MadrasHighCourtinthecaseofJeyyamGlobal
Foods(P)Ltd.v/sUnionofIndia(2019)64GSTR129
(Mad.)(2ndCompilation-Page19)whereinitwasheldthat
theauthoritydidnothavepowertodetermineclassification
ofgoodsinexerciseofpowersunderSection129oftheGST
Acts.SimilardecisionwasrenderedbyHon.KeralaHigh
CourtinthecaseofN.V.K.MohammadSulthanRawther
andSonsv/sUnionofIndia(2019)61GSTR307(Ker.).

(18)GSTleviableonactualtransactionvalueandnot
marketvalue

ThisisparticularlybecausetaxundertheGSTActsis
leviableonactualtransactionvalueandnotonmarketvalue
ofthegoods.Section15oftheGSTActsprovidesfor
valuationofsuppliesanditisprincipallyleviableonprice
actuallypaidorpayableinrespectofthegoodsorservices.
Thusassuchitisnotevenopenfortheadjudicating
authoritytoimposetaxonmarketvalue.Hewouldhaveto
establishthattheassesseehasunrecordedreceiptsforthe
purposeofenhancingthevaluationofsuppliesmadebythe

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assessee.InthecontextofsalestaxstatutesHon.Supreme
CourthasinfactheldinthecaseofStateofRajasthanv/s
RajasthanChemistAssociation(2006)147STC542
(SC)(2ndCompilation-Page55)thatimpositionoftaxon
maximumretailpriceofthegoodsisbeyondthelegislative
competenceoftheStatelegislature.Thuswheneventhe
adjudicatingauthoritycannotimposetaxonmarketvalueof
goodswithoutestablishingthatthiswasinfactthe
transactionvalue,thequestionofenhancementofvalueby
theauthorityinterceptingthegoodsintransitdoesnotarise.
Infactthiswouldleadtograntingextremelyarbitrary
powerstotheauthoritiesinasmuchasthousandsof
varietiesofgoodsaremovedacrossthecountryhaving
differentvalueswhichmayinfactvaryfromcommodityto
commodityandtransactiontotransactiondependingonthe
factsandcircumstances.Infactforthesamegoodsthevalue
wouldbedifferentdependingonthestageofsupplyofsuch
goods.Inotherwordswhilethevalueofgoodsmovingfrom
manufacturertowholesellerwillbelower,thevalueofthe
samegoodsmovingfromretailertoendconsumerwillbe
muchhigher.Adhocenhancementofvalueofthegoodsby
thelearnedauthorityinterceptingthegoodsistherefore
whollywithoutjurisdiction,arbitraryandillegal.

(19)InthealternativethelearnedRespondent
authoritiescanatthemostdemandtaxandpenaltyon
theenhancedvalue

Withoutprejudicetotheaboveandinthealternativeatthe
mostthelearnedauthorityinterceptingthevehiclecan
demandtaxandpenaltyunderSection129oftheGSTActs
ontheenhancedvaluewhichaccordingtohimisthecorrect
value.Inanycaseunder-valuationcannotbeusedaspretext
fordirectinvocationofSection130oftheGSTActs.

(20)Thereisnoquestionofinvokingprovisionsof
Section130oftheGSTActsincaseofimportedgoods.
Infactinsuchcasethereisnorequirementofpayment
oftaxorpenaltyunderSection129oftheGSTActsas
taxispaidinadvance

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InSpecialCivilApplicationNo.4730of2019thegoodsin
transportationareimportedgoods.Thegoodswerebeing
transportedfromairporttothepremisesofthePetitioner.
Admittedlywhilee-waybillwasnottherethegoodswere
accompaniedbybillofentryforhomeconsumptionwhich
showedthatIGSThadalreadybeenpaidbythePetitioner
beforecommencementofmovementofgoods.Thusthere
cannotbeanyquestionofintentiontoevadepaymentoftax
sincetaxwasalreadypaidinadvanceontheimported
goodsatthetimeofclearanceforhomeconsumptionatthe
airport.Infactsincetheapplicabletaxhadalreadybeen
paidpriortocommencementofmovementofgoods,thereis
alsonoquestionofpaymentoftaxagainunderSection129
oftheGSTActswhichisapplicableonlyincaseswheretax
isyettobepaid.PenaltyisalsopayableunderSection129
oftheGSTActsontax”payable”.Sinceinsuchcasethetax
wasalreadypaidnotaxwas”payable”andhencethe
questionofpenaltyalsodoesnotarise.Demandoftaxand
penaltyunderSection129oftheGSTActsandredemption
fineequaltovalueofgoodsunderSection130oftheGST
Actsinsuchfactsandcircumstancesisinanycase
arbitrary,mechanical,badandillegal.

(21)Confiscationofgoodsonthegroundof
non-productionofdocumentsisinfact
unconstitutional

ItisinfactrespectfullysubmittedthatifSection130ofthe
GSTActsisallowedtobedirectlyinvokedonthegroundof
absenceofnecessarydocumentsduringtransportationthen
suchprovisionwillbeunconstitutionalasheldbyHon.
SupremeCourtwhileinterpretingsimilarprovisioninthecase
ofTheCheckpostOfficer,Coimbatorev/sK.P.Abdulla
andBros.(1971)27STC1(SC)(1stCompilation-Page1)

(22)Additionalgroundsraisedinaffidavitinreplynot
formingpartofthedetentionorders/confiscation
noticesrequiredtobeoutrightlyrejected

Itisfurtherrespectfullysubmittedthatsomeadditional
groundsraisedinsomeoftheaffidavitsinreplyinsupportof

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detentionorders/confiscationnoticeswhicharenotforming
partofthenoticesarerequiredtobeoutrightlyrejected.Itis
wellsettledthatthelearnedRespondentscannotbeallowed
toimproveupontheimpugnedorders/noticesbywayof
affidavitsinreply.Relianceisplacedinthisregardonthe
judgementofHon.SupremeCourtinthecaseofMohinder
SinghGillv/sChiefElectionCommissionerAIR1978
SC851.”

16.WealsoheardMr.TusharHemani,thelearnedsenior
counselappearingforthewritapplicantsoftheSpecialCivil
ApplicationNo.10018of2019.Broadly,thesubmissionsof
Mr.Hemaniareasunder;

“Sections129130ofTheCentralGoodsandServices
TaxAct,2017(hereinafterreferredtoas’CGSTAct’for
thesakeofbrevity)aremateriallydifferentandoperate
indifferentsituations.Theycannotbeused
interchangeably,atthediscretionoftheauthorities.
InordertounderstandthedifferencesbetweenS..129
130oftheAct,itisbeneficialtounderstandthe
SectionSchemeoftheAct.

S.122ispenaltysectionforcertainoffences
enumeratedtherein,violationwhereofattractspenalty
ofRs.10,000oranamountequivalenttothetaxevaded
i.e.100%ofthetaxevaded,Whicheverishigher.Allthe
offencesenumeratedinS.122aretheexamplesof
contraventionsoftheprovisionsofthisActortheRules
madethereunder.

S.129talksaboutdetention,seizureandreleaseof
goodsandconveyancesintransit.Asperthesection
whichbeginsWithnon-obstanteclause,anyperson
transportsanygoodsorstoresanygoodswhilethey
areintransitincontraventionoftheprovisionsofthis
ActortheRulesmadethereunder,suchgoodsand
conveyanceshallbeliabletodetentionorseizureand
shallbereleaseduponpaymentofapplicabletaxand
100%penaltyonsuchtax.Theexamplesof

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contraventionsoftheprovisionsofthisActortheRules
madethereunderareenumeratedinSectionS.122oftheAct.
S.130talksaboutconfiscationofgoodsorconveyances
andlevyoftax,penaltyandlinethereon.Thesection
alsobeginswithnon-obstanteclauseandstates
amongstotherthingsthatifanyperson”contravenes
anyoftheprovisionsofthisActortherulesmade
thereunderwithintenttoevadepaymentoftax”,then,
allsuchgoodsorconveyancesshallbeliableto
confiscationandthepersonshallbeliabletopenalty,
apartfromtaxandfine,u/s122.Therefore,evenSectionS.130
isalsoasub-setof8.122.

AClosecomparisonofthesethreeprovisionsviz.S.
122,129SectionS.130oftheActleavenodoubtthatS.122
isageneralpenaltysectionwhichcoverscertain
offencesenumeratedtherein.S.129talksaboutthe
verysamecontraventionsalbeit,whencommittedin
transit.Thereforeit’saspecificsectionoperatesonly
whengoodsareintransitasagainstgeneralpenaltyas
providedu/s122.Inotherwords,provisionsofS.129
aloneneedtobeinvokedwhencontraventionsofanyof
theprovisionsoftheActarecaughtwhengoodsarein
transit.Becausethesecontraventionsarecaughtwhen
thegoodsareintransit,afasttrackmechanismis
providedundertheSectionSchemeoftheActsoastohave
fasteradjudicationofthesameintermsofsubsection
(2)to(5)ofS.129oftheAct.Soifthepersonsocaught,
payspaymentofapplicabletaxand100%penaltyon
suchtax,goodsarereleasedimmediatelyand
proceedingsforsuchcontraventioncometoanend.
ThemajordistinctionbetweenS.129andS.130isthat
theprovisionsofS.129canonlybeinvokedwhengoods
areintransitwhereasS.130canbeinvokedatany
stage,muchafterthegoodshavereachedtheir
destinationorevenduringassessmentproceedings
subjecttoofcourse,fulfillingitsconditions.
ForanyviolationoftheprovisionsoftheActorrules
madethereunderwhilegoodsareintransit,
straightway,proceedingsu/s130cannotbeinitiatedas
hasbeendonebytheRevenue.Itisonlyafter

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exhaustingthisremedyofS.129thatrecoursecanbe
hadtoS.130.ProvisionsofS.129(6)leavelittledoubt
aboutthislegislativeintent.AsperS.129(6)ifthe
amountdemandedu/s129(1)isnotpaidwithin14
days,furtherproceedingsshallbeinitiatedin
accordancewiththeprovisionsofS.130.Thus
Proceedingsaretobeinitiatedasperlawandin
accordancewithconditionsofS.130.

Here,proceedingsu/s130canonlybeinitiatedif
conditionsstatedunderthesaidsectionaresatisfied.It
cannotbeinterpretedinamannersoastoholdthat
oncetaxandpenaltyasdemandedu/s129isnotpaid
withinaperiodof14days,S.130automaticallygets
invokedwithouthavingtosatisfyanyofthe
preconditionsasstatedunderthesaidsection.These
conditionsaresinequanonforinvokingtheprovisions
ofS.130oftheAct.

CBECcirculardated13/04/2018clauses(k)supports
thisinterpretationinasmuchasthesaidclause
contemplatesissuanceofNoticeinFormGSTMOV-10
whichisaSCNtobeissueduponthepersonforgetting
hisresponse.Iftheproceedingsareautomaticand
compulsorynosuchnoticeisrequired
CBECcirculardated13/04/2018clause(1)also
supportsthisinterpretationasthesaidclausetalks
aboutopinionoftheproperofficeraboutthemovement
ofgoodsbeingeffectedtoevadepaymentoftax.Such
opinionhastobeobjectiveopinionbasedonhard
evidencesandnotmerelyonconjecture,surmisesand
presumptions.Iftheproceedingsareautomaticand
compulsorynosuchopinionisrequired.

S.130appliesto5kindsofoffencesenumeratedin
sub-section(1).Thefundamentaldifferencebetween
languageofS.129andS.130oftheActisthephrase
withintenttoevadepaymentoftax’.Thisphrase
inherentlycarrieswithittheelementof’mensrea’.Itis
implicitinthephrase’withintendtoevadepaymentof
tax’thattherehasbeenawillful,deliberateand
calculatedactonthepartofthepersontoevade
paymentoftax.Theactionisplannedandpremeditated

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purelywithaclearintentiontoevadepaymentoftax.
Thusunless,suchintentionisprovedbeyonda
reasonabledoubt,provisionsofS.130cannotbe
invoked.UnlikeS.135whichappliestoprosecution
alone,presumptionofculpablementalstateisnot
availabletoRevenuedepartmentwhendealingwithS.

130.

Inthepresentcase,evenFormGSTMOV-10
categoricallystatesthat”Asthegoodsweretransported
withoutanyvaliddocuments,itispresumedthatthe
goodswerebeingtransportedforthepurposesof
evadingthetaxes.”Thisclearlyshowsthatthe
conclusionasto’intenttoevadetax’ispurelybasedon
presumptionwhichisnotpermissible.

S.129(5)statesthatonpaymentofamountreferredto
insub-section(1)i.e.taxand100%penaltyonsuchtax,
allproceedingsinrespectofthenoticespecifiedin
sub-section(3)shallbedeemedtobeconcluded.
Therefore,forthisdefaultorcontraventionorcauseof
action,revenuecannotonceagaininitiateproceedings
u/s130.Thisinterpretationissupportedbythe
Explanation1appendedtoS.74oftheActwhich
reads::

“Explanation1-ForthepurpseofSectionsection73andthis
section,-

iI)theexpression”allproceedingsinrespectofthe
saidnotice”shallnotincludeproceedingsunderSectionsection
132;

(ii)wherethenoticeunderthesameproceedingsis
issuedtothemainpersonliabletopaytaxandsome
otherpersons,andsuchproceedingsagainstthemain
personhavebeenconcludedunderSectionsection73orSectionsection
74,theproceedingsagainstallthepersonsliabletopay
penaltyunderSectionsections122,Section125,Section129andSection130are
deemedtobeconcluded.”

Abareperusaloftheexplanationrevealsthatoncea
personpaysthetaxandpenaltyascontemplatedu/s
73or74,allproceedingsexceptasprescribedu/s132

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cometoanend.Evenifmainpersonspayssuchtax
andpenalty,proceedingsu/s129and130cometoan
endagainstotherpersons.Therefore,theintention
behindtheseprovisionsisclearthatsolongasaperson
paystax,interestandpenaltyofupto50%ofthetax
involved,noactionsarerequiredu/s129or130.In
otherwords,legislaturedoesnotwanttotakemultiple
actionsforthesamecontraventionordefaultorcauseof
action.

SectionUndertheSchemeoftheAct,thereisacleardistinction
betweenvariouscontraventionsoftheprovisionsofthis
ActortheRulesmadethereunderwhichareaccidental,
technicalorinadvertentasagainstcontraventions
whicharewillful,fraudulentorwithanintenttoevade
paymentoftax.Fortheformer,penaltyislightwhereas
forthelaterpenaltyisheavyandinagivencasemay
befollowedbyprosecution.ProvisionsofSectionS.73andSection74
areonesuchexample.S.129and130areanother
example.However,Actdoesnotcontemplate
consecutiveproceedingsunderboththesectionsforthe
verysamecontravention.Ifacontraventionispenalized
underS.129,thesamecontraventioncannotbeonce
againpenalizedu/s130.Withouttherebeinga
differentcauseofactionorsomethingmoretothe
contravention,proceedingsu/s129cannotbe
succeededbyS.130.

Asregardstheargumentthatifapersondoesnotpay
thenecessarytaxandpenaltyasdemandedu/s129(1)
r/wSectionS.129(3)oftheAct,revenuehasnooptionbutto
initiateproceedingsu/s130asprescribedu/s129(6)of
theActbecausethenrevenueisleftremedylessasno
furtherproceedingsareprescribedu/s129oftheAct,it
issubmittedthatoncegoodsintransitaresubjectedto
S.129oftheAct,thepersonhastopaynecessarytax
andpenalty.Ifhedoesn’t,allconsequencesasstatedin
S.79(1)(c)(iii)r/w.S.79(1)(b)shallfollow.These
provisionsempowertherevenuetosellgoodsseized
withoutthesamehavingtobeconfiscated.Confiscation
u/s130bringswithitthefineapartfromtax,interest
andpenalty.Therefore,thesamecanonlybeinvoked
whenconditionsstatedinthesaidsectionarefulfilled.

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Infactgoodsseizedu/s67oftheActalsoaretreated
andsold,ifneedbe,asprescribedu/s79oftheAct
withoutthesamehavingtobeconfiscatedfirst.”

17.WehavealsoheardMr.PareshM.Dave,thelearned
counselappearingforthewritapplicantsoftheSpecialCivil
ApplicationNo.9105of2019.AccordingtoMr.Dave,the
threebroadissuesinvolvedinthislitigationcouldbe
summarizedasunder;

“(I)Whetherproceedingsforconfiscationofgoodsor
conveyances(andalsolevyofpenalty)underSection
130oftheCGSTActcanbeinitiatedwithoutfirst
followingtheprocedurelaiddownunderSection129of
theCGSTAct?

(II)Whetherprocedureandproceedingsfor
confiscationofgoodsorconveyances(andalsolevyof
penalty)underSection130oftheCGSTActare
permissibleevenaftertheprocedureofSection129of
theActwasfollowedi.e.,amountreferredinsub-section
(1)waspaidbytheconcernedperson?

(III)Whetheritispermissibleinlawtoorder
confiscationofgoodsorconveyanceoncetheyare
releasedunderSection129oftheActonpaymentofthe
amountoftaxandpenalty?.Inotherwords,oncethe
goodsandtheconveyanceisreleased,thenthe
authoritycouldnotbesaidtobeinphysicalpossession
ofboth,andintheabsenceofthegoodsorconveyance,
therecannotbeanyconfiscationofthesame.Toputit
moresimply,thephysicalavailabilityofthegoodsand
theconveyancewillhavesignificanceforimpositionof
redemptionfineunderSection130oftheAct.”

18.Thus,thesumandsubstanceofthesubmissions
canvassedonbehalfofthewritapplicantsisthatthe
proceedingsforconfiscationofgoodsorconveyancecannot

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beinitiatedunderSection130oftheActwithoutfirst
complyingwiththeprocedureasprescribedunderSection
129oftheActandthesecondlimbofthesubmissionisthat
oncethetaxandthepenaltyispaidunderSection129of
theAct,thentheauthorityhasnopowertoproceedfurther
underSection130oftheActforthepurposeofconfiscation
ofthegoodsandtheconveyance.Inotherwords,the
confiscationproceedingsunderSection130wouldbe
permissibleonlyifthedealerfailstopaytheapplicabletax
andpenaltyimposedbyanorderunderSection129(3)of
theAct.Confiscationisacoercivemeasuretoensure
paymentoftaxandpenaltyleviedonadealerwho,
otherwise,isatathreatofloosingthegoodsitself.The
vociferousargumentisthattheconfiscationisnotan
automaticconsequenceensuingfromthedetentionand
seizure.Itisonlywhentheapplicabletaxandpenaltythat
maybeleviedunderSection129isnotpaid,therecouldbe
proceedingsinitiatedunderSection130whichwouldleadto
confiscationofthegoodsitself.Theargumentisthatthe
provisionsofSection130areapplicableonlyintheeventof
failureonthepartofthedealertopaytheapplicabletax
andpenalty.Theprincipalargumentofallthelearned
counselappearingforthewritapplicantsisthatthe
concernedauthoritieshavenotbeenabletounderstandthe
truepurportandobjectofthetwosections,i.e.,Sections
129andSection130oftheActrespectively.Theargumentisthat
nosoonerthegoodsareseizedandthevehicleisdetained,
straightwaytheprovisionsofSection130oftheActare

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beinginvoked.This,accordingtothelearnedcounsel,is
notpermissibleinlaw.Theargumentisthatboththe
provisionsareindependentofeachother.Confiscation
proceedingscanbeinitiatedatthethresholdonlyifthe
authorityisconvincedhavingregardtothematerialson
recordthatthepartyconcernedhadcontravenedthe
provisionsoftheActandtheruleswithanintenttoevade
thepaymentoftax.Itisarguedthatthereisanelementof
mensrea,i.e.,theculpablementalstateinSection130of
theAct.Ameretechnicalirregularityorlapseonthepartof
theownerofthegoodsorthedriverofthevehiclemaynot
besufficienttoimputemensreasoastocometothe
conclusionthattheintentionwastoevadepaymentoftax.
Insuchcircumstances,referredtoabove,itisprayedthat
appropriatedirectionsmaybeissuedtotheauthorities
concernedasregardsSections129andSection130respectivelyof
theAct.

SubmissionsonbehalfoftheState;

19.Allthewritapplicationshavebeenvehemently
opposedbyMr.KamalTrivedi,thelearnedAdvocateGeneral
appearingfortheState.

20.Broadly,thesubmissionsofthelearnedAdvocate
Generalmaybesummarizedasunder;

(I)Theprinciplesapplicableinthematterof
interpretationofthetaxingprovisionslikeSections129and

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130oftheActaredifferentthanthosewhichareapplicable
inthecaseofinterpretationofanyordinaryprovisions
wherethestressisonthestrictletteroflawratherthanthe
substanceofphilosophyofthelaw.Inotherwords,
accordingtoMr.Trivedi,inataxingstatute,itistheliteral
interpretationratherthanthesupposedintendmentwhich
isakeytothetoolofinterpretation.

(II)Thenon-obstanteclauseusedinanylegalprovision
seekstoprovidethesame,asweepingoverridingeffectover
anyotherlegalprovisionsoperatinginthesameorsimilar
field.Sinceboththeprovisions,i.e.,Sections129andSection130
containanon-obstanteclause,theyarerequiredtobe
interpretedharmoniouslywhilekeepinginmindtheobject
andpurposebehindtheenactment.ItisarguedthatSection
129oftheActdealswiththedetention/seizureofthe
goods/conveyancewhileintransit.Section130deals
specificallywiththeconfiscationofsuchgoods/conveyance.

(III)AccordingtoMr.Trivedi,forinvocationofSection129
oftheActallthatisnecessaryis”contraventionofthe
provisionsoftheActortheRules”,whereasSection130of
theActprescribesspecificcircumstancesforthepurposeof
invokingtheprovisionsrelatingtoconfiscation.Itispointed
outthatSection130oftheActspecificallytalksaboutthe
intention,i.e.,mensrea.Boththesectionsareindependent
ofeachother.

(IV)Itisfurthersubmittedthatitispreposterousonthe

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partofthewritapplicantstocontendthatSection130of
theActcanbemadeapplicableonlyifSection129(6)ofthe
Actisnotcompliedwith.Itissubmittedthattheprovisions
ofSection130areindependentoftheprovisionsofSection
129oftheActandthatthesamecanbeinvokedbythe
departmentatanystagei.e.(i)afterconcludingthe
proceedingsinitiatedunderSection129oftheAct,or(ii)
afterissuingnoticeunderSection129(3)oftheAct,or(iii)
directlyafterdetainingthegoodsunderSection129(1)of
theAct.Thus,therecannotbeanystraightjacketprocedure
tobeadopted,asthesamewouldentirelydependuponthe
factsandcircumstancesofeachcase.

(V)Mr.Trivedifurthersubmittedthatwhenabreachof
theprovisionsoftheActandtheRulesisfound,resultingin
detainingthegoodsand/orconveyanceunderSection
129(1)oftheAct,byissuingthedetentionorder(i.e.
MOV-06)followedbytheserviceofashowcausenotice
underSection129(3)oftheAct(i.e.MOV-O7),ifownerof
thegoodscomesforwardandmakesthepaymentoftaxand
penalty,suchgoodsarerequiredtobereleasedintermsof
Section129(1)oftheActandthattheproceedingswith
respecttoSection129(3)oftheActwillbedeemedtobe
concluded.However,aftersuchrelease,ifitisfoundout
thatthecontraventionoftheActortheRuleswas/iswith
anintentiontoevadepaymentoftaxorfallingunderanyof
theeventualitiesmentionedinSection130(1)oftheAct.
theninthatcase,oncethegoods/conveyancearereleased,

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theexerciseunderSection130wouldbeafutileexercise,
becauseofnon-availabilityofgoodsandconveyance.

(VI)Itissubmittedthattherelianceplacedbythewrit
applicantsonExplanation1appendedtotheprovisionsof
Section74oftheAct,forcontendingthatSection130ofthe
Actcannotbeinvokedbythedepartmentforthetransaction
withrespecttowhich,assesseehasalreadypaidthe
amountoftaxandpenaltyintermsofSection129ofthe
Act.isalsonottenableintheeyesoflaw.Thisisinviewof
thefactthatthesaidExplanationneitherprovidesthatthe
confiscationproceedingsagainstthe’mainperson’wouldbe
deemedtobeconcluded,northattheconfiscation
proceedingsagainst’allotherpersons’wouldbedeemedto
beconcluded.Asagainstthis,itmerelystipulatesthatthe
proceedingsrelatedto’penalty’undertheprovisionsof
Sections122,Section125.129and130oftheActwouldbedeemed
tobeconcluded.Therefore,thesaidexplanationwouldnot
behelpfultothewritapplicantsandthus.asaforesaid,the
provisionsofSection130oftheActcanalsobeinvokedin
caseswheretheamountoftaxandpenaltyispaidinterms
oftheprovisionsofSection129oftheAct,incaseswhere
thesaidcaseisfallinginanyofthefiveeventualities
prescribedinSection130(1)oftheAct.

(VII)Itisfurthersubmittedthatitisnotnecessaryonthe
partofthedepartmenttoholdafull~fledgedinquirybefore
invokingtheprovisionsofSection130oftheActinasmuch

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as,therecanbeasituationlikesupplyingthegoodswithout
gettingregisteredundertheAct,whichdirectlytriggers
Section130(1)(iii)oftheAct,forwhich,noinquiryis
required.Thus,insuchsimilarsituations,theremaynotbe
anyinquiry,anddirectlyonthatgroundalone.the
provisionsofSection130oftheActproposingconfiscation
ofgoods/conveyancecanbeinvokedbythedepartment.
Thisapart,intheabove-referredsituation,itmayalso
happenthatconsideringthesameascontraventionofthe
provisionsoftheAct,theconcernedofficermay
inadvertentlyissuenoticeunderSection129(3)oftheAct.
However,thereafteritmayberealisedbytheconcerned
officerthatthesaidcontraventiondirectlytriggersthe
provisionsofSection130(1)(iii)oftheActandthatthesaid
goodsareliableforconfiscation.Hence.undersuch
circumstances,theauthoritieswouldliketoproceedfurther
byissuinganoticeunderSection130(1)readwith130(4)of
theActfortheproposedconfiscation.Therefore.itis
incorrecttocontendthattherehastobe’anythingmore’
thanthatwasprevailingatthetimeofinvocationofSection
129oftheAct,forinvokingtheprovisionsofSection130of
theAct.

(VIII)Itissubmittedthatspecificinclusionofsub-section(2)in

Section129oftheActhasapurposewhichsuggeststhat
whileframingtheprovisionsofSections129andSection130ofthe
Act,thelegislaturewasconsciousofthefactthatthe
detention/seizureofthegoods/conveyanceunderthe

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provisionsofSection129(1)oftheActcontinues,tillan
orderofreleaseispassedbytheconcernedauthorityunder
theprovisionsofSection129oftheActoranorderof
confiscationispassedundertheprovisionsofSection130of
theAct.However.inthemeanwhile,i.e.duringthe
continuationofdetention/seizure.tillthesameculminates
intothefinalorderofreleaseorconfiscation,thesaid
goods/conveyancecanbereleasedonprovisionalbasis
uponexecutionofbondandfurnishingofasecurityofsuch
quantum,asmaybeprescribed.However,theexerciseof
suchadiscretionbytheauthorityinthecaseofprovisional
releasewouldonceagaindependuponthegenuinenessof
thetransactionandnotinallcaseslikewheretheconsignor
ortheconsigneeisnotregisteredorthesameisnot
traceable.

(IX)`Itissubmittedthatconsideringtheobjectandpurpose
oftheAct,onehastoreadtheword’shall’,asusedin
Sub-Section(3)ofSection129oftheAct,as’directory’and
not’mandatory,asotherwise,theprovisionsrelatingto
confiscationcontainedunderSection130wouldbe
renderedotiose/meaningless.

(X)Itissubmittedthatitisincorrectonthepartofthe
writapplicantstocontendthattheprovisionsofSections
129andSection130oftheActaresub-setsofSection122ofthe
Act.Rather.thesaidSections129andSection130oftheActcanbe
invokedforeventualitieswhicharenotmentionedinSection

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122oftheActandhence.thesamecannotbesaidtobe
relatedtotheprovisionsofSection122oftheAct,exceptfor
quantificationoftheamountofpenalty.Inadditiontothis,
itisalsonotcorrectonthepartofthewritapplicantsto
contendthattheprovisionsofSection122oftheActare
generalinnatureandtheprovisionsofSections129and
Section130arespecificinnatureandhence,non-obstanteclauses
ofthesaidsectionswouldoverridetheprovisionsofSection
122oftheAct.Thesaidargumentfallsflatonthebasic
groundthattheprovisionsofSections129andSection130ofthe
ActthemselvesrefertotheprovisionsofSection122ofthe
Act,soastodecide/computetheamountofpenaltytobe
imposedupontheAssessees.Thus.oncethereisnoconflict
betweentheprovisionsofSection122oftheActonone
handandSections129andSection130oftheActontheother,
therearisesnoquestionofinvocationof’non-obstante’
clauseinsuchasituation.

(XI)ItissubmittedthattheprovisionsofSectionsections73and
Section74oftheActdealwiththe’demandsandrecovery’tobe
madebytheassessingofficerbasedupontheassessment,
whereastheprovisionsofSection129oftheActdealwith
the’detention/seizure’.Whileassessingthereturns,ifthe
assessingofficerfindsthattheamountoftaxhasnotbeen
paidorshortpaidorerroneouslyrefunded,orwhereinput
taxcredithasbeenwronglyavailedorutilizedforany
reason,eitherwithmalafideintentionorwithoutthesame,
asthecasemaybe,theprovisionsofSection73/Section74ofthe

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Actwouldbeinvoked.However,theprovisionsofSection
129oftheActdealwithsituationwheretheevasionof
tax/contraventionoftheAct/Rulesisdetectedduring
transititself,requiringtheadoptionofsummarylike
proceedings.Therefore,thesaidprovisionsareoperatingin
differentsphere.

(XII)Itissubmittedthatthecomparisonoftheprovisionsof
SectionCustomsAct/SectionExciseActononehandandtheprovisionsof
theActontheother,assoughttobedrawnonbehalfofthe
writapplicants,isnotcorrect.Section110(1)ofthe
CustomsActisnotcomparabletoSection129(1)oftheAct
inasmuchas,theprovisionsofSection110oftheCustoms
Actcontemplatesthattheproperofficermayseizethegoods
whichareliableforconfiscation,whereastheprovisionsof
Section129contemplatethattheproperofficermaydetain/
seizethegoods/conveyanceintransitincontraventionof
theprovisionsoftheActortheRules.

(XIII)Itisfurthersubmittedthattheprovisionsof
Sections110(2)andSection124oftheCustomsActdonot
contemplatethatthegoodswhichareseizedaretobe
releasedinaspecifictimelimit,muchless,withinaperiod
ofsixmonths.Aproposthis,thesaidsectionsmerelycasta
dutyonthedepartmenttoissueashowcausenoticewithin
aperiodofsixmonthsfromthedateofseizureofgoods,but
thesamedoesnotcontemplateastoinhowmuchtime,the
samehastobeadjudicatedupon.Therefore,thecontention

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raisedonbehalfofthewritapplicantsthatthegoodswhich
areseizedaretobereleasedwithinashortspanoftimeand
thatthelegislaturehasnotcontemplatedtoretainthegoods
pendingtheconfiscationproceedings.isnottenable.In
additiontotheabove,evenotherwise,theprovisionsof
Section110AoftheCustomsAct,whichdealwiththe
‘provisionalrelease’ofthegoods,donotcontemplatethe
releaseofthegoodsonlyonpaymentofpenaltyandinterest
buttheproposedamountoffineisalsotobeincludedfor
provisionalreleaseofthegoods.Inviewofthis,theamount
offineshouldbetakenintoaccountwhiledirectingthe
provisionalreleaseofthegoods/conveyanceasperSection129(2)read
withSection67(6)oftheActreadwithRule140oftheRules.

(XIV)Inthelast,Mr.Trivedisubmittedthatassuch
thereisnoseriouschallengetotheconstitutionalvalidityof
theprovisionsofSections129andSection130oftheActis
concerned.Hesubmittedthatitisasettledprincipleoflaw
thatthepowertolevytaxincludesalltheincidentalpowers
topreventtheevasionofsuchtax.Thepowertoseizeand
confiscatethegoodsintheeventofevasionoftaxandthe
powertolevypenaltyaremeanttochecktaxevasionandis
intendedtooperateasadeterrentagainstthetax-evaders
andare,therefore,ancillaryorincidentaltothepowerto
levytaxonthegoodsandthus,fallwithintheambitand
scopeofthelegislativepowers.Hesubmittedthatitisnot
correctonthepartofthewritapplicantstocontendthatthe
impositionofpenaltyisarbitraryandunconstitutional

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inasmuchas,thesameisonlyleviedincasewherethe
ownerofthegoodsisnotcomingforthandthegoodsare
notbeingaccountedforbyanyoneandhence,withaview
tosafeguardtherevenue’sinterest,sucha
measure/yardstickisincorporatedintheprovisionsof
Section129(1)(b)oftheAct.forwhich,theaforesaidtwo
Sections129andSection130oftheActcannotbefaulted.

(XV)Mr.Trivedifurther,veryelaborately,explainedthe
differenteventualitiesforthepurposeoftakingrecourseof
Sections129andSection130respectivelyoftheCGSTActas
under;

1stEventuality2ndEventuality

1.Section129(1)-Detention/Seizure1.Section129(1)-Detention/Seizure
OrderinFormMOV-06OrderinFormMOV-06

2Section129(3)-IssuanceofShow2Section129(3)-IssuanceofShow
CauseNoticeinFormMOV-07CauseNoticeinFormMOV-07

3.Section129(3)-Renditionoforderon3.Section129(3)-Renditionoforderon
thesaidShowCauseNoticeinFormthesaidShowCauseNoticeinForm
MOV-09i.e.eitherconfirmingorMOV-09i.e.eitherconfirmingor
droppingthesaidnotice.droppingthesaidSCN.

4.Section129(5)-Ifconfirmed,then4.Section129(6)-Ifconfirmed,then
uponpaymentoftaxandpenalty,anduponnon/paymentoftaxandpenalty.
ifdropped,thendirectlyreleaseof
goodsandconveyanceinForm
MOV-05.

5.InitiationofSection130proceedings.

3rdEventuality4thEventuality
1.Section129(1)-Detention/Seizure1.Section129(1)-Detention/Seizure
OrderinFormMOV-06OrderinFormMOV-06

2.Section129(3)-IssuanceofShow2.Section130(1)r/wSection130(4)-
CauseNoticeinFormMOV-07IssuanceofShow-CauseNotice
3.Section129(3)-RenditionoforderonregardingconfiscationinForm
thesaidShowCauseNoticeinFormMOV-10,

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MOV-09i.e.eitherconfirmingor
droppingthesaidSCN.

4.Section129(5)-Ifconfirmed,then
uponpaymentoftaxandpenalty,and
ifdropped,thendirectlyreleaseof
goodsandconveyanceinForm
MOV-05.

5.Section130(1)r/wSection130(4)-
IssuanceofShow-CauseNotice
regardingconfiscationinForm
MOV-10,inrespectofanyofthe
circumstancesnarratedinsub-clauses
(i)to(v)ofSection130(1)

21.Mr.Trivedi,insupportofhissubmissions,hasplacedrelianceon
thefollowingdecisions;

“(1)SectionInCommissionerofSalesTax,DelhiandOthersv.Shri
KrishnaEngg.CompanyandOthers,(2005)2SCC692;

(2)SectionInSanwarmalKejriwalvs.VishwaCooperativeHousing
SocietyLtd.Ors,1990(2)SCC288;

(3)InShriSwaranSinghAnr.v.ShriKasturiLal;(1977)
1SCC750;

(4)SectionInStateOfBiharOthersvsBiharRajya,(2005)9SCC
129;

(5)SectionInIolidaireIndiaLtd.v.FairgrowthFinancialServices
Ltd.andOthers,(2001)3SCC71;

(6)SectionInUnionofIndiaOrs.vs.A.K.Pandey,(2009)10SCC
552;

(7)SectionInSalesTaxOfficersOrs.vs.DuttaTraders,(2007)
14SCC215.;

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22.Insuchcircumstances,referredtoabove,Mr.Trivedisubmits
thatthisCourtmayinterpretthetwoprovisionsbearinginmindthe
aforesaidsubmissions.

SubmissionsonbehalfoftheUnionofIndia;

23.Mr.P.Y.Divyeshvar,thelearnedstandingcounselappearingfor
theUnionofIndiainoneofthepetitionshastenderedhiswritten
submissions.Thewrittensubmissionsareasunder;

“THEPOWEROFCONFISCATIONISBEYONDTHEPOWERTO
LEVYGST.THEREFORESECTION130OFCGSTACT,2017IS
ULTRAVIRESPROVISIONSOFTHECONSTITUTIONisnotcorrect
asGSTActbroughtintheConstitutionbywayofTheConstitution
(OneHundredandFirstAmendment)Act,2016.Accordingto
whichtheParliamenthaspowertomakelawswithrespectto
GST.Further,thereisnophysicalcontrolonsuchsupplyofgoods
andservices.Thecontroliseffectedthroughdocuments.For
regulationoftheactivitiesofsupplycertaindocumentshavebeen
prescribed.TheschemeoflevyandcollectionofGSTenvisages
complianceofapplicablelawinteraliathroughthesedocuments.
Theentiremechanismismeanttoensurethatthereisnoleakage
ofrevenuebywayofsupply/movementofgoodsandaredevised
tothwartanyunscrupulousmoveofusingthesamee-waybill
twice.Thesystemisdevisedinsuchawaytoself-sufiiciently
proceedonthebasisofclaimedinformationfurnishedinthe
documents.Anyoffence(inthepresentschemeoftaxation)through
detectionduringinterceptionhastobedealtinaccordancewith
thefactsandcircumstancesoftheindividualcase.Absenceof
physicalcontrolmakesitincumbentuponthetaxpayertostrictly
followtheprescribedprocedure.Itisasettledlegalpositionthat
thelegislaturecanfreelychooseitsobjectsoftaxation,fixtherate
andclassifypersonsandpropertiesandmakemachinery
provisionsforthatpurpose.

Further,CGSTAct,2017isacompletecodeinitselfandaSpecial

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Act.Havingenvisagedtherelevantsituationsamechanismhas
beendevisedinlawandwherein,dependingupontheconcomitant
factors,penaltiesconfiscationcommensuratewiththeroleand
responsibilityhavebeenprescribed.Theprovisionsrelatingto
mandatoryrequirementofmovementofthegoodsunderthecover
ofvalide-waybillaredulyspecifiedintheRule138oftheCGST
Rules,2107.Noncomplianceofthelegalrequirementsofthelaw
rendersthegoods/vehicleliabletoconfiscationasenumeratedin
thelaw.Therequirementofproperdocumentsistobefulfilled
beforecommencementoftheactoftransportations.Thusit
appearsthatnounconstitutionalityisinvolvedinthemechanismof
provisionsrelatingtoconfiscationofgoodsascontainedinsection
130oftheCGSTAct,2017.

3.THEDEMANDOFTAXANDPENALTYUNDERSECTION129OF
THEGSTACTASACONDITIONTORELEASEOFGOODSIS
ILLEGAL,ARBITRARYANDUNWARRANTED;and(ii)SECTION
129(1)(B)OFGSTACTISVIOLA’I’IVEOFSectionARTICLE14ANDSection19(1)
(G)OFTHECONSTITUTIONOFINDIAisnotcorrectconsideringthe
factthatIntermsofrule129(1)oftheCGSTAct,2017whereany
goodsaretransportedincontraventionoftheprovisionofthe
CGSTAct,2017ortherulesmadethereunderallsuchgoodsand
conveyanceusedasameansoftransportforcarryingthesaid
goodsandconveyanceshallbeliabletoseizureandshallbe
releasedintermsofprovisionscontainedintherule.Theaverment
ofpetitionerthatitisonlyaminorinteractionanddoesnot
warrantactionintermsofsection129oftheCGSTActisnoton
thelinesofthesettledlegalposition.Therequirementof
transportationofgoodsunderthecoverofvalidspecified
documentsistobemandatorilyfollowed.Noncomplianceofthe
sameistobeprocessedasperlaw.Thereisnophysicalcontrolon
suchsupplyofgoodsandservices.Thecontroliseffectedthrough
documents.Forregulationoftheactivitiesofsupplycertain
documentshavebeenprescribed.Theschemeoflevyand
collectionofGSTenvisagescomplianceofapplicablelawinteralia
throughthesedocuments.Theremaybemajororminorviolations
relatingtothedocuments.BoardvideCircularNo.
64/38/2018GSTdated14.09.2018hasclarifiedthesituationsof
minorviolationspertainingtoinvoice/e-waybills/anyother
documentsaccompanyingtheconsignmentwhereproceedings
undersection129oftheCGSTAct,2017maynotbeinitiated.The

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lapse/violationinvolvedintheinstantcasedoesnotappearminor
innatureaselaboratedintheBoardcircularNo64/38/2O18-GST
dated14.09.2018.Theentiremechanismismeanttoensurethat
thereisnoleakageofrevenuebywayofsupply/movementof
goods.Itappearsthatintheinstantcasetherewasanattemptto
violatetheprovisionoflaw,whichifundetected,couldhave
resultedindefraudinggovernmentrevenue.0ninterceptionofthe
vehicleandascertainingcommitmentofviolationsbythe
concernedpersons,mandatorypenalprovisionswereinvoked.

Essentially,theprocedureprescribedunderlawhasnotbeen
compliedwithandtheactiontakenthereafterhasbeen
challenged.ItistomentiontheHon’bleSupremeCourtinthe
matterofIndianAlluminiumCompanyLimitedVs.Thane
MunicipalCorporation,(1991)ELT454(SC)hasessentiallyruled
thatnon-observanceofevenaproceduralconditionnottobe
condonediflikelytofacilitatecommissionoffraudandintroduce
administrativeinconveniences.Thelineofdistinctionbetweenthe
bonafidemistakeandunscrupulousacthastobeconstruedinthe
lightofattendingcircumstancesandevaluatedonthebasisof
applicablelaw.Lawinthisregardisveryclearandhasspecific
provisionstodealwithsuchassituation.Theviolationsofthissort
arenotminorbreachesasclaimedbythepetitioner.Therulesare
amechanisminthemselvesandaredevisedtothwartany
unscrupulousmoveofusingthesamee-waybilltwice.Thesystem
isdevisedinsuchawaytoself-sufficientlyproceedonthebasisof
claimedinformationfurnishedinthedocuments.Anyoffence(in
thepresentschemeoftaxation)throughdetectionduring
interceptionhastobedealtinaccordancewiththefactsand
circumstancesoftheindividualcase.Absenceofphysicalcontrol
makesitincumbentuponthetaxpayertostrictlyfollowthe
prescribedprocedure.Itisasettledlegalpositionthatthe
legislaturecanfreelychooseitsobjectsoftaxation,fixtherateand
classifypersonsandpropertiesandmakemachineryprovisions
forthatpurpose.

Thustherequirementsofcomplianceofprocedurearenotaless
importantaspectbutaconditionsinequanonforthepurpose
involved.Thisratioofthecasecitedaboveappearstobe
analogouslyapplicableintheinstantcase.Further,CGSTAct,
2017isacompletecodeinitselfandaSectionSpecialAct.Having
envisagedtherelevantsituationsamechanismhasbeendevised
inlawandwherein,dependingupontheconcomitantfactors,

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penaltiescommensuratewiththeroleandresponsibilityhavebeen
prescribed.Theprovisionsrelatingtomandatoryrequirementof
movementofthegoodsunderthecoverofvalide-waybillareduly
specifiedintheRule138oftheCGSTRules,2107.Noncompliance
ofthelegalrequirementsofthelawrendersthegoods/vehicle
liabletopenalactionasenumeratedinthelaw.Therequirementof
properdocumentsistobefulfilledbeforecommencementoftheact
oftransportations.Lawdoesnotprovideanyrelaxationasmaybe
claimedbythepetitioner.Itwasincumbentuponthepetitionerto
ensurethatalltherequirementsaredulymetwith.Hisclaims
appearafterthoughtandtherationaleputforthbyhimisnot
potentenoughtoalterthelegalposition.Theprovisionsregarding
quantumofmandatorypenaltyarelegalandinaccordancewith
thespiritandintentoftheAct.Thusitappearsthatno
unconstitutionalityisinvolvedinthemechanismofprovisions
relatingtoreleaseofgoodsascontainedinsection129ofthe
CGST.

IncaseofR.K.Gar:v.UnionofIndiaandOthersreportedin1981
4SCC675theConstitutionBenchoftheHon’bleSupremeCourt
heldthateverylegislationparticularlyineconomicmattersis
essentiallyempiricanditisbasedonexperimentation.Itwas
furtherheldandobservedasunder:-“7.Nowwhileconsidering
theconstitutionalvalidityofastatutesaidtobeviolativeofSectionArticle
14,itisnecessarytobearinmindcertainwellestablished
principleswhichhavebeenevolvedbythecourtsasrulesof
guidanceindischargeofitsconstitutionalfunctionofjudicial
review.Thefirstruleisthatthereisalwaysapresumptionin
favouroftheconstitutionalityofastatuteandtheburdenisupon
himwhoattacksittoshowthattherehasbeenaclear
transgressionoftheconstitutionalprinciples.Thisruleisbasedon
theassumption,judiciallyrecognisedandaccepted,thatthe
Legislatureunderstandsandcorrectlyappreciatestheneedsofits
ownpeople,itslawsaredirectedtoproblemsmademanifestby
experienceanditsdiscriminationarebasedonadequategrounds.
Thepresumptionofconstitutionalityisindeedsostrongthatin
ordertosustainit,thecourtmaytakeintoconsiderationmattersof
commonknowledge,mattersofcommonreport,thehistoryofthe
timesandmayassumeeverystateoffactswhichcanbe
conceivedexistingatthetimeoflegislation”.
IncaseofSectionGodrejBoyceMfg.CompanyPvt.Limitedvs.

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CommissionerofSalesTaxors.reportedin19923SCC624,the
Hon’bleSupremeCourthadupheldarulewhichrestricted
availmentofModvatCredittosixmonthsfromthedateofthe
documentsspecifiedintheproviso.Thecontentionthatsuch
amendmentwouldtakeawayanexistingrightwasrejected.In
caseofSectionStateofGujaratv.RelianceIndustriesLimited,reportedin
(2017)16SCC28itwasheldandobservedthathowmuchtax
creditshouldbegivenandunderwhatcircumstances,isadomain
ofaLegislature.

FurtherinthecaseofRSPLLTD.VersusUnionofIndia{2018)(19)
GSTL430(Guj.)theHon’bleHighCourtofGujaratatAhmedabad
inthecaseofdisputetocertainprovisionsofCGSTActhasinter
aliaheldinpara25oftheorderthat”underthecircumstanceswe
donotfindthatthestatuteinanmannerviolatesSectionArticle14or19
1(g)oftheConstitution”(relevantpartmentionedand
emphasized).}

Furthermore,itistomentionthatpreviouslyalsocertainprovisions
ofGSTlawshavebeenchallenged.InarecentcaseofUnionof
IndiaVersusMohitMineralPvt.Ltd.{2018(17)GSTL(561)}Hon’ble
SupremeCourtwhiledecidingtheissuerelatedtolegislative
competenceofstatetoenactlawrelatingtocompensationtostates
hasinteraliaelaboratelydiscussedtherelevantprovisions
validatingtheenactment.Inviewoftheabovesettledlegal
position,clearviewemergesthatLegislationhastherighttolevy
taxesandpenaltiesunderCGSTAct,2017whichemanatesfrom
constitutionalpowersandnovalidgroundhasbeenmentionedby
thepetitionerholdingtheenactedlawasinvalid.Meregroundof
quantumoffineisnobasisforholdingittobeviolativeofthe
referredarticlesoftheConstitution.Thusitappearsthatno
unconstitutionalityisinvolvedinthemechanismofprovisions
relatingtoreleaseofgoodsascontainedinsection129ofthe
CGSTAct,2017.

Fromtheabove,itisclearthatpenaltyislesswheretheownerof
thegoodscomesforwardandpenaltyishigherwheretheownerof
thegoodsdoesn’tcomeforward.IntheGSTmatrixthesupplieris
thefulcrumforanysupplyandthereforethepenalprovisionsare
lessharshforanyviolationoftheprovisionsofthesaidAct
committedbythesupplier/ownerofthegoods.However,where
thesupplierofthegoodsisnon-traceableorobscure,there

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appearstobemorestrongerapprehensionofintentionofevasion
andthereforethepenalprovisionsaremuchmoreonerous.As
statedabove,CGSTAct,2017isacompletecodeinitselfanda
SectionSpecialAct.Havingenvisagedtherelevantsituationsamechanism
hasbeendevisedinlawandwherein,dependinguponthe
concomitantfactors,penaltiesconfiscationcommensuratewith
theroleandresponsibilityhavebeenprescribed.Theprovisions
relatingtomandatoryrequirementofmovementofthegoodsunder
thecoverofvalide-waybillaredulyspecifiedintheRule138of
theCGSTRules,2107.Noncomplianceofthelegalrequirementsof
thelawrendersthegoods/vehicleliabletoconfiscationas
enumeratedinthelaw.Therequirementofproperdocumentsisto
befulfilledbeforecommencementoftheactoftransportations.
Lawdoesnotproviderelaxationasmaybeclaimedbythe
petitioner.Itwasincumbentuponthepetitionertoensurethatall
therequirementsaredulymetwith.Hisclaimsappearafter
thoughtandtherationaleputforthbyhimisnotpotentenoughto
alterthelegalposition.Theprovisionsregardingquantumof
mandatorypenaltyarelegalandinaccordancewiththespiritand
intentoftheAct.

InfactGSTActbroughtintheConstitutionbywayofThe
Constitution(OneHundredandFirstAmendment)Act,2016.
AccordingtowhichtheParliamenthaspowertomakelawswith
respecttoGST.Section164oftheCGSTAct,2017empowersthe
Governmenttomakerules.Further,videNotificationNo.
03/2017-CentralTaxdated19.06.2017(asamended)Central
GovernmenthadnotifiedCentralGoodsandServicesTaxRules,
2017.Furthermore,inChapterXVIoftheCGSTRules,2017
E-WayRuleshavebeennotified.Inviewoftheabove,the
provisions,relatingtomandatoryrequirementofmovementofthe
goodsunderthecoverofvalide-waybillasspecifiedintheRule
138oftheCGSTRules,2107,arelegalandinaccordancewiththe
spiritandintentoftheAct.Thustherequirementsofcomplianceof
procedureisnotalessimportantaspectbutaconditionsinequa
nonforthepurposeinvolved.Thisratioofthecasecitedabove
appearstobeanalogouslyapplicableintheinstantcase.”

DISCUSSION

24.Aswearelookingintotwoimportantprovisionsofanewtax

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regime,wemustlookintothesalientfeaturesoftheGST.The
salientfeaturesoftheGSThavebeenveryexhaustivelylooked
intoanddiscussedbytheKeralaHighCourtinthecaseofSheen
GoldenJewels(India)Pvt.Ltd.vs.StateTaxOfficer,reported
in(2019)62GSTR207.

GST-Introduction:

25.Inafederalconstitutionalsetup,coordinationratherthan
subordinationastheguidingspirit,theStatesandtheUnionas
theconstituentshavedemarcatedspheresoflegislationand
governance.WithClearlydelineatedlegislativefields,neithercan
trespassupontheother’slegislativeterritory-theresiduary
powerslyingwiththeUnion,though.Thedivisionofpowersis
zealouslyguardedinnootherspherethanfiscal.Taxationasthe
backboneofawelfarenation,whichIndiais;thelegislativefields
areasdistinct,yetinterconnected,asthespinalsegmentsdo.

26.Thatsaid,101stConstitutionalAmendmentisthe
epoch-makingfederalfeatunparalleledinconstitutional
democracies-almost.Itis,Imaysay,aconstitutionalcoupde
gracedeliveredagainstthefiscalconfusioncompoundedby
conflictingtaxationregimes.Thisamendment,perhaps,marks
thecrestofcooperativefederalism.Ithascreatedevena
constitutionalinstitution-GSTCouncil.

27.Asconstitutionaldemocracieshavegainedexperience,
Utopianvisionofjusticehasgivenwaytoutilitarianview.
Materialcomfortorupliftmenthasbecomethehallmarkofgood
governance.Soeconomicanalysisoflawsubstitutesthenotionof

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simplejusticewiththatofeconomicefficiencyandwealth
maximisation.True,nationslikeFrancesuccessfullyembraced
GSTregimesinthe1950s.EvenfederalpolitieslikeCanada
replacedMST(Manufacturer’sSalesTax)withGST(Goodsand
ServicesTax)inthe1980s.Indiajoinedthefiscalreform
bandwagonalittlelate.Tentativeitwastobeginwith,but
determineditisinthisnewfederalfiscalpath.

28.Toputtheconceptinperspective,GSTisasingletaxonthe
supplyofgoodsandservices,rightfromthemanufacturertothe
consumer.Creditsofinputtaxespaidateachstagewillbe
availableinthelaterstageofvalueaddition.Thisprocessmakes
GSTataxonvalueadditionateachstage.Theconsumerwill
thusbearonlytheGSTchargedbythelastdealerinthesupply
chain,withset-offbenefitsatallthepreviousstages.

29.Inotherwords,thefocuswasshiftedfromtaxableeventto
destination-basedtaxation.Itavoidstheevilofcascading
taxationortaxontaxtrouble.Sogoesthemotto:OneNation-One
Market-OneTax.

30.Anascentenactmentinanebulousfieldoftaxationwill
havemanyteethingtroubles.GSTisnoexception.Initspathto
perfection,GSThasmuchdusttosettle-legislativelyand
judicially.Thesearethedaysofconfusionandcacophony:many
views,manyinterpretations,andmanyjurisprudential
mumblings.

GST:TheOrigins:

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31.Beforeitsadventasarevolutionaryindirecttaxregime,
GoodsandServicesTax(GST)hadbeenontheparliamentary
anvilformorethanadecade.Itsneedasaharmonisedindirect
tax,encompassingallgoodsandserviceswasdocumentedas
earlyasin2004.ThatyeartheTaskForceonImplementationof
theFiscalResponsibilityandBudgetManagementinitsReport
stressedtheneed.Thefirstofficialannouncementforatransition
toGST,though,wasmadebytheGovernmentofIndiain
2006-07(theBudgetSpeech).TheGovernment’scommitment
stoodreiteratedintheBudgetSpeechof2008-09,too.Butthe
GovernmentofIndiatookthefirststeptowardsthetransitionto
GSTwhenitannouncedcertainpolicychangesinthe2009-10
budget.

32.Thenextmajorlandmarkwasthe”FirstDiscussionPaper
onGoodsandServicesTaxinIndia”releasedbytheEmpowered
CommitteeinNovember2009.Thiswasthefirstofficial
documentpubliclydelineatingthecontoursoftheproposed
reformandnuancesoftheGSTModel.

33.TheFirstDiscussionPaper,infact,explainedtherationale
foraconstitutionalamendmenttointroduceGST.Itnotedthat
whiletheCentreisempoweredtotaxservicesandgoodsupto
theproductionstage,theStateshavethepowertotaxsaleof
goods.TheStatesdonothavethepowerstolevyataxonthe
supplyofserviceswhiletheCentredoesnothavethepowerto
levyataxonthesale.Thus,itsuggestedforaconstitutional
amendmentthatwouldcontainamechanismforaharmonious

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structureofGSTthatwouldnotaffectthefederalfabric.

34.Then,withthedeliberationsbetweentheCentreandStates,
aidedbytheEmpoweredCommittee,theconstitutional
amendmentprocesstousherinGSTbegan.Itresultedinthe
“Constitution(OneHundredandFifteenthAmendment)Bill,
2011″Afterthatonegotlapsed,camethe2014AmendmentBill
(aspassedbyParliament).Passedon8September2016,thisBill
became”theConstitution(OneHundredandFirstAmendment)
Act,2016”.

35.TheGSTCouncil,constitutedinSeptember2016,isa
constitutionalinstitutioncomprisingasitsmemberstheFinance
MinistersoftheUnionandtheSMteS3includingUnion
TerritorieswithLegislatures.Ithastheauthority”torecommend
totheUnionandtheStatesonvariousfacetsofGST,including
ModelGSTlaws,principlestodeterminetheplaceofsupply,levy
ofthetax,designofGST,disputesettlement,specialprovisions
foraspecialcategoryofStates,andsoforth.”

36.AdoptingtherecommendationoftheGSTCouncil,
Parliamenthasenactedthesepiecesoflegislation:

(1)TheCentralGoodsandServicesTaxAct,2017:itleviesatax
onintra-Statesuppliesofgoodsandservicesinallsupplies
withinaState

(2)theIntegratedGoodsandGoodsandServicesTaxAct,2017:
itleviesataxoninter-Statesuppliesofgoodsandservices;

(3)theUnionTerritoryGoodsandServicesTaxAct,2017:it
leviesataxonintra-Statesuppliesofgoodsandservice.

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37.TarunJain’sGoodsandServicesTax,alreadycopiously
quoted,observesthatintheconstitutionalterms,theGSTis
uniquebecauseoftheseaspectsofitsdesign:(1)Itprovides
fortheconcurrentexerciseoftaxingpowersbytheCentreand
theStatesonthesamesubject-auniqueandunprecedented
measure.(2)BoththeCentreandtheStatesaretoactintandem
basedontheGSTCouncil’srecommendations.

SalientfeaturesoftheGST:

38.ThesalientfeaturesofGSTarethese:

(i)GSTapplieson’supply/ofgoodsorservicesasagainstthe
presentconceptonthemanufactureofgoods,oronthesaleof
goods,orontheprovisionofservices.

(ii)GSTisbasedontheprincipleofdestination-based
consumptiontaxationasagainstthepresentprincipleof
origin-basedtaxation.

(iii)ItisadualGSTwiththeCentreandtheStates
simultaneouslylevyingataxonacommonbase.GSTtobelevied
bytheCentreiscalledCentralGST(CGST)andthattobelevied
bytheStatescalledStateGST(SGST).

(iv)AnIntegratedGST(IGST)isleviedoninter-statesupply
(includingstocktransfers)ofgoodsorservices.Thisshallbe
leviedandcollectedbytheGovernmentofIndia,andsuchtax
shallbeapportionedbetweentheUnionandtheStatesinthe
mannerasmaybeprovidedbyParliamentbyLawonthe
recommendationoftheGSTCouncil.

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(v)Importofgoodsorservicesistreatedasinter-statesupplies
andissubjecttoIGST,besidestheapplicablecustomsduties.

(vi)CGST,SGSTIGSTareleviedatratestobemutuallyagreed
uponbytheCentreandtheStates.Therateswouldbenotified
ontherecommendationoftheGSTCouncil.Tobeginwith,the
GSTCouncilhasdecidedthatGSTwouldbeleviedatfourrates
viz.5%,12%,18%and28%.Thescheduleorlistofitemsthat
wouldfallundereachslabhasbeenworkedout.Besidesthese
rates,acesswouldbeimposedon”demerit”goodstoraise
resourcesforcompensatingStatesasStatesmayloserevenue
owingtoimplementingGST.

(vii)GSTwillapplytoallgoodsandservicesexceptAlcoholfor
humanconsumption.

(viii)GSTonfivespecifiedpetroleumproducts(Crude,Petrol,
Diesel,ATFNaturalGas)beapplicablefromadatetobe
recommendedbytheGSTC.

(ix)TobaccoandtobaccoproductswouldbesubjecttoGST.
Besides,theCentrewillhavethepowertolevyCentralExcise
dutyontheseproducts.

(x)AcommonthresholdexemptionwouldapplytobothCGST
andSGST.Taxpayerswithanannualturnovernotexceeding
Rs.20lakh(Rs.10LakhforspecialcategoryStates)wouldbe
exemptedfromGST.Forsmalltaxpayerswithanaggregate
turnoverinafinancialyearupto50lakhs,acompositionscheme
isavailable.Underthescheme,ataxpayershallpaytaxasa
percentageofhisturnoverinaStateduringtheyearwithoutthe
benefitofInputTaxCredit.Thisschemewillbeoptional.

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(xi)Thelistofexemptedgoodsandserviceswouldbekepttoa
minimum,anditwouldbeharmonizedfortheCentreandthe
StatesandacrossStatesasfaraspossible.

(xii)Exportswouldbezero-ratedsupplies.Thus,goodsor
servicesthatareexportedwouldnotsufferinputtaxesortaxes
onfinishedproducts.

(xiii)ThecreditofCGSTpaidoninputsmaybeusedonlyfor
payingCGSTontheoutput,andthecreditofSGSTpaidon
inputsmaybeusedonlyforpayingSGST.InputTaxCredit(ITC)
ofCGSTcannotbeusedforpaymentofSGSTandviceversa.In
otherwords,thetwostreamsofInputTaxCredit(ITC)cannotbe
cross-utilised,exceptinspecifiedcircumstancesofinter-state
suppliesforpaymentofIGST.

(xiv)AccountswouldbesettledperiodicallybetweentheCentre
andtheStatestoensurethatthecreditofSGSTusedfor
paymentofIGSTistransferredbytheExportingStatetothe
Centre.Similarly,IGSTusedforpaymentofSGSTwouldbe
transferredbytheCentretotheImportingState.Further,the
SGSTportionofIGSTcollectedonB2Csupplieswouldalsobe
transferredbytheCentretothedestinationState.Thetransferof
fundswouldbecarriedoutbasedoninformationcontainedinthe
returnsfiledbythetaxpayers.

(xv)Thelaws,regulations,andproceduresforlevyandcollection
ofCGSTandSGSTwouldbeharmonizedtotheextentpossible.

39.GSTreplacesthesetaxescurrentlyleviedandcollectedby
theCentre:

(a)CentralExciseDuty,

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(b)DutiesofExcise(MedicinalandToiletPreparations),

(c)AdditionalDutiesofExcise(GoodsofSpecialImportance),

(d)AdditionalDutiesofExcise(TextilesandTextileProducts),

(e)AdditionalDutiesofCustoms(commonlyknownasCVD),

(f)SpecialAdditionalDutyofCustoms(SAD),

(g)ServiceTax,

(h)Cessesandsurcharges,insofarastheyrelatetothesupply
ofgoodsandservices.

40.StatetaxesthatgetsubsumedwithintheGSTare:

(a)StateVAT,

(b)CentralSalesTax,

(c)PurchaseTax,

(d)LuxuryTax,

(e)EntryTax(Allforms),

(f)EntertainmentTaxandAmusementTax(exceptthoseleviedby
thelocalbodies),

(g)Taxonadvertisements,

(h)Taxonlotteries,bettingandgambling,

(i)Statecessesandsurchargesinsofarastheyrelatetothe
supplyofgoodsandservices,

41.TohavethewholeGSTsystembackedbyarobustIT
system,ParliamenthassetuptheGoodsandServicesTax
Network(GSTN).Itwillprovidefrontendservicesandwillalso
developbackendITmodulesforStateswhochosethesame.

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ConstitutionalAmendmentAct,AnOverview:

42.Asweshallsee,theCAActinserts,repeals,andamends
certainpartsoftheConstitution.InsertedaretheArticles246A,
269A,and279A;repealedistheSectionArticle268A;amendedare
Articles248,249,250,268,269,270,271,286,366,and279A.
BesidesthattheSixthandtheSeventhSchedules,too,havebeen
amended.

43.SectionArticle246A,insertedthroughSection2oftheAmendment
Act,isamarvelofthefederalfiscalmechanism.BythisArticle,
theStateLegislaturesnowhavethepowertomakelaws
regardingGSTtaximposedbytheUnionorbythatStateandto
implementtheminintra-statetrade.TheCentre,ofcourse,
continuestohaveexclusivepowertomakeGSTlawsregarding
inter-statetrade.BoththeUnionandStatesinIndianowhave
simultaneouspowerstomakelawonthegoodsandservices.

44.SectionArticle269A,insertedthroughSection9oftheAct,deals
withlevyandcollectionofgoodsandservicestaxinthecourseof
inter-Statetradeorcommerce.Thatis,incaseofinter-state
trade,theamountcollectedbytheCentreistobeapportioned
betweentheCentreandtheStatesaspertheGSTCouncil’s
recommendations.UndertheGST,iftheCentrecollectsthetax,
itassignsState’ssharetotheStateconcerned;ontheother
hand,iftheStatecollectsthetax,itassignstheCentre’sshareto
theCentre.Thoseproceedswillnotformapartofthe
ConsolidatedFundofIndia,soitavoidshavinganAppropriation

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Billpassedeverytimeadepositismade.

45.AndSectionArticle279AprovidesfortheconstitutionofaGST
Council,besidesprescribingitspowersandpositions.Earlier,
SectionArticle268AdealtwiththeservicetaxleviedbyUnionand
collectedandappropriatedbytheUnionandStates.Now,this
Articlestandsrepealed.Astotheamendedconstitutional
provisions,SectionArticle248confersresiduarylegislativepowerson
Parliament.NowthisprovisionissubjecttoSectionArticle246Aofthe
Constitution.SectionArticle249,amendedthroughSection4oftheAct,
nowstandschangedsothatifRajyaSabhaapprovesthe
resolutionwith2/3rdmajority,Parliamentwillhavepowersto
makenecessarylawsregardingGST,inthenationalinterest.So
hasSectionArticle250beenamended;Parliamentwillhavepowersto
makelawsonGSTduringtheemergencyperiod.

46.Atadifferentplanearetheotheramendments.SectionArticle268
hasbeenamendedsothatexcisedutyonmedicinalandtoilet
preparationareomittedfromtheStateListandaresubsumedin
GST.AndSectionArticle269wouldempowertheParliamenttomake
GSTrelatedlawsforinter-statetradeorcommerce.SectionArticle270
nowprovidesforcollectionanddistributionoftaxtobedone
accordingtoSectionArticle246A.Then,underSectionArticle271,GSThasbeen
exemptedfrombeingpartoftheConsolidatedFundofIndia.The
amendedSectionArticle286includesthesupplyofgoodsandservices
underitsambit,ratherthanjustsaleorpurchaseofgoods;
SectionArticle366nowincludesthedefinitionsofGoodsandService
Tax,ServicesandState.Andfinally,SectionArticle279Ahasalsobeen
broughtundertheambitofSectionArticle368.

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47.AswiththeSchedules,theSixthSchedulehasbeen
amendedtogivepowertotheDistrictCouncilstolevyandcollect
taxesonentertainmentandamusements.AndtheSeventh
Schedulehasalsobeenamended.IntheUnionList,petroleum
crude,high-speeddiesel,motorspirit(petrol),naturalgas,and
aviationturbinefuel,tobaccoandtobaccoproductshavebeen
removedfromtheambitofGSTandhavebeensubjectedtoUnion
jurisdiction.Newspapersadvertisements,andServiceTaxhave
beenbroughtunderGST(entries84,92,92C).Similarly,inthe
StateList,petroleumcrude,high-speeddiesel,motorspirit
(commonlyknownaspetrol),naturalgas,aviationturbinefuel,
andalcoholicliquorforthehumanconsumptionhavebeen
included,unlessthesaleisinthecourseofinter-Stateor
Internationaltradeandcommerce.EntrytaxandAdvertisement
taxeshavebeenremoved.Taxesonentertainmentareonlytobe
includedtotheextentofthatimposedbylocalbodies.(entries
52,54,55,62).

48.Tobeexplicit,inSectionArticle366oftheConstitution,afterclause
(12),clause(12A)Wasinserted:”goodsandservicestax”means
anytaxonsupplyofgoods,orservicesorbothexcepttaxeson
thesupplyofthealcoholicliquorforhumanconsumption.After
clause(26),clauses(26A)and(26B)wereinserted:”Services”
meansanythingotherthangoods;”Statenwithreferenceto
Articles246A,268,269,269AandSectionArticle279AincludesaUnion
territorywithLegislature.

49.Section18oftheAmendmentActprovidesforcompensation

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toStatesforlossofrevenuebecauseoftheintroductionofgoods
andservicestax.Parliamentshall,bylaw,onthe
recommendationoftheGSTCouncil,provideforcompensationto
theStatesforlossofrevenuearisingonaccountof
implementationofthegoodsandservicestaxforfiveyears.

50.TheoverarchingprovisionforourdiscussionisSection19of
theAmendmentAct.Itreadsthus;

“Section19-Transitionalprovisions:

NotwithstandinganythinginthisAct,anyprovisionofanylaw
relatingtotaxongoodsorservicesoronbothinforceinanyState
immediatelybeforethecommencementofthisAct,whichis
inconsistentwiththeprovisionsoftheConstitutionasamendedby
thisActshallcontinuetobeinforceuntilamendedorrepealedby
acompetentLegislatureorothercompetentauthorityoruntil
expirationofoneyearfromsuchcommencement,whicheveris
earlier.”

51.UntiltheConstitutionSufferedits101stAmendment-thatis,
TheConstitution(OneHundredFirstAmendment)Act,2016-
theUnionandtheStateGovernmentshavebeencollecting,asis
relevanthere,theindirecttaxesunderdearlydemarcated
legislativefieldsasshownintheSeventhSchedule.Then,there
were97EntriesinList-I,66inList-II,and47inList-III,notall
thosedealingswiththeLegislature’staxingpowerthough.InList
I,principalamongtheEntriesconcerningtaxesareArticles41,
42,83,84,87to92,92A,92B,92C,97;andinListIIareEntries
26,45,47to61and63.

52.TheCAActhasbroughtdrasticchangesinthefederal
taxingpowersoftheState;ithasintroducedacoupleofArticles,

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amendedafew,anddoneawaywithafewmore.Ataglancewe
canappreciatethechanges:

AfterImpact
BeforeAmendmentAmendmen
t
246ANotexistingIntroducedSpecialprovisionon
goodsandservicestax
conferring
simultaneous
legislativepowerson
boththeUnionandthe
States.
248ResiduaryAmendedTheUnion'sresiduary
powerlegislativepoweris
subjectedtoSectionArticle
246A.
249PowerofAmendedItgivespowertothe
ParliamenttoParliamenttoenact
legislateanylawapplicableto
regardingastatesonthematters
matterinthementionedevenin
StateListinthestateslist.GST,no
nationalmentionedinStates
interestlist,nowexplicitly
mentioned.
250PowerofAmendedIthasasimilarimpact
Parliamenttoasdoestheamended
legislateSectionArticle249.
regardingany
matterinthe
StateListifa
Proclamationof
Emergencyis
inoperation
268DutiesleviedbyAmendedAdditionalDutiesof
theUnionbutExcise(Medicinaland
collectedandtoiletpreparations)
appropriatedbyStandsubsumedinto
theStatesGST.

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268AServicetaxOmittedServicetaxhasbeen
leviedbyUnionsubsumedintoGST.
andCollectedSoEntryNo.92Cof
andList-Itoostands
appropriatedbyomitted.
theUnionand
theStates:
269TaxesleviedAmendedThearrangement
andcollectedunderSectionArticle269is
bytheUnionsubjectedtoArticle
butassignedto269A,anewprovision.
theStates
269ANotexistingInsertedLevyandcollectionof
goodsandservicestax
duringinter-State
tradeorcommerce.

Thepowertolevyand
collectGSTduring
inter-Statetradeor
commerceisvested
withtheGovernment
ofIndia.Thetaxesso
collectedwillbe
apportionedbetween
theUniontheStates
inmannerprescribed.

270TaxesleviedAmendedNowSectionArticle268Aan
anddistributedEntryNo.92CofList-I
betweenthestandomitted;so
Unionandtheservicetaxis
States.subsumedunderGST.
SoinSectionArticle270,a
referencetoSectionArticle
268Ahasbeen
omitted,andanew
referencetoSectionArticle
269AforlevyofGST
forInter-state
transactionshasbeen

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introduced.
271SurchargeonAmendedParliament'spowersto
certaindutieslevyanadditional
andtaxesforsurchargeonUnion
purposesofthetaxesunderSectionArticle271
Unionnowstandsamended:
Parliamentcanlevyno
additionalsurcharge
onGST.
279ANotexistingInsertedProvisionforcreating
theGSTCouncil,a
constitutionalbody.
286RestrictionsonAmendedFirst,theword"sales"
theimpositionisreplacedwith
oftaxonthe"supply"andtheword
saleor"goods"isreplaced
purchaseofwith"goodsorservices
goodsorboth".

Statescannotlegislate
onthesupplyofgoods
orservicesifsuch
supplyisoutsidetheir
stateorisinthe
courseofimportor
export.

Originally,Statescould
notlevyandcollecttax
onspecificInter-state
transactions.With
omittingClause(3),
noweveninter-state
transactionsofthat
naturewouldattract
GST.

366.DefinitionInsertedThedefinitionshave
beenaddedtothe
Constitution:(12A)
GoodsandServices

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Tax;(26A)Services;
and(26B)State.
368PowerofAmendedAsregardsprovisions
Parliamenttoandlawsregarding
amendtheGSTCouncil,
ConstitutionParliamenthasbeen
andprocedurevestedwiththepower
thereforetoamendthe
Constitution.
SixthProvisionsonAmendedItconcernspowersto
Schetheassessandcollectland
duleAdministrationrevenueandtoimpose
ofTribalAreastaxesintheTribal
intheStatesofAreasofafewStates.
Assam,
Meghalaya,
Tripura,and
Mizoram

8.Powersto
assessand
collectland
revenueandto
imposetaxes.

SeventhSchedule
ListBarringthoseAmendedNowexcisedutyis
I:excluded,theleviedonlyonthe
EntryUnioncouldenumerateditems:
84levyexciseduty
onallother(a)petroleumcrude;
goods,
including(b)high-speeddiesel;
tobacco,
manufactured(c)motorspirit
orproducedin(commonlyknownas
India.Thepetrol);
excludedones
(d)naturalgas;
arethese:
(e)aviationturbine
(a)alcoholic

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liquorsforfuel;and
human
consumption;f)tobaccoandtobacco
products"
(b)opium,
Indianhemp,
andother
narcoticdrugs
andnarcotics,
butincluding
medicinaland
toilet
preparations
containing
alcoholorany
substancein
sub-paragraph
(b).

EntryTaxesontheOmittedNow,taxesonthesale
92saleororpurchaseof
purchaseofnewspapersandon
newspapersadvertisements
andonpublishedthereinhave
advertisementsbeensubsumedinto
published.GST.
EntryTaxesonOmittedServicetaxhasalso
92Cservicesbeensubsumedinto
GST.
ListIITaxesontheOmittedPurchasetax,too,has
Entryentryofgoodsbeensubsumedinto
52intoalocalGST.
areafor
consumption,
useorsale
therein.
EntryTaxesontheAmendedNowthetaxesare
54saleorconfinedtothesaleof
purchaseofpetroleumcrude,high
goodsotherspeeddiesel,motor
thanspirit(petrol),natural

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newspapers,gas,aviationturbine
subjecttothefuel,andalcoholic
provisionsofliquorforhuman
entry92Aofconsumption.But
ListI.(Entryexcludedisthesalein
92AofListIthecourseof
concerninter-Statetradeor
inter-Statecommerce.
tradeor
commerce.)(Nowthesaleor
purchaseofgoods
standssubsumeby
GST)

EntryTaxesonOmittedTaxeson
55advertisementsadvertisementsother
otherthanthanadvertisements
advertisementsbroadcastbyradioor
publishedintelevisionhasalso
thenewspapersbeensubsumedinto
andGST.
advertisements
broadcastby
radioor
television.
EntryTaxesonAmended(a)TaxesonLuxury
62luxuries,betting,andgambling
includingtaxeshavebeensubsumed
onintoGST.
entertainments,
amusements,(b)RighttolevyTaxon
betting,andentertainmentsand
gambling.amusementshasbeen
restrictedto
Panchayats,
municipalities,
RegionalCouncils,and
DistrictCouncils.

TheStateEnactments:

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53.Intheabovebackground,theStateshaveenactedthe
respectiveStateGoodsandServicesTaxActs.Theselaws,among
Otherthings,(i)CarryoutthetransitiontoGST;(ii)providefor
thelevyofGSTonintrastatewithintheState;andalso(iii)
modify/repealtheearlierStateenactmentswhichhavetobe
modified/repealedbecauseoftransitiontoGST.Notableisthe
repealoftheVAT/EntryTax/LuxuryTax,andsoon,which
earlierprovidedforlevyofthesetaxeswithintheStates.

GujaratEnactment

54.TheGujaratGoodsServicesTaxAct,2017(ActNo.25of
2017)receivedtheGovernor'sassentonthe16thDayof
September,2017.Itprovidesfor,asthepreamblesuggests,levy
andcollectionoftaxonIntra-Statesupplyofgoodsorservices,or
bothbytheStateofGujarat.Asitisinparimateriawiththe
CentralGoodsandServicesTaxAct,itneedsnomuch
elaboration.

55.Tosumitup,theGSTisadiscretionbasedtaxon
consumptionofgoodsandservices.Thetaxableeventunderthe
GSTregimeisthesupplyofgoodsorservicesorboth.Section
2(107)oftheCGSTandSGSTActs,whichareidentical,defines
"taxableperson"asapersonwhoisregisteredorliabletobe
registeredunderthesaidstatutes.Section2(108)oftheCGST
andSGSTActs,whichareidentical,defines"taxablesupply"asa
supplyofgoodsorservices,orbothwhichischargeabletogoods
andservicestaxunderthesaidstatutes.

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ChapterXIXoftheGST:-

56.ChapterXIXofthestatutescontainingSections122toSection138
dealswiththeoffencesandpenalties.Amongthesaidprovisions,
Sections122toSection128dealwiththeimpositionofpenalties.Section
129dealswithdetention,seizureandreleaseofgoodsand
conveyancesintransit.Sections130andSection131dealwith
confiscationofgoodsorconveyancesandlevyofpenaltyand
Sections132toSection138dealwiththevariousoffencesundertheAct.
Amongthesaidprovisions,Section129dealingwithdetention,
seizureandreleaseofgoodsandconveyancesintransit,reads
thus:

"129.Detention,seizureandreleaseofgoodsand
conveyancesintransit.

(1)NotwithstandinganythingcontainedinthisAct,where
anypersontransportsanygoodsorstoresanygoodswhile
theyareintransitincontraventionoftheprovisionsofthis
Actortherulesmadethereunder,allsuchgoodsand
conveyanceusedasameansoftransportforcarryingthe
saidgoodsanddocumentsrelatingtosuchgoodsand
conveyanceshallbeliabletodetentionorseizureandafter
detentionorseizure,shallbereleased,--

(a)onpaymentoftheapplicabletaxandpenaltyequaltoone
hundredpercent.ofthetaxpayableonsuchgoodsand,in
caseofexemptedgoods,onpaymentofanamountequalto
twopercent.ofthevalueofgoodsortwenty-fivethousand
rupees,whicheverisless,wheretheownerofthegoods
comesforwardforpaymentofsuchtaxandpenalty;

(b)onpaymentoftheapplicabletaxandpenaltyequaltothe
fiftypercent.ofthevalueofthegoodsreducedbythetax
amountpaidthereonand,incaseofexemptedgoods,on
paymentofanamountequaltofivepercent.ofthevalueof
goodsortwenty-fivethousandrupees,whicheverisless,
wheretheownerofthegoodsdoesnotcomeforwardfor

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paymentofsuchtaxandpenalty;

(c)uponfurnishingasecurityequivalenttotheamount
payableunderclause(a)orclause(b)insuchformand
mannerasmaybeprescribed:Providedthatnosuchgoods
orconveyanceshallbedetainedorseizedwithoutservingan
orderofdetentionorseizureonthepersontransportingthe
goods.

(2)Theprovisionsofsub-section(6)ofSectionsection67shall,
mutatismutandis,applyfordetentionandseizureofgoods
andconveyances.

(3)Theproperofficerdetainingorseizinggoodsor
conveyancesshallissueanoticespecifyingthetaxand
penaltypayableandthereafter,passanorderforpaymentof
taxandpenaltyunderclause(a)orclause(b)orclause(c).
(4)Notax,interestorpenaltyshallbedeterminedunder
sub-section(3)withoutgivingthepersonconcernedan
opportunityofbeingheard.

(5)Onpaymentofamountreferredinsub-section(1),all
proceedingsinrespectofthenoticespecifiedinsub-section
(3)shallbedeemedtobeconcluded.

(6)Wherethepersontransportinganygoodsortheownerof
thegoodsfailstopaytheamountoftaxandpenaltyas
providedinsub-section(1)withinsevendaysofsuch
detentionorseizure,furtherproceedingsshallbeinitiatedin
accordancewiththeprovisionsofSectionsection130:
Providedthatwherethedetainedorseizedgoodsare
perishableorhazardousinnatureorarelikelytodepreciate
invaluewithpassageoftime,thesaidperiodofsevendays
maybereducedbytheproperofficer."

57.Section130ofthestatute,dealingwiththeconfiscationof
goodsorconveyances,readsthus:

"130.(1)NotwithstandinganythingcontainedinthisAct,if
anyperson--

(i)suppliesorreceivesanygoodsincontraventionofanyof
theprovisionsofthisActortherulesmadethereunderwith
intenttoevadepaymentoftax;or(ii)doesnotaccountfor

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anygoodsonwhichheisliabletopaytaxunderthisAct;or

(iii)suppliesanygoodsliabletotaxunderthisActwithout
havingappliedforregistration;or

(iv)contravenesanyoftheprovisionsofthisActortherules
madethereunderwithintenttoevadepaymentoftax;or

(v)usesanyconveyanceasameansoftransportforcarriage
ofgoodsincontraventionoftheprovisionsofthisActorthe
rulesmadethereunderunlesstheowneroftheconveyance
provesthatitwassousedwithouttheknowledgeor
connivanceoftheownerhimself,hisagent,ifany,andthe
personinchargeoftheconveyance,then,allsuchgoodsor
conveyancesshallbeliabletoconfiscationandtheperson
shallbeliabletopenaltyunderSectionsection122.
(2)Wheneverconfiscationofanygoodsorconveyanceis
authorisedbythisAct,theofficeradjudgingitshallgiveto
theownerofthegoodsanoptiontopayinlieuof
confiscation,suchfineasthesaidofficerthinksfit:
Providedthatsuchfineleviableshallnotexceedthemarket
valueofthegoodsconfiscated,lessthetaxchargeable
thereon:

Providedfurtherthattheaggregateofsuchfineandpenalty
leviableshallnotbelessthantheamountofpenaltyleviable
undersub-section(1)ofSectionsection129:

Providedalsothatwhereanysuchconveyanceisusedfor
thecarriageofthegoodsorpassengersforhire,theownerof
theconveyanceshallbegivenanoptiontopayinlieuofthe
confiscationoftheconveyanceafineequaltothetaxpayable
onthegoodsbeingtransportedthereon.

(3)Whereanyfineinlieuofconfiscationofgoodsor
conveyanceisimposedundersub-section(2),theownerof
suchgoodsorconveyanceorthepersonreferredtoin
sub-section
(1),shall,inaddition,beliabletoanytax,penaltyand
chargespayableinrespectofsuchgoodsorconveyance.
(4)Noorderforconfiscationofgoodsorconveyanceorfor
impositionofpenaltyshallbeissuedwithoutgivingthe
personanopportunityofbeingheard.

(5)Whereanygoodsorconveyanceareconfiscatedunder

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thisAct,thetitleofsuchgoodsorconveyanceshallthereupon
vestintheGovernment.

(6)Theproperofficeradjudgingconfiscationshalltakeand
holdpossessionofthethingsconfiscatedandeveryofficerof
Police,ontherequisitionofsuchproperofficer,shallassist
himintakingandholdingsuchpossession.

(7)Theproperofficermay,aftersatisfyinghimselfthatthe
confiscatedgoodsorconveyancearenotrequiredinany
otherproceedingsunderthisActandaftergivingreasonable
timenotexceedingthreemonthstopayfineinlieuof
confiscation,disposeofsuchgoodsorconveyanceand
depositthesaleproceedsthereofwiththeGovernment."

58.Wetakenoticeofthefactthatboththesections,i.e.,
Sections129andSection130respectivelyoftheActstartwitha
non-obstanteclause.Thefirstquestionweneedtoconsideris
whetherboththesectionsareindependentofeachotherorthey
canbeusedinterchangeablyatthediscretionoftheauthorities.
Inotherwords,isSection130oftheAct,whichprovidesfor
confiscationofgoodsorconveyancesandlevyofpenalty,subject
toSection129oftheAct.Asnotedabove,thetwoprovisions
underthesameenactmenthaveanon-obstanteclause"not
withstandinganythingcontainedinthisAct."

59.Asregardthenon-obstanteclause,thisCourt
deemsitfittoconsiderfewdecisions:

60.SectionInStateofWestBengalv.UnionofIndia,AIR1963SC
1241,itisobservedasunder;

"TheCourtmustascertaintheintentionofthe
legislaturebydirectingitsattentionnotmerelytothe
clausestobeconstruedbuttotheentirestatute;itmust

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comparetheclausewiththeotherpartsofthelawand
thesettinginwhichtheclausetobeinterpretedoccurs."

61.SectionInUnionofIndiav.MajI.C.Lala,AIR1973
SC2204,theSupremeCourtheldthatthenonobstanteclause
doesnotmeanthatthewholeofthesaidprovisionoflaw
hastobemadeapplicableorthewholeoftheotherlaw
hastobemadeinapplicable.ItisthedutyoftheCourttoavoid
theconflictandconstruetheprovisionstothattheyare
harmonious.

62.SectionInUnionofIndiav.G.M.Kokil,AIR1984SC
1022,theSupremeCourt,atParagraph10,heldasfollows:

"Itiswell-knownthatanon-obstanteclauseis
alegislativedevicewhichisusuallyemployedtogive
overridingeffecttocertainprovisionoversomecontrary
provisionthatmaybefoundeitherinthesame
enactmentorsomeotherenactment,thatisto
say,toavoidtheoperationandeffectofallcontrary
provisions."

63.SectionInChandavarkarSitaRatnaRaov.AshalataS.Guram,
[1986]4SCC447,atParagraph67,theSupremeCourtheldas
follows:

"67.Aclausebeginningwiththeexpression
"notwithstandinganythingcontainedinthisActorin
someparticularprovisionintheActorinsomeparticular
Actorinanylawforthetimebeinginforce,orinany
contract"ismoreoftenthannotappendedtoasectionin
thebeginningwithaviewtogivetheenactingpartofthe
sectionincaseofconflictanoverridingeffectover
theprovisionoftheActorthecontractmentioned
inthenonobstanteclause.Itisequivalentto
sayingthatinspiteoftheprovisionoftheAct

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oranyotherActmentionedinthenonobstante
clauseoranycontractordocumentmentionedthe
enactmentfollowingitwillhaveitsfulloperationorthatthe
provisionsembracedinthenonobstanteclausewouldnot
beanimpedimentforanoperationofthe
enactment.Seeinthisconnectiontheobservations
ofthisCourtinTheSouthIndiaCorporation(P.)
SectionLtd.,v.TheSecretary,BoardofRevenue,Trivandrum
Anr.,AIR1964SC207at215[1964]4SCR280."

64.SectionInVishinN.Kanchandaniv.VidyaLachmandas
Khanchandani,AIR2000SC2747,atParagraph11,the
SupremeCourtheldthat,

"ThereisnodoubtthatbynonobstanteclausetheLegislature
devicesmeanswhichareusuallyappliedtogiveoverriding
effecttocertainprovisionsoversomecontraryprovisions
thatmaybefoundeitherinthesameenactmentor
someotherstatute.Inotherwordssuchaclauseis
usedtoavoidtheoperationandeffectofall
contraryprovisions.Thephraseisequivalenttoshowingthat
theActshallbenoimpedimenttomeasureintended.To
attracttheapplicabilityofthephrase,thewholeofthe
section,theschemeoftheActandtheobjectsandreasons
forwhichsuchanenactmentismadehastobekeptin
mind."

65.SectionInICICIBankLtd.v.SIDCOLeathersLtd.,[2006]67SCL
383(SC),theSupremeCourt,atParagraphs34,36and37,held
asfollows:

"34.Section529AoftheCompaniesActnodoubtcontainsa
nonobstanteclausebutinconstruingtheprovisionsthereof,
itisnecessarytodeterminethepurportandobjectforwhich
thesamewasenacted....

36.Thenonobstantenatureofaprovisionalthoughmaybeof
wideamplitude,theinterpretativeprocessthereofmustbe
keptconfinedtothelegislativepolicy....

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37.Anonobstanteclausemustbegiveneffectto,tothe
extenttheParliamentintendedandnotbeyondthesame."

66.TheSupremeCourt,inthecaseofSectionCentralBankofIndia
v.StateofKerala,[2009]4SCC94,heldasfollows;

"103.Anon-obstanteclauseisgenerallyincorporatedina
statutetogiveoverridingeffecttoaparticularsectionorthe
statuteasawhole.Whileinterpretingnon-obstanteclause,
theCourtisrequiredtofindouttheextenttowhichthe
legislatureintendedtodosoandthecontextin
whichthenon-obstanteclauseisused.Thisrule
ofinterpretationhasbeenappliedinseveraldecisions."

67.SectionInStateBankofWestBengalv.UnionofIndia,[(1964)1
SCR371],itwasobservedthat:

"68...theCourtmustascertaintheintentionofthe
legislaturebydirectingitsattentionnotmerelytothe
clausestobeconstruedbuttotheentirestatute;itmust
comparetheclausewiththeotherpartsofthelawandthe
settinginwhichtheclausetobeinterpretedoccurs."

68.SectionInMadhavRaoJivajiRaoScindiav.Unionof
Indiaandanother[(1971)1SCC85],Hidayatullah,C.J.
observedthat-

"..thenonobstanteclauseisnodoubtavery
potentclauseintendedtoexcludeeveryconsideration
arisingfromotherprovisionsofthesamestatuteor
otherstatutebut"forthatreasonalonewemust
determinethescope"ofthatprovisionstrictly.
Whenthesectioncontainingthesaidclausedoes
notrefertoanyparticularprovisionswhichitintendsto
overridebutreferstotheprovisionsofthestatute
generally,itisnotpermissibletoholdthatitexcludes
thewholeActandstandsallalonebyitself.Asearchhas,
therefore,tobemadewithaviewtodeterminingwhich
provisionanswersthedescriptionandwhichdoesnot."

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69.SectionInR.S.Raghunathv.StateofKarnatakaandanother,
[(1992)1SCC335],athreeJudgeBenchreferredtotheearlier
judgmentsinSectionAswiniKumarGhosev.ArabindaBose[AIR1952
SC369],SectionDominionofIndiav.ShrinbaiA.Irani[AIR1954SC
596],SectionUnionofIndiav.G.MKokil[1984(Supp.)SCC196],
SectionChandravarkarSitaRatnaRaov.AshalataS.Guram[(1986)
4SCC447]andobserved:

"...Thenonobstanteclauseisappendedtoaprovisionwitha
viewtogivetheenactingpartoftheprovisionanoverriding
effectincaseofaconflict.Butthenonobstante
clauseneednotnecessarilyandalwaysbecoextensive
withtheoperativepartsoastohavetheeffectof
cuttingdownthecleartermsofanenactmentandif
thewordsoftheenactmentareclearandarecapableofa
clearinterpretationonaplainandgrammatical
constructionofthewordsthenonobstanteclause
cannotcutdowntheconstructionandrestrictthescopeof
itsoperation.Insuchcasesthenonobstanteclausehastobe
readasclarifyingthewholepositionandmustbe
understoodtohavebeenincorporatedinthe
enactmentbythelegislaturebywayofabundant
cautionandnotbywayoflimitingtheambitand
scopeoftheSpecialRules."

70.SectionInA.G.Varadarajuluv.StateofTamilNadu
[(1998)4SCC231],theSupremeCourtreliedonAswini
KumarGhose'scase.TheCourtwhileinterpretingthenon-
obstanteclausecontainedinSection21AofTamilNaduLand
Reforms(FixationofCeilingonSectionLand)Act,1961held:

"Itiswellsettledthatwhiledealingwithanonobstante
clauseunderwhichthelegislaturewantstogiveoverriding
effecttoasection,thecourtmusttrytofindouttheextentto
whichthelegislaturehadintendedtogiveoneprovision

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overridingeffectoveranotherprovision.Suchintentionofthe
legislatureinthisbehalfistobegatheredfromtheenacting
partofthesection.SectionInAswiniKumarGhosev.Arabinda
Bose[AIR1952SC369],PatanjaliSastri,J.observed:

"Theenactingpartofastatutemust,whereitisclear,be
takentocontrolthenonobstanteclausewhereboth
cannotbereadharmoniously;"

71.Anon-obstanteclauseisgenerallyappendedtoasection
withaviewtogivetheenactingpartofthesection,in
caseofconflict,anoverridingeffectovertheprovisioninthe
sameorotherActmentionedinthenonobstanteclause.Itis
equivalenttosayingthatinspiteoftheprovisionsorAct
mentionedinthenonobstanteclause,theprovisionfollowingit
willhaveitsfulloperationortheprovisionsembracedinthenon-
obstanteclausewillnotbeanimpedimentfortheoperationof
theenactmentortheprovisioninwhichthenonobstante
clauseoccurs.[See:'PrinciplesofStatutoryInterpretation',9th
EditionbyJusticeG.P.SinghChapterV,SynopsisIVatpages
318319]

72.Whentwoormorelawsorprovisionsoperateinthesame
fieldandeachcontainsanon-obstanteclausestatingthatits
provisionwilloverridethoseofanyotherprovisionsorlaw,
stimulatingandintricateproblemsofinterpretationarise.In
resolvingsuchproblemsofinterpretation,nosettled
principlescanbeappliedexcepttorefertotheobjectand
purposeofeachofthetwoprovisions,containinga
nonobstanteclause.TwoprovisionsinsameActeach

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containinganonobstanteclause,requiresaharmonious
interpretationofthetwoseeminglyconflictingprovisions
inthesameAct.Inthisdifficultexercise,thereare
involvedproperconsiderationofgivingeffecttotheobjectand
purposeoftwoprovisionsandthelanguageemployed
ineach.[See:forrelevantdiscussioninpara20inShriSwaran
SinghAnr.v.ShriKasturiLal;(1977)1SCC750]

73.NormallytheuseofthephrasebytheLegislatureina
statutoryprovisionlike'notwithstandinganythingtothecontrary
containedinthisAct'isequivalenttosayingthattheActshallbe
noimpedimenttothemeasure[See:LawLexiconwords
'notwithstandinganythinginthisActtothecontrary'].Useof
suchexpressionisanotherwayofsayingthattheprovisionin
whichthenonobstanteclauseoccursusuallywouldprevailover
theotherprovisionsintheAct.Thus,thenonobstanteclauses
arenotalwaystoberegardedasrepealingclausesnor
asclauseswhichexpresslyorcompletelysupersedeanyother
provisionofthelaw,butmerelyasclauseswhichremoveall
obstructionswhichmightariseoutoftheprovisionsofany
otherlawinthewayoftheoperationoftheprinciple
enactingprovisiontowhichthenonobstanteclauseis
attached.[See:SectionBipathummaOrs.v.MariamBibi;1966(1)
MysoreLawJournalpage162,atpage165]

Constructionoftheprovisionsofataxingstatute:_

74.Aswearelookingintotheprovisionsofataxingstatute,the

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constructionoftheprovisionsmustbestrictandinfavourofthe
enforcementoftheprovision.Intheaforesaidcontext,wemay
refertoandrelyuponadecisionoftheSupremeCourtinthe
caseofSectionCommissionerofSalesTax,DelhiAnr.vs.Shri
KrishnaEngg.Co.Ors.,(2005)2SCC692.Wequotethe
relevantparas;

"21.TheundisputedobjectiveoftheActistolevyandcollect
taxonthesaleofgoodsintheNationalCapitalTerritoryof
Delhi.Levytotaxismeaninglessifthetaxisnotcollected.It
canneverbetheintentionofthelawmakerstokeepon
levyingtaxwithoutanyefforttocollectthetaxsolevied.This
CourtinSectionIndoInternationalIndustriesvs.Commissionerof
SalesTax,UttarPradesh[1981]47STC359heldthat
"Itiswellsettledthatininterpretingitemsinstatuteslikethe
ExciseTaxActsorSectionSalesTaxActs,whoseprimarystipulated
objectistoraiserevenue."

Needlesstostressthattheobjectofeverytaxingstatuteisto
raiserevenue.

22.SectionInTheStateofTamilNaduvs.M.K.Kandaswamiand
Others,[1975]36STC191,thisCourtheldthatwherethe
objectofaprovisionistoplugleakageandpreventevasionof
tax.Ininterpretingsuchprovision,aconstructionwhich
woulddefeatitspurposeand,ineffect,obliterateitfromthe
statutebookshouldbeeschewed.Ifmorethanone
constructionispossible,thatwhichpreservesitsworkability
andefficacyistobepreferredtotheonewhichwouldrender
itotioseorsterile.

23.FurtheraDivisionBenchoftheKarnatakaHighCourtin
SectionN.V.Bagivs.CommissionerofCommercialTaxesin
Karnataka,[1991]83STC449hasheld
"inmatterswhichdealwithprovisionstopreventevasionof
taxwhichisduetotheStatetheconstructionoftheprovision
mustbestrictandinfavouroftheenforcementofthe
provision".

34.TheschemeoftheActisthateitherST-1Formshould
beavailableortaxshouldbecollected.Ifadealershows

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suchindulgenceastodeliveryofST-1Formsforaparticular
period,hetakestherisk.Itwouldhavebeenfurtherthebest
advisedtoinsistontheirsupplyevenforthetransaction
intendedtobecompletedbythem.

35.ThisCourtinSectionA.V.Fernandezvs.TheStateofKerala,
AIR1957SC657opinedthat,howevergreatthehardship
mayappeartothejudicialmind,
"Inconstruingfiscalstatutesandindeterminingtheliability
ofasubjecttotaxonemusthaveregardtothestrictletterof
thelawandnotmerelytothespiritofthestatuteorthe
substancesofthelaw.IftherevenuesatisfiestheCourtthat
thecasefallsstrictlywithinthelaw,thesubjectcanbe
Taxed."

AfewyearslateranotherConstitutionBenchinthecaseof
SectionCommissionerofSalesTax,U.P.vs.ModiSugarMillsLtd.,
AIR1961SC1047observedthus
"Ininterpretingataxingstatute,equitableconsiderationare
entirelyoutofplace.Norcantaxingstatutesbeinterpretedon
anypresumptionsorassumptions.Thecourtmustlook
squarelyatthewordsofthestatuteandinterpretthem.It
mustinterpretataxingstatuteinthelightofwhichisclearly
expressed;itcannotimplyanythingwhichisnotexpressedit
cannotimportprovisionsinthestatutesoastosupplyany
assumeddeficiency."

75.SectionInRBIv.PeerlessGeneralFinanceandInvestmentCo.
Ltd.,[(1987)1SCC424],itwasobserved,"thatinterpretationis
bestwhichmakesthetextualinterpretationmatchthe
contextual."SpeakingfortheCourt,ChinappaReddy,J.noted
theimportanceofruleofcontextualinterpretationandheld:-

"Interpretationmustdependonthetextandthecontext.They
arethebasesofinterpretation.Onemaywellsayifthetext
isthetexture,contextiswhatgivesthecolour.Neithercanbe
ignored.Bothareimportant.Thatinterpretationisbestwhich
makesthetextualinterpretationmatchthecontextual.A
statuteisbestinterpretedwhenweknowwhyitwas
enacted.Withthisknowledge,thestatutemustberead,first

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asawholeandthensectionbysection,clausebyclause,
phrasebyphraseandwordbyword.Ifastatuteislooked
at,inthecontextofitsenactment,withtheglassesofthe
statute-maker,providedbysuchcontext,itsscheme,the
sections,clauses,phrasesandwordsmaytakecolourand
appeardifferentthanwhenthestatuteislookedatwithout
theglassesprovidedbythecontext.Withtheseglasseswe
mustlookattheActasawholeanddiscoverwhateach
section,eachclause,eachphraseandeachwordismeant
anddesignedtosayastofitintotheschemeoftheentire
Act.Nopartofastatuteandnowordofastatutecanbe
construedinisolation.Statuteshavetobeconstruedsothat
everywordhasaplaceandeverythingisinitsplace.Itisby
lookingatthedefinitionasawholeinthesettingoftheentire
Actandbyreferencetowhatprecededtheenactmentand
thereasonsforitthattheCourtconstruedtheexpression
`prizechit'inSrinivasa[(1980)4SCC507]andwefindno
reasontodepartfromtheCourt'sconstruction."

76.InR.V.NationalAsylumSupportServices[(2002)4All
ER654],LORDSTEYNobserved"thestartingpointisthat
languageinalllegaltextsconveysmeaningaccordingtothe
circumstancesinwhichitwasused.Itfollowsthatcontextmust
alwaysbeidentifiedandconsideredbeforetheprocessof
constructionorduringit.Itis,therefore,wrongtosaythatthe
courtmayonlyresorttotheevidenceofcontextualscenewhen
anambiguityhasarisen."

77.SectionInV.L.S.FinanceLtd.,v.UnionofIndia,reportedin2013
(6)SCC278,atParagraph18,theHon'bleSupremeCourt,held
asfollows:

"Asiswellsettled,whileinterpretingtheprovisionsofa
statute,thecourtavoidsrejectionoradditionofwordsand
resorttothatonlyinexceptionalcircumstancestoachievethe
purposeofActorgivepurposefulmeaning.Itisalsoa

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cardinalruleofinterpretationthatwords,phrasesand
sentencesaretobegiventheirnatural,plainandclear
meaning.Whenthelanguageisclearandunambiguous,it
mustbeinterpretedinanordinarysenseandnoadditionor
alterationofthewordsorexpressionsusedispermissible.As
observedearlier,theaforesaidenactmentwasbroughtin
viewoftheneedofleniencyintheadministrationoftheAct
becausealargenumberofdefaultsareoftechnicalnature
andmanydefaultsoccurredbecauseofthecomplexnatureof
theprovision."

78.SectionInHardeepSinghv.StateofPunjab,reportedin2014(3)
SCC92,atParagraphs43and44,theHon'bleSupremeCourt
heldasfollows:

"43.Thecourtcannotproceedwithanassumptionthatthe
legislatureenactingthestatutehascommittedamistakeand
wherethelanguageofthestatuteisplainandunambiguous,
thecourtcannotgobehindthelanguageofthestatutesoas
toaddorsubtractawordplayingtheroleofapolitical
reformerorofawisecounseltothelegislature.Thecourthas
toproceedonthefootingthatthelegislatureintendedwhatit
hassaidandevenifthereissomedefectinthephraseology
etc.,itisforothersthanthecourttorectifythatdefect.The
statuterequirestobeinterpretedwithoutdoinganyviolence
tothelanguageusedtherein.Thecourtcannotre-write,
recastorreframethelegislationforthereasonthatithasno
powertolegislate.

44.Nowordinastatutehastobeconstruedassurplusage.
Nowordcanberenderedineffectiveorpurposeless.Courts
arerequiredtocarryoutthelegislativeintentfullyand
completely.Whileconstruingaprovision,fulleffectistobe
giventothelanguageusedtherein,givingreferencetothe
contextandotherprovisionsoftheStatute.Byconstruction,a
provisionshouldnotbereducedtoadeadletteroruseless
lumber.Aninterpretationwhichrendersaprovisionanotiose
shouldbeavoidedotherwiseitwouldmeanthatinenacting
suchaprovision,thelegislaturewasinvolvedinanexercise
infutilityandtheproductcameasapurposelesspieceof

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legislationandthattheprovisionhadbeenenactedwithout
anypurposeandtheentireexercisetoenactsuchaprovision
wasmostunwarrantedbesidesbeinguncharitable.(Vide:
PatelChunibhaiDajibhaetc.v.NarayanraoKhanderao
JambekarAnr.,AIR1965SC1457;SectionTheMartinBurnLtd.,
v.TheCorporationofCalcutta,AIR1966SC529;
SectionM.V.ElisabethOrs.,v.HarwanInvestmentTradingPvt.
Ltd.,HanoekarHouse,Swatontapeth,VAsco-de-Gama,Goa,
AIR1993SC101;SectionSultanaBegumv.PremChandJain,AIR
1997SC1006;StateofBiharOrs.etc.v.BiharDistillery
Ltd.etc.etc.,AIR1997SC1511;SectionInstituteofChartered
AccountantsofIndiav.M/s.PriceWaterhosueAnr.,AIR
1998SC74;andSectionTheSouthCentralRailwayEmployees
Co-operativeCreditSocietyEmployeesUnion,Secundrabad
v.TheRegistrarofCo-operativeSocieties,AIR1998SC703)."

79.AtParagraph45,theHon'bleSupremeCourtconsideredthe
decisionmadeinSectionRohitashKumarv.OmPrakashSharma
reportedin2013(11)SCC451,wherein,theHon'bleSupreme
Court,atParagraphs27to29,heldasfollows:

"27.TheCourthastokeepinmindthefactthat,while
interpretingtheprovisionsofaStatute,itcanneitheradd,
norsubtractevenasinglewordAsectionistobeinterpreted
byreadingallofitspartstogether,anditisnotpermissible,
toomitanypartthereof.TheCourtcannotproceedwiththe
assumptionthatthelegislature,whileenactingtheStatute
hascommittedamistake;itmustproceedonthefootingthat
thelegislatureintendedwhatithassaid;evenifthereis
somedefectinthephraseologyusedbyitinframingthe
statute,anditisnotopentothecourttoaddandamend,or
byconstruction,makeupforthedeficiencies,whichhave
beenleftintheAct

28.TheStatuteisnottobeconstruedinlightofcertain
notionsthatthelegislaturemighthavehadinmind,orwhat
thelegislatureisexpectedtohavesaid,orwhatthe
legislaturemighthavedone,orwhatthedutyofthe
legislaturetohavesaidordonewas.TheCourtshaveto
administerthelawastheyfindit,anditisnotpermissible

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fortheCourttotwisttheclearlanguageoftheenactment,in
ordertoavoidanyreal,orimaginaryhardshipwhichsuch
literalinterpretationmaycause.....

29.Underthegarbofinterpretingtheprovision,theCourt
doesnothavethepowertoaddorsubtractevenasingle
word,asitwouldnotamounttointerpretation,but
legislation."

80.Intheaforesaidcontext,weshouldalsoremindourselvesof
thefinedistinctionexplainedbytheSupremeCourtinthecaseof
SectionAssociatedCementCo.Ltd.vs.CommercialTaxOfficer,
KotaOrs.,reportedinAIR1981SC1887asregardsthe
chargingprovisionsofataxingstatuteandthemachinery
provisionswhichprovidethemachineryforthequantificationof
thetaxandthelevyingandcollectionofthetaxsoimposed.We
quotetherelevantobservations;

"Itissettledlawthatadistinctionhastobemadebycourt
whileinterpretingtheprovisionsofataxingstatutebetween
chargingprovisionswhichimposethechargetotaxand
machineryprovisionswhichprovidethemachineryforthe
quantificationofthetaxandthelevyingandcollectionofthe
taxsoimposed.Whilechargingprovisionsareconstrued
strictly,machinerysectionsarenotgenerallysubjecttoa
rigorousconstruction.Thecourtsareexpectedtoconstrue
themachinerysectionsinsuchamannerthatachargetotax
isnotdefeated.Theaboveruleofconstructionofataxing
statutehasbeenadoptedbythisCourtinSectionIndiaUnitedMills
Ltd.v.CommissionerofExcessProfitsTax,Bombayinwhich
section15oftheExcessProfitsTaxActcameupfor
consideration.TheCourtobservedinthatcasethus:
"Thatsectionis,itshouldbeemphasised,notacharging
section,butamachinerysection.Andamachinerysection
shouldbesoconstruedastoeffectuatethechargingsection."

TheaboveprinciplewasfollowedbythisCourtinSectionGursahai
Saigalv.CommissionerofIncome-tax,Punjabinwhichis

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wasobservedthus:

"Nowitiswellrecognisedthattheruleofconstructionon
whichtheassesseereliesappliesonlytoataxingprovision
andhasnoapplicationtoallprovisionsinataxingstatute.It
doesnot,forexample,applytoaprovisionnotcreatinga
chargeforthetaxbutlayingdownthemachineryforits
calculationorprocedureforitscollection.Theprovisionsina
taxingstatutedealingwithmachineryforassessmenthaveto
beconstruedbytheordinaryrulesofconstruction,thatisto
say,inaccordancewiththeclearintentionofthelegislature
whichistomakeachargeleviedeffective."

IndecidingGursahaiSaigal'scase(supra)theCourtfollowed
theobservationsmadebythePrivyCouncilinSectionCommissioner
ofIncome-taxv.MahaliramRamjidasandbytheHouseof
LordsinWhitneyv.CommissionersafInlandRevenue.Inthe
caseofMahaliramRamjidas(supra)thePrivyCouncil
observed:

"Thesection,althoughitisapartofataxingAct,imposesno
chargeonthesubject,anddealsmerelywiththemachinery
ofassessment.Ininterpretingprovisionsofthiskindtherule
isthatconstructionshouldbepreferredwhichmakesthe
machineryworkableutresvaleatpotiusquamPereat."

InWhitney'scase(supra),LordDunedinmadethefollowing
observations:

"MyLords,Ishallnowpermitmyselfageneralobservation.
Oncethatitisfixedthatthereisliability,itisantecedently
highlyimprobablethatthestatuteshouldnotgoontomake
thatliabilityeffective.Astatuteisdesignedtobeworkable,
andtheinterpretationthereofbyaCourtshouldbetosecure
thatobject,unlesscrucialomissionorcleardirectionmakes
thatendunattainable.Now,therearethreestagesinthe
impositionofatax:thereisthedeclarationofliability,thatis
thepartofthestatutewhichdetermineswhatpersonsin
respectofwhatpropertyareliable.Next,thereisthe
assessment.Liabilitydoesnotdependonassessment.That,
exhypothesi,hasalreadybeenfixed.Butassessment
particularizestheexactsumwhichapersonliablehastopay.
Lastly,comethemethodsofrecovery,ifthepersontaxed
doesnotvoluntarilypay,"

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Sections129andSection130oftheAct:-

81.TheplainreadingofSection129oftheActwouldindicate
thatthesametalksaboutdetention,seizureandreleaseofgoods
andconveyancesintransit.Ontheotherhand,Section130
talksaboutconfiscationofgoodsorconveyancesandlevyoftax,
penaltyandfinethereon.Boththesections,therefore,shouldbe
interpretedharmoniouslykeepinginmindtheobjectand
purposebehindtheenactmentthereof.Forthepurposeof
invokingSection129oftheAct,allthatisrequiredis
"contraventionoftheprovisionsoftheActortheRules",whereas
specificcircumstancesaresetoutinsub-section(1)ofSection
130forinvokingtheprovisionsrelatingtoconfiscationwhichare
basicallyrelatedto"intenttoevadepaymentoftax".Thus,weare
clearaboutonethinginourmindthatboththesesectionsare
independentofeachother.

82.Section130oftheActprovidesforspecificsituationsor
causesleadingtotheconfiscationofgoods/conveyances.There
arefiveprecisecausesforconfiscationofgoodsand/or
conveyancesspecifiedinthissectionandtheyare:

ActionConsequence
SupplyorreceivegoodsinResultinginactualevasionof
contraventionoftheActor
tax
rulesmadethereunder
NotaccountingforgoodsCarryingaliabilityto
paymentoftax
SupplyofgoodsliabletotaxWithoutapplyingregistration
ContraventionoftheWithintenttoevadepayment

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provisionsofActorrulesoftax
madethereunder
UseofconveyanceasaIncontraventionoftheActor
meansoftransport/forrulesmadethereunder
carriageoftaxablegoods

83.Inalltheaforesaideventualities,thegoodsorconveyance
shallbeliableforconfiscation.Howevertheconveyanceshallnot
beconfiscatedwheretheowneroftheconveyanceprovesthatit
iswithouttheconnivanceofownerhimself,hisagentorperson
inchargeoftheconveyance.Further,thepersonshallbeliableto
paypenaltyunderSectionsection122oftheAct.

84.Ifthegoodsorconveyanceareliabletobeconfiscatedunder
theprovisionsofthisAct,theproperofficershallgivetheowner
ofthegoodsanoptiontopayfineinlieuofconfiscation.

85.Theamountoffineshallnotexceedthemarketvalueof
goodsasreducedbytheamountoftaxpayablethereon.However,
atthesametime,theaggregateoffineandpenaltyleviableshall
notbelessthantheamountofpenaltyasleviableundersection
129(1)WhileSectionsection129isapplicableontransporters,Sectionsection
130primarilycoverstheowner.

86.Wheretheconveyanceisusedfortransportationofgoodsor
passengeronhire,theowneroftheconveyanceshallbegivenan
optiontopayinlieuofconfiscationoftheconveyanceafineequal
toamountoftaxpayableonthegoodstransportedonhis
conveyance.Itisworthwhiletonotethattheamountoffine

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payableisinadditiontoanytax,penaltyandothercharges
payableonconfiscatedgoodsorconveyance.

87.Theorderforconfiscationcannotbeissuedwithoutgiving
thepersonanopportunityofbeingheard.

88.Thetitleoftheconfiscatedgoodsorconveyanceshall
bevestedupontheGovernment.

89.Theproperofficeradjudgingconfiscationshalltake
andholdpossessionofthethingsconfiscatedonbehalfof
theGovernmentandeveryofficerofpoliceshallassistin
takingsuchholdandpossession.

90.Iftheproperofficerissatisfiedthattheconfiscated
goods/conveyancearenotrequiredforanyproceedings
undertheAct,thenheshallaftergivingreasonabletimenot
exceeding3monthstopayfineinlieuofconfiscation,
disposethegoodsanddepositthesaleproceedswiththe
Government.

91.Ourattentionhasalsobeendrawntotheprovisionsof
Section122,thatprescribespenaltiesforcertainoffences,
Section125,thatprovidesforlevyofgeneralpenaltyandSection
126oftheAct,whichsetsoutcertaingeneraldisciplinesrelating
totheimpositionofpenalties.

92.TheprovisionsofSection122oftheActenvisagevarious
offencesforwhichpenaltyisleviableandintermsofSection122
(2)oftheAct,themaximumpenaltywouldbeasumof

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Rs.10,000/-or10%ofthetaxduefromsuchperson,whichever
ishigher.Inthecaseofwilfulmis-statementorsuppressionof
factstoevadetax,suchpenaltywouldbeequaltoRs.10,000/-or
thetaxdue,whicheverishigher.IntermsofSection125ofthe
Act,extractedbelow,themaximumpenaltyshallnotexceedto
Rs.25,000/-:-

'Generalpenalty

125.Anyperson,whocontravenesanyoftheprovisionsof
thisActoranyrulesmadethereunderforwhichnopenaltyis
separatelyprovidedforinthisAct,shallbeliabletoapenalty
whichmayextendtotwenty-fivethousandrupees.'

93.Thegeneraldisciplinesalsoprovidesforimpositionoftaxfor
minorbreachesofregulationsorproceduralrequirements,
definedintheExplanationtotheprovision.Section126ofthe
Actisextractedbelow:-

"Generaldisciplinesrelatedtopenalty.

126.(1)NoofficerunderthisActshallimposeanypenaltyfor
minorbreachesoftaxregulationsorproceduralrequirements
andinparticular,anyomissionormistakeindocumentation
whichiseasilyrectifiableandmadewithoutfraudulent
intentorgrossnegligence.

Explanation.--Forthepurposeofthissub-section,--

(a)abreachshallbeconsidereda'minorbreach'ifthe
amountofhttp://www.judis.nic.intaxinvolvedislessthan
fivethousandrupees;

(b)anomissionormistakeindocumentationshallbe
consideredtobeeasilyrectifiableifthesameisanerror
apparentonthefaceofrecord.

(2)ThepenaltyimposedunderthisActshalldependonthe
factsandcircumstancesofeachcaseandshallbe

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commensuratewiththedegreeandseverityofthebreach.

(3)Nopenaltyshallbeimposedonanypersonwithoutgiving
himanopportunityofbeingheard.

(4)TheofficerunderthisActshallwhileimposingpenaltyin
anorderforabreachofanylaw,regulationorprocedural
requirement,specifythenatureofthebreachandthe
applicablelaw,regulationorprocedureunderwhichthe
amountofpenaltyforthebreachhasbeenspecified.

(5)Whenapersonvoluntarilydisclosestoanofficerunder
thisActthecircumstancesofabreachofthetaxlaw,
regulationorproceduralrequirementpriortothediscoveryof
thebreachbytheofficerunderthisAct,theproperofficer
mayconsiderthisfactasamitigatingfactorwhen
quantifyingapenaltyforthatperson.

(6)Theprovisionsofthissectionshallnotapplyinsuchcases
wherethepenaltyspecifiedunderthisActiseitherafixed
sumorexpressedasafixedpercentage.'"

94.TheCentralBoardofIndirectTaxesandCustoms,New
Delhi,hasissuedaCircularinF.No.CBEC/20/16/03/2017-GST,
dated14.09.2018,inregardtotheproceduretobefollowedin
the'Interceptionofconveyancesforinspectionofgoodsin
movementanddetention,releaseandconfiscationofsuchgoods
andconveyances'.

95.Ourattentionisdrawntoparagraphs3,4,5and6ofthe
saidCircular,extractedbelow:-

"....3.Section68oftheCGSTActreadwithrule138A
oftheCentralGoodsandServicesTaxRules,2017
(hereinafterreferredtoas'theCGSTRules')requires
thatthepersoninchargeofaconveyancecarryingany
consignmentofgoodsofvalueexceeding
http://www.judis.nic.inRs50,000/-shouldcarrya

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copyofdocumentsviz.,invoice/billofsupply/delivery
challan/billofentryandavalide-waybillinphysical
orelectronicformforverification.Incasesuchperson
doesnotcarrythementioneddocuments,thereisno
doubtthatacontraventionoftheprovisionsofthelaw
takesplaceandtheprovisionsofSectionsection129and
section130oftheCGSTActareinvocable.Further,it
maybenotedthatthenon-furnishingofinformationin
PartBofFORMGSTEWB-01amountstothee-waybill
becomingnotavaliddocumentforthemovementof
goodsbyroadasperExplanation(2)torule138(3)of
theCGSTRules,exceptinthecasewherethegoodsare
transportedforadistanceofuptofiftykilometreswithin
theStateorUnionterritorytoorfromtheplaceof
businessofthetransportertotheplaceofbusinessof
theconsignorortheconsignee,asthecasemaybe.

4.Whereas,section129oftheCGSTActprovidesfor
detentionandseizureofgoodsandconveyancesand
theirreleaseonthepaymentofrequisitetaxand
penaltyincaseswheresuchgoodsaretransportedin
contraventionoftheprovisionsoftheCGSTActorthe
rulesmadethereunder.Ithasbeeninformedthat
proceedingsundersection129oftheCGSTActare
beinginitiatedforeverymistakeinthedocuments
mentionedinpara3above.Itisclarifiedthatincasea
consignmentofgoodsisaccompaniedbyaninvoiceor
anyotherspecifieddocumentandnotane-waybill,
proceedingsundersection129oftheCGSTActmaybe
initiated.

5.Further,incaseaconsignmentofgoodsis
accompaniedwithaninvoiceoranyotherspecified
documentandalsoane-waybill,proceedingsunder
section129oftheCGSTActmaynotbeinitiated,inter
alia,inthefollowingsituations:

a)Spellingmistakesinthenameoftheconsignororthe
consigneebuttheGSTIN,whereverapplicable,is
correct;

b)Errorinthepin-codebuttheaddressoftheconsignor

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andtheconsigneementionediscorrect,subjecttothe
conditionthattheerrorinthePINcodeshouldnothave
theeffectofincreasingthevalidityperiodofthee-way
bill;

c)Errorintheaddressoftheconsigneetotheextent
thatthelocalityandotherdetailsoftheconsigneeare
correct;

d)Errorinoneortwodigitsofthedocumentnumber
mentionedinthee-waybill;

e)Errorin4or6digitlevelofHSNwherethefirst2
digitsofHSNarecorrectandtherateoftaxmentioned
iscorrect;

f)Errorinoneortwodigits/charactersofthevehicle
number.

6.Incaseoftheabovesituations,penaltytothetuneof
Rs.500/-eachundersection125oftheCGSTActand
therespectiveStateGSTActshouldbeimposed
(Rs.1000/-undertheIGSTAct)inFORMGSTDRC-07
foreveryconsignment.Arecordofallsuch
consignmentswhereproceedingsundersection129of
theCGSTActhavenotbeeninvokedinviewofthe
situationslistedinparagraph5aboveshallbesentby
theproperofficertohiscontrollingofficeronaweekly
basis......'hequestionstobedeterminedinthesecases
relatetothereleaseofconsignmentandthequantumof
penalty,ifany,tobeleviedatthisstage,andpending
adjudication."

96.Asfarasthedeterminationofpenaltyisconcerned,itisthe
AssessingOfficer/StateTaxOfficerwhoisthecompetentand
properpersonforsuchdetermination/quantification.However,a
holisticreadingofthestatutoryprovisionsandtheCircularnoted
above,indicatestomethattheDepartmentdoesnotpaintall
violations/transgressionswiththesamebrushandmakesa

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distinctionbetweenseriousandsubstantiveviolationsandthose
thatareminor/proceduralinnature.

97.Thequestionswhetherthemovementoftheconsignments
sansvalidE-waybillsconstitutesasubstantiveerrororamere
technicalbreacharetobeconsideredbytheAssessingOfficer,
havingregardtotheprovisionsofSections122,Section125andSection126of
theActaswellallrelevantInstructionsandCircularsissuedby
theBoard,includingtheCircularextractedabove.

98.ADivisionBenchoftheKeralaHighCourtinthecaseof
AssistantStateTaxOfficerAnr.vs.M/s.IndusTowers
Limited,2018(3)KLTSN53,hadanoccasiontoconsidera
questionofreleaseofgoodsorderedasprovidedunder
sub-section(1)ororderpassedundersub-section(3)ofSection
129oftheAct.Itwasheldthus;

"Thefindingthatthetransactionwouldnotfallwithinthe
scopeoftaxablesupplyunderthestatute,cannotbe
sustainedforreasonoftherebeingnodeclarationmade
underR.138.Theresultantfindingthatmereinfractionofthe
proceduralrulescannotresultindetentionofgoodsthough
theymayresultinimpositionofpenaltycannotalsobe
sustained.IftheconditionsundertheActandRulesarenot
compliedwith,definitelyS.129operatesandconfiscation
wouldbeattracted."

99.Itispracticallyimpossibletoenvisagevarioustypesof
contraventionoftheprovisionsoftheActortheRulesforthe
purposeofdetentionandseizureofthegoodsandconveyancesin

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transit.Thecontraventioncouldbetrivialoritmaybequite
serioussufficientenoughtojustifythedetentionandseizure.
Thislitigationisnothingbutanoutburstonthepartofthe
dealersthatpracticallyinallcasesofdetentionandseizureof
goodsandconveyance,theauthoritieswouldstraightwayinvoke
Section130oftheActandtherebywouldstraightwayissue
noticecallingupontheownerofthegoodsortheownerofthe
conveyancetoshow-causeastowhythegoodsorthe
conveyance,asthecasemaybe,shouldnotbeconfiscated.Once
suchanoticeunderSection130oftheActisissuedrightatthe
inception,i.e,rightatthetimeofdetentionandseizure,thenthe
provisionsofSection129oftheActpaleintoinsignificance.The
reasonwhywearesayingsoisthatforthepurposeofreleaseof
thegoodsandconveyancedetainedwhileintransitforthe
contraventionoftheprovisionsoftheActortherules,thesection
providesforreleaseofsuchgoodsandconveyanceonpaymentof
theapplicabletaxandpenaltyoruponfurnishingasecurity
equivalenttotheamountpayableunderclause(a)orclause(b)to
Clause(1)ofSection129.Section129(2)alsoprovidesthatthe
provisionsofsub-section(6)ofSection67shallmutatismutandis
applyfordetentionandseizureofgoodsandconveyances.We
quoteSection67(6)asunder;

"67(6)Thegoodssoseizedundersub-section(2)shallbe
released,onaprovisionalbasis,uponexecutionofabond
andfurnishingofasecurity,insuchmannerandofsuch
quantum,respectively,asmaybeprescribedoronpayment
ofapplicabletax,interestandpenaltypayable,asthecase
maybe."

100.Section129furtherprovidesthattheproperofficer,

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detainingorseizingthegoodsorconveyances,isobligedtoissue
anotice,specifyingthetaxandpenaltypayableand,thereafter,
passanorderforpaymentofsuchtaxandpenalty.Clause(4)
providesthatnotax,interestorpenaltyshallbedetermined
undersub-section(3)withoutgivingthepersonconcernedan
opportunityofbeingheard.Clause(5)providesthatonpayment
oftheamount,referredtoinsub-section(1)oftheproceedings
inrespectofthenotice,specifiedinsub-section(3)aredeemedto
beconcluded,andinthelast,clause(6)providesthatifthetax
andpenaltyisnotpaidwithin14daysofdetentionorseizure,
thenfurtherproceedingswouldbeinitiatedinaccordancewith
theprovisionsofSection130.

101.Weareoftheviewthatatthetimeofdetentionandseizure
ofgoodsorconveyance,thefirstthingtheauthoritiesneedto
lookintocloselyisthenatureofthecontraventionofthe
provisionsoftheActortheRules.Thesecondstepinthe
processfortheauthoritiestoexaminecloselyiswhethersuch
contraventionoftheprovisionsoftheActortheRuleswaswith
anintenttoevadethepaymentoftax.Section135oftheAct
providesforpresumptionofculpablementalstatebutsuch
presumptionisavailabletothedepartmentonlyinthecasesof
prosecutionandnotforthepurposeofSection130oftheAct.
Whatwearetryingtoconveyisthatinagivencase,the
contraventionmaybequitetrivialormaynotbeofsucha
magnitudewhichbyitselfwouldbesufficienttotaketheview
thatthecontraventionwaswiththenecessaryintenttoevade
paymentoftax.

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102.Insuchcircumstances,referredtoabove,weproposeto
taketheviewthatinallcases,withoutanyapplicationofmind
andwithoutanyjustifiablegroundsorreasonstobelieve,the
authoritiesmaynotbejustifiedtostraightwayissueanoticeof
confiscationunderSection130oftheAct.Forthepurposeof
issuinganoticeofconfiscationunderSection130oftheActat
thethreshold,i.e,.atthestageofSection129oftheActitself,the
casehastobeofsuchanaturethatonthefaceoftheentire
transaction,theauthorityconcernedisconvincedthatthe
contraventionwaswithadefiniteintenttoevadepaymentoftax.
Wemaygiveonesimpleexample.Thedriverofthevehicleisina
positiontoproducealltherelevantdocumentstothesatisfaction
oftheauthorityconcernedasregardspaymentoftaxetc.,but
unfortunately,heisnotabletoproducethee-waybill,whichis
alsooneoftheimportantdocumentssofarastheAct,2017is
concerned.Theauthenticityofthedeliverychallanisalsonot
doubted.Insuchasituation,itwouldbetoomuchforthe
authoritiestostraightwayjumptotheconclusionthatthecaseis
oneofconfiscation,i.e,thecaseisofintenttoevadepaymentof
tax.

103.Wetakenoticeofthefactthatpracticallyinallcases,after
thedetentionandseizureofthegoodsandtheconveyance,
straightwaynoticeisissuedunderSection130,andinthesaid
notice,onewouldfindaparrotlikechantation"asthegoods
werebeingtransportedwithoutanyvaliddocuments,itis
presumedthatthegoodswerebeingtransportedforthepurposes

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ofevadingthetax".Wehavealsocomeacrossnoticesof
confiscation,whereinithasbeenstatedthatthethedriverofthe
conveyanceispresumedtohavecontravenedtheprovisionsof
theActortheRuleswithanintenttoevadepaymentoftax.This,
inouropinion,isnotjustified.Theresultanteffectofsuchissue
ofconfiscationnoticeattheverythreshold,withoutany
applicationofmindorwithouttherebeinganyfoundationforthe
same,rendersSection129oftheActpracticallyotiose.Wetake
cognizanceofthefactthatoncethenoticeunderSection130of
theActisissued,thenthevehicleisnotreleasedevenifthe
ownerofthegoodsisreadyandwillingtopaythetaxandthe
penaltythatmaybedeterminedunderSection129oftheAct.
Suchapproachleadstounnecessarydetentionofthegoodsand
theconveyanceforanindefiniteperiodoftime.Therefore,what
wearetryingtoconveyisthatallcasesofcontraventionofthe
provisionsoftheActortheRules,byitself,maynotattractthe
consequencesofsuchgoodsortheconveyanceconfiscatedunder
Section130oftheAct.Section130oftheActisaltogetheran
independentprovisionwhichprovidesforconfiscationincases
whereitisfoundthattheintentionwastoevadepaymentoftax.
Confiscationofgoodsorvehicleisalmostpenalincharacter.In
otherwords,itisanaggravatedformofaction,andtheobjectof
suchaggravatedformofactionistodeterthedealersfrom
evadingtax.

104.Intheaforesaidcontext,wewouldliketoclarifythatwedo
notproposetolaydown,asapropositionoflaw,orweshouldnot
beunderstoodtohavetakentheviewthat,inanycircumstances,

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theauthoritiesconcernedcannotinvokeSection130oftheActat
thethreshold,i.e.,atthestageofdetentionandseizure.Whatwe
aretryingtoconveyisthatforthepurposeofinvokingSection
130oftheActattheverythreshold,theauthoritiesneedtomake
outaverystrongcase.Merelyonsuspicion,theauthoritiesmay
notbejustifiedininvokingSection130oftheActstraightway.If
theauthoritiesareoftheviewthatthecaseisoneofinvoking
Section130oftheActattheverythreshold,thentheyneedto
recordtheirreasonsforsuchbeliefinwriting,andsuchreasons
recordedinwritingshould,thereafter,belookedintobythe
superiorauthoritysothatthesuperiorauthoritycantakean
appropriatedecisionwhetherthecaseisoneofstraightway
invokingSection130oftheAct.Anyopinionoftheauthorityto
beformedisnotsubjecttoobjectivetest.ThelanguageofSection
130oftheActleavesnoroomfortherelevanceofanofficial
examinationastothesufficiencyofthegroundonwhichthe
authoritymayactorproceedforthepurposeofconfiscationat
theverythreshold.But,atthesametime,theremustbematerial
basedonwhichalonetheauthoritycouldformitsopinionin
goodfaiththatithasbecomenecessarytocallupontheownerof
thegoodsaswellastheowneroftheconveyancetoshow-cause
astowhythegoodsandtheconveyanceshouldnotbe
confiscatedunderSection130oftheAct.Thenoticeforthe
purposeofconfiscationmustdisclosethematerials,uponwhich,
thebeliefisformed.Itcouldbearguedthatitisnotnecessaryfor
theauthorityundertheActtostatereasonsforitsbelief.Forthe
timebeing,weproceedonthebasisofsuchargument.But,ifit
ischallengedthatthenoticeisbereftofthenecessarydetailsor

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thesatisfactionoftheauthorityisimaginaryorbasedonmere
suspicion,thentheauthoritymustdisclosethematerials,upon
which,hisbeliefwasformedasithasbeenheldbytheSupreme
CourtinSheonathSingh'scase[AIR1971SC2451].In
SheonathSingh(supra),theSupremeCourtheldthattheCourt
canexaminethematerialstofindoutwhetheranhonestand
reasonablepersoncanbasehisreasonablebeliefuponsuch
materialsalthoughthesufficiencyofthereasonsforthebelief
cannotbeinvestigatedbytheCourt.Theformationofthe
opinionbytheauthoritythatthegoodsandtheconveyanceare
liabletobeconfiscatedshouldreflectintenseapplicationofmind.
Wearesayingsobecauseitisnotanyoreverycontraventionof
theprovisionsoftheActortheRuleswhichmaybesufficientto
arriveattheconclusionthatthecaseisoneofanintentionto
evadepaymentoftax.Inshort,theactionmustbeheldingood
faithandshouldnotbeamerepretence.

105.WewouldliketoremindtheRevenueoftheobservations
madebythisCourtinthecaseofSitaramRoadwaysvs.State
ofGujarat,SpecialCivilApplicationNo.15107of2019,decided
on10thOctober,2019.Wequotetheobservations;

"8.Section130oftheCGSTActprovidesforconfiscationof
goodsorconveyancesandlevyofpenalty.Sub-section(4)
thereofprovidesthatnoorderforconfiscationofgoodsor
conveyanceorforimpositionofpenaltyshallbeissued
withoutgivingthepersonanopportunityofbeingheard.In
thepresentcase,onaperusalofthedocumentsannexed
alongwiththepetitionitappearsthatpursuanttothenotice
dated21.8.2019issuedbytherespondent,thepetitioner
appearedbeforetherespondenton24.8.2019andshowed
willingnesstopaytheamountoftaxandpenaltyforthe

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purposeofsecuringreleaseofthevehicleinquestion.

Thereafter,thesecondrespondent,withoutaffordingany
opportunityofhearingtothepetitionerascontemplated
undersub-section(4)ofsection130oftheCGSTAct,has
proceededtopasstheimpugnedorderon24.8.2019.It
appearsthatmerelybecausethepetitionerappearedbefore
therespondentandshowedwillingnesstopaythetaxand
penaltyforthepurposeofsecuringreleaseofthevehiclein
question,thesecondrespondenthasproceededtopassthe
impugnedorderwithouthearingthepetitioneronthe
questionofconfiscationofthegoodsandconveyance.

9.Ascanbeseenfromtheimpugnedorder,itisintheformat
providedtherefor,viz.inFORMGSTMOV-11.Inparagraph1
oftheimpugnedorderalltheblankshavebeenfilledup
whichindicatetheregistrationnumberoftheconveyanceand
thetime,placeanddateandbywhomtheconveyancecame
tobeintercepted.Paragraphs3and4thereofdonotcontain
anydetailsintheblankspacesmeanttobefilledin.Oneof
thesignificantparagraphsinthestatutoryformisparagraph
5,whichreadsthus:

"Thepersoninchargehasnotfiledanyobjections/the
objectionsfiledwerenotacceptableforthereasonsstated
below:

a)...

b)....

Thus,intermsofthestatutoryformatprovidedforpassing
anorderundersection130oftheCGSTAct,theofficer
adjudgingisrequiredtoprovidethereasonsforconfiscating
thegoodsandconveyance.Referencemayalsobemadeto
paragraph6ofthestatutoryform,whichreadsthus:
"6.Inviewoftheabove,thefollowinggoodsandconveyance
areconfiscatedbytheundersignedbyexercisingpowers
vestedundersection130oftheCentralGoodsandServices
TaxAct"

Onaconjointreadingofparagraphs5and6,itisclearthat
theofficeradjudgingthecasepassedtheorderconfiscating
thegoodsandconveyancedescribedinparagraph6,forthe
reasonssetoutinparagraph5.

10.Inthisregardaperusaloftheimpugnedorderof

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confiscation,showsthatcolumn5whereintheofficer
adjudgingitisrequiredtosetoutthereasonsforconcluding
thatthegoodsandconveyancearerequiredtobe
confiscated,istotallyblank.Asanecessarycorollaryit
followsthatthegoodsandconveyancehavebeenorderedto
beconfiscatedwithoutdisclosingthereasonstherefor.The
impugnedorderis,therefore,anon-speakingorder,whichis
totallybereftofanyreasonswhatsoever.

11.Atthisstage,itmaybeappositetorefertothelegislative
schemecontainedinsection130oftheCGSTAct.Sub-section
(1)ofSectionsection130thereof,readsthus:

130.Confiscationofgoodsorconveyancesandlevyof
penalty.--(1)NotwithstandinganythingcontainedinthisAct,
ifanyperson--

(i)suppliesorreceivesanygoodsincontraventionofanyof
theprovisionsofthisActortherulesmadethereunderwith
intenttoevadepaymentoftax;or

(ii)doesnotaccountforanygoodsonwhichheisliableto
paytaxunderthisAct;or

(iii)suppliesanygoodsliabletotaxunderthisActwithout
havingappliedforregistration;or

(iv)contravenesanyoftheprovisionsofthisActortherules
madethereunderwithintenttoevadepaymentoftax;or

(v)usesanyconveyanceasameansoftransportforcarriage
ofgoodsincontraventionoftheprovisionsofthisActorthe
rulesmadethereunderunlesstheowneroftheconveyance
provesthatitwassousedwithouttheknowledgeor
connivanceoftheownerhimself,hisagent,ifany,andthe
personinchargeoftheconveyance,
then,allsuchgoodsorconveyancesshallbeliableto
confiscationandthepersonshallbeliabletopenaltyunder
Sectionsection122.

12.Thus,intermsofclauses(i)and(iv)ofsub-section(1)
section130oftheCGSTAct,thegoodscanbeconfiscated
providedthatthepersonsuppliesorreceivesgoodsin
contraventionoftheprovisionsoftheActortherulesmade
thereunderwiththeintenttoevadepaymentoftax;or
contravenesanyprovisionsoftheActandtherulesmade
thereunderwiththeintenttoevadepaymentoftax

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respectively.Insofarasclauses(ii)and(iii)areconcerned,the
veryfactthatthepersondoesnotaccountforthegoodson
whichheisliabletopaytaxundertheAct;orsuppliesany
goodswhichareliabletotaxundertheActwithouthaving
appliedforregistration,wouldbesufficientforordering
confiscationofthegoods.Therefore,whilemakinganorderof
confiscationundersection130oftheCGSTAct,theofficer
adjudgingitwillhavetostateastowhichclauseof
sub-section(1)ofsection130oftheCGSTActisattractedin
thefactsofthesaidcase.Ifitisthecaseoftheofficer
adjudgingitthatthecasefallsunderclauses(i)or(iv)of
sub-section(1)ofsection130oftheCGSTAct,thenforthe
purposeofmakinganorderofconfiscation,hewillhaveto
cometotheconclusionthatthegoodsweresuppliedor
receivedincontraventionoftheprovisionsoftheActorthe
rulesmadethereunderwiththeintenttoevadepaymentof
tax.Inotherwords,theofficeradjudgingthecase,while
makinganorderofconfiscationunderclauses(i)or(iv)of
sub-section(1)ofsection130oftheCGSTAct,hastorecord
twinsatisfaction:firstlythatthereisacontraventionofthe
provisionsoftheActortherulesmadethereunder,with
specificreferencetotheprovisionoftheActortherulesthat
hasbeencontravened;andsecondly,thatsuch
contraventioniswiththeintenttoevadepaymentoftax.
Therefore,inacasefallingunderclauses(i)and(iv)of
sub-section(1)ofsection130oftheCGSTAct,theproper
officerisrequiredtorecordaspecificfindingastowhyhe
hascometotheconclusionthatthecontraventioniswiththe
intenttoevadepaymentoftax.Incasesfallingunderclause

(ii)ofsub-section(1)ofsection130oftheCGSTAct,the
properofficerwillberequiredtorecordafindingthatthe
personconcernedhasnotaccountedforthegoodsinrespect
ofwhichisheliabletopaytax;andincasesfallingunder
clause(iii)thereof,hewouldberequiredtorecordafinding
thatthepersonconcernedhassuppliedgoodswhichare
liabletotaxundertheActwithouthavingappliedfor
registration.

13.Inthepresentcase,theimpugnedorderistotallysilent
asregardswhichprovisionoftheActortheruleshasbeen
contravened;whichclauseofsub-section(1)ofsection130of
theCGSTActisattractedinthepresentcase;andastowhy
theofficeradjudgingithascometotheconclusionthatthere

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iscontraventionoftheprovisionsoftheActandtherules
madethereunderwiththeintenttoevadepaymentof

14.Moreover,aperusaloftheimpugnedorderrevealsthat
finedeterminedinlieuofconfiscationofgoodsisequaltothe
marketvalueofthegoodsviz.Rs.6,81,556/-.Referencemay
thereforebemadetosub-section(2)ofsection130ofthe
CGSTAct,whichreadsthus:

"(2)Wheneverconfiscationofanygoodsorconveyanceis
authorisedbytheAct,theofficeradjudgingitshallgivetothe
ownerofthegoodsanoptiontopayinlieuofconfiscation,
suchfineasthesaidofficerthinksfit:

PROVIDEDthatsuchfineleviableshallnotexceedthemarket
valueofthegoodsconfiscated,lessthetaxchargeable
thereon.

PROVIDEDFURTHERthattheaggregateofsuchfineand
penaltyleviableshallnotbelessthantheamountofpenalty
leviableundersub-section(1)ofSectionsection129.
PROVIDEDALSOthatwhereanysuchconveyanceisused
forthecarriageofthegoodsorpassengersforhire,theowner
oftheconveyanceshallbegivenanoptiontopayinlieuof
theconfiscationoftheconveyanceafineequaltothetax
payableonthegoodsbeingtransportedthereon."
Thus,sub-section(2)ofsection130oftheCGSTAct
providesthatthefineleviableshallnotexceedthemarket
valueofthegoods,lessthetaxchargeablethereon.Itis,
therefore,clearthatthefineprovidedunderthefirstproviso
tosub-section(2)ofsection130oftheCGSTActisthe
maximumfineleviable.Consequently,theproperofficer
adjudgingthecaseisrequiredtoexaminetheseriousnessof
thecontraventionandimposefineaccordingly.Itisnotasif
ineverycasetheproperofficershouldlevythemaximum
fine.Theorderofconfiscationshould,therefore,reflectdue
applicationofmindonthepartoftheproperofficertothe
quantumoffineimposedbyhim.

15.Aperusaloftheimpugnedorderrevealsthattheproper
officerhasleviedmorethanthemaximumfineleviablein
termsofthefirstprovisotosub-section(2)ofsection130of
theCGSTAct,inasmuchas,hehasleviedfineequaltothe
marketvalueofthegoodswithoutdeductingthetax

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chargeablethereon.Moreover,thereisnothingintheorderto
reflectapplicationofmindtothequantumoffine.

16.Atthisjuncturereferencemaybemadetothedecisionof
theSupremeCourtinSectionKrantiAssociates(P)Ltd.v.Masood
AhmedKhan,(2010)9SCC496,whereinthecourtinthe
contextofnecessitytogivereasons,hasheldthus:
"47.Summarisingtheabovediscussion,thisCourtholds:

(a)InIndiathejudicialtrendhasalwaysbeentorecord
reasons,eveninadministrativedecisions,ifsuchdecisions
affectanyoneprejudicially.

(b)Aquasi-judicialauthoritymustrecordreasonsinsupport
ofitsconclusions.

(c)Insistenceonrecordingofreasonsismeanttoservethe
widerprincipleofjusticethatjusticemustnotonlybedoneit
mustalsoappeartobedoneaswell.

(d)Recordingofreasonsalsooperatesasavalidrestrainton
anypossiblearbitraryexerciseofjudicialandquasi-judicial
orevenadministrativepower.

(e)Reasonsreassurethatdiscretionhasbeenexercisedby
thedecision-makeronrelevantgroundsandbydisregarding
extraneousconsiderations.

(f)Reasonshavevirtuallybecomeasindispensablea
componentofadecision-makingprocessasobserving
principlesofnaturaljusticebyjudicial,quasi-judicialand
evenbyadministrativebodies.

(g)Reasonsfacilitatetheprocessofjudicialreviewby
superiorcourts.

(h)Theongoingjudicialtrendinallcountriescommittedto
ruleoflawandconstitutionalgovernanceisinfavourof
reasoneddecisionsbasedonrelevantfacts.Thisisvirtually
thelifebloodofjudicialdecision-makingjustifyingthe
principlethatreasonisthesoulofjustice.

(i)Judicialorevenquasi-judicialopinionsthesedayscanbe
asdifferentasthejudgesandauthoritieswhodeliverthem.
Allthesedecisionsserveonecommonpurposewhichisto
demonstratebyreasonthattherelevantfactorshavebeen
objectivelyconsidered.Thisisimportantforsustainingthe
litigants'faithinthejusticedelivery

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(j)Insistenceonreasonisarequirementforbothjudicial
accountabilityand

(k)Ifajudgeoraquasi-judicialauthorityisnotcandid
enoughabouthis/herdecision-makingprocessthenitis
impossibletoknowwhetherthepersondecidingisfaithfulto
thedoctrineofprecedentortoprinciplesofincrementalism.

(l)Reasonsinsupportofdecisionsmustbecogent,clearand
succinct.Apretenceofreasonsor"rubber-stampreasons"is
nottobeequatedwithavaliddecision-making

(m)Itcannotbedoubtedthattransparencyisthesinequa
nonofrestraintonabuseofjudicialpowers.Transparencyin
decision-makingnotonlymakesthejudgesand
decision-makerslesspronetoerrorsbutalsomakesthem
subjecttobroaderscrutiny.(SeeDavidShapiroinDefenceof
JudicialCandor.)

(n)Sincetherequirementtorecordreasonsemanatesfrom
thebroaddoctrineoffairnessindecision-making,thesaid
requirementisnowvirtuallyacomponentofhumanrights
andwasconsideredpartofStrasbourgSeeRuizTorijav.
Spain,(1994)19EHRR553andAnyav.Universityof
Oxford,2001EWCACiv405(CA),whereintheCourtreferred
toSectionArticle6oftheEuropeanConventionofHumanRights
whichrequires,"adequateandintelligentreasonsmustbe
givenforjudicialdecisions".

(o)Inallcommonlawjurisdictionsjudgmentsplayavital
roleinsettingupprecedentsforthefuture.Therefore,for
developmentoflaw,requirementofgivingreasonsforthe
decisionisoftheessenceandisvirtuallyapartof"due
process"."

17.InCCTv.ShuklaBros.,(2010)4SCC785,theSupreme
Courtheldthus:

"14.Theprincipleofnaturaljusticehastwiningredients;
firstly,thepersonwhoislikelytobeadverselyaffectedby
theactionoftheauthoritiesshouldbegivennoticetoshow
causethereofandgrantedanopportunityofhearingand
secondly,theorderssopassedbytheauthoritiesshouldgive
reasonforarrivingatanyconclusionshowingproper
applicationofmind.Violationofeitherofthemcouldinthe
givenfactsandcircumstancesofthecase,vitiatetheorder

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itself.Suchrulebeingapplicabletotheadministrative
authoritiescertainlyrequiresthatthejudgmentofthecourt
shouldmeetwiththisrequirementwithhigherdegreeof
satisfaction.Theorderofanadministrativeauthoritymaynot
providereasonslikeajudgmentbuttheordermustbe
supportedbythereasonsofrationality.Thedistinction
betweenpassingofanorderbyanadministrativeor
quasi-judicialauthorityhaspracticallyextinguishedandboth
arerequiredtopassreasonedorders."

18.SectionInTataEngineeringLocomotiveCo.Ltd.v.
CollectorofCentralExcise,Pune,2006(203)ELT360(SC),
theSupremeCourtwasdealingwithacasewherebya
crypticandnon-speakingorder,theTribunalhadupheldthe
orderpassedbyCommissionerbyapplyingtheratioofthe
decisionoftheLargerBenchinTISCOLtd.,withoutrecording
anyfindingsoffact.Thecourtheldthatitisnotsufficientina
judgmenttogiveconclusionsalonebutitisnecessarytogive
reasonsinsupportoftheconclusionsarrivedat.Thecourt,
setasidetheorderoftheTribunalasthefindingsrecorded
bytheTribunalwerecrypticandnon-speaking,andremitted
thematterbacktotheTribunalfortakingafreshdecisionby
aspeakingorderinaccordancewithlawafteraffordingdue
opportunitytoboththe

19.SectionInStateofPunjabv.BhagSingh,2004(164)ELT137
(SC),theSupremeCourtwasconsideringacasewherethe
HighCourthaddismissedtheappealwithoutgivingany
reasons.Thecourtheldthatreasonsintroduceclarityinan
order.Onplainestconsiderationofjustice,theHighCourt
oughttohavesetforthitsreasons,howsoeverbrief,inits
orderindicativeofanapplicationofmind,allthemorewhen
itsorderisamenabletofurtheravenueofchallenge.The
absenceofreasonshasrenderedtheHighCourtordernot
sustainable.Thecourtfurtherheldthatrighttoreasonisan
indispensablepartofasoundjudicialsystem,reasonsat
leastsufficienttoindicateanapplicationofmindtothe
matterbeforethecourt.Anotherrationaleisthattheaffected
partycanknowwhythedecisionhasgoneagainsthim.One
ofthesalutaryrequirementsofnaturaljusticeisspellingout
reasonsfortheordermade,inotherwords,aspeakingout.

20.Thus,theSupremeCourthasconsistentlyheldthata
quasi-judicialauthoritymustrecordreasonsinsupportofits

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conclusionsandthatreasonsareanindispensable
componentofadecisionmakingprocess.InCCTv.Shukla
Bros(supra)theSupremeCourthasheldthatgivingreasons
insupportoftheconclusionsarrivedatisaningredientofthe
principlesofnaturaljustice.

21.Viewedinthelightoftheprinciplesenunciatedinthe
decisionsreferredtohereinabove,theimpugnedorderisin
breachoftheprinciplesofnaturaljusticeontwocounts:
firstly,thatthoughthematterwaskeptforhearingon
28.08.2019,thesecondrespondentpassedtheimpugned
orderon24.08.2019withoutaffordinganyopportunityof
hearingtothepetitioner;andsecondly,becausethe
impugnedorderisatotallynon-speakingorderwhichdoes
notreflectthereasonastowhytheproperofficerhascometo
theconclusionthatthegoodsandtheconveyanceareliable
tobeconfiscated,whichrenderstheorderunsustainable.
Theimpugnedorder,therefore,deservestobesetasideand
thematterisrequiredtoberemittedtotheproperofficerto
decidethematterafreshinaccordancewithlaw,keepingin
mindtheprinciplesdiscussedhereinabove,afteraffording
reasonableopportunityofhearingtothepetitioner."

Thephrase"withintenttoevadepaymentoftax",theword
"penalty"andtheelementofmensreainSection130ofthe
Act:-

106.Whenthestatutetalksaboutintenttoevadepaymentof
tax,thesamecouldbeco-relatedwiththeterm"willfulattempt".
Forthepurposeofevadingtax,andthattoo,withthenecessary
intention,thereisalwaysawillfulattempt.Inotherwords,the
attempttoevadeshouldbe"willful".Theterm"willful"hasnot
beendefinedundertheAct.Underthecommonlegalcolumns,
theword"willful"suggeststheguiltymindoftheassessee.In
otherwords,theassesseehasconsciouslyorknowingly
attemptedtothwartthechargeabilityorpaymentoftax.Further,

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suchwillfulattemptshouldbeto"evade"thechargeabilityor
impositionorpaymentoftaxetc.Theword"evade"hasalsonot
beendefinedintheAct.AspertheCambridgeDictionary,the
word"evade"means"toavoidorescapefromsomeoneor
something".Further,aspertheK.J.Ayar'sJudicialDictionary,
theword"evade"iscapableofbeingusedintwosenses,one
whichsuggestunderhanddealingandanotherwhichmeans
nothingmorethantheintentionalavoidanceofsomething
disagreeable.Weshouldbeconsciousofthefactthatthe
legislaturehasusedthewords"withintenttoevadepaymentof
tax"inSection130oftheAct.Whenthelawrequiresan
intentiontoevadepaymentofduty,thenitisnotmerefailureto
payduty.Itmustbesomethingmore.Thatis,theassesseemust
beawarethatthedutywasleviableanditmustdeliberatelyavoid
payingit.Theword"evade"inthecontextmeansdefeatingthe
provisionsoflawofpayingduty.Itismademorestringentbyuse
oftheword"intent".Inotherwords,theassesseemust
deliberatelyavoidthepaymentofdutywhichispayablein
accordancewithlaw.

107.Thelearnedcounselappearingforthepetitionerswould
arguethatasSection130talksaboutanintenttoevadepayment
oftaxandalsotalksaboutpenaltyunderSection122oftheAct,
theorderforconfiscationandpenaltycannotbeimposed
withoutrecordingthefindingoffactthatthepersonconcerned
intendedtoavoidtaxasmensreawassuggestedtobean
essentialingredientforimposingpenalty.Inotherwords,penalty
beingpenalinnature,cannotbeimposedunlessmensreais

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establishedbyadducingnecessaryevidence.Ontheotherhand,
thelearnedAdvocateGeneralwouldsubmitthatmensrea
cannotbereadintoSection130oftheAct.

108.SectionIntheDivisionalPersonnelOfficer,SouthernRailway
andAnr.v.T.R.Challappan,AIR1975SC2216,theHon'ble
SupremeCourtconsideredthemeaningof"penalty"in
departmentalproceedingsagainsttheemployees.Asthe
argumenthadbeenadvancedthattheexpression"penalty"
referredtoinRule14oftheRailwayServants(Disciplineand
Appeal)Rules1968,whichprovidedforimpositionofpenaltyof
dismissalorremovalinrespectofarailwayservant,stood
confirmedbytheCourtholdingasunder:-

"Theword'penalty'imposedonarailwayservant,inour
opinion,doesnotrefertoasentenceawardedbytheCourtto
theaccusedonhisconviction,butthoughnothappilyworded
itmerelyindicatesthenatureofthepenaltyimposablebythe
disciplinaryauthorityifthedelinquentemployeehasbeen
foundguiltyofconductwhichhasledtohisconvictionona
criminalcharge......Thewords"whereanypenaltyis
imposed'inRule14(i)shouldactuallybereadas'whereany
penaltyisimposable'becausesofarasthedisciplinary
authorityisconcerneditcannotimposeapenaltyonthe
basisoftheconvictionandsentencepassedagainstthe
delinquentemployeebyacompetentcourt.Furthermore,the
ruleempoweringthedisciplinaryauthoritytoconsider
circumstancesofthecaseandmakesuchordersasitdeems
fitclearlyindicatesthatitisopentothedisciplinaryauthority
toimposeanypenaltyasitlikes.Inthissense,therefore,the
word'penalty'usedinRule14(i)oftheRulesof1968is
relatabletothepenaltiestobeimposedundertheRules
ratherthanapenaltygivenbyacriminalcourt."

109.SectionInN.K.JainandOrs.v.C.K.ShawandOrs.,AIR1991

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SC1289,theSupremeCourtconsideredthenatureofexpression
"penalty"usedinSection14(2A)oftheProvidentFundand
SectionMiscellaneousProvisionsAct,1952,whereinitconsideredthe
definitionoftheWord"penalty"indifferentdictionaries,as
under:-

"InButterworths"WordsandPhrases,.......themeaningof
word'penalty'islargeenoughtomean,isintendedtomean
anddoesmean,isintendedtomean,anddoesmean,any
punishmentwhetherbyimprisonmentorotherwise....Penalty
inabroadsensemaybedefinedasanysufferinginperson
orpropertybywayofforfeiture,deprivationordisability,
imposedasapunishmentbylaworjudicialauthorityin
respectof...anactprohibitedbystatute.TheOxford
Dictionaryechoesthesamewideconceptionbyreferringto'a
loss,disabilityordisadvantageofsomekind....fixedbylaw
forsomeoffence.'Themeaningoftheword'penalty'asgiven
intheCollinsEnglishDictionarysuchasatermof
imprisonment,someotherformofpunishment,suchasafine
orforfeitfornotfulfillingacontract,loss,suffering,orother
unfortunateresultofone'sownaction,erroretc.,Sport,
gamesetc.ahandicapawardedagainstaplayerortermfor
illegalplay,suchasafreeshotatgoalbytheopposingteam,
lossofpoint,etc.
........Apenaltymayrefertobothcriminalandcivilliability,
beingdeniedaspenalretribution,punishmentforcrimeof
offence,thesufferinginperson,rightsorpropertywhichis
annexedbylawofjudicialdecisiontocommissionofacrime
orpublicoffence.Theterm'penalty'embracesall
consequencesvisitedbylawonheadsofthosewhoviolate
policeregulationsandextendstoallpenaltieswhether
eligiblebyStateininterestofcommunityorbyprivate
personsintheirwoninterest,evenwhenstatuteisremedial
aswellaspenal.

Theword'penalty'isnotconfinedtopunishmentorcrime;it
hasabroadermeaninginlawofcontracts;itisusedas
contradistinguishedfromliquidateddamages.Itisalsoused
toindicatethesumtobeforfeitedonbreachofabond,and

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incommonparlanceitexpressesanydisadvantageresulting
fromanact."

110.Andheldthatinviewofthedefinitionitwasnotpossibleto
holdthatthesaidprovisionswerenotapplicableincaseof
exemptedestablishmentsforthereasonthatsomemore
provisions,legalorpenal,werealsomadeapplicabletoexempted
establishmentswithaviewtomaketopenalprovisionsmore
stringentwithaviewtocheckthegrowthofarrears.

111.SectionInDirectorofEnforcementv.MCTMCorporationPvt.
Ltd.andOrs.,AIR1996SC1100,theHon'bleSupremeCourt
consideredasissueastowhetheringredientsofmensreawas
necessaryincaseofapersonwhoisfoundviolatingthe
provisionsoftheSectionForeignExchangeRegulationsAct,1947.The
Courtobservedasunder:-

"Mensrea'isastateofmind.Underthecriminallaw,mens
reaisconsideredasthe'guiltyintention'andunlessitis
foundthatthe'accused'hadtheguiltyintentiontocommitthe
'crime',hecannotbeheld'guilty'ofcommittingthecrime.An
'offence'underSectionCriminalProcedureCodeandtheSectionGeneral
ClausesAct,1897isdefinedas'anyactoromission'made
punishablebyanylawforthetimebeinginforce.'The
proceedingsunderSection23(1)(a)FERA,1947are
'adjudicatory'innatureandcharacterandarenot'criminal
proceedings.'TheofficersoftheEnforcementDirectorateand
otheradministrativeauthoritiesareexpresslyempoweredby
theActto'adjudicate'only.Indeedtheyhavetoact'judicially'
andfollowtherulesofnaturaljusticetotheextentapplicable
but,theyarenot'Judges'ofthe'CriminalCourts'tryingan
'accused'forcommissionofaanoffence,asunderstoodin
thegeneralcontext.Theyperformquasi-judicialfunctions
anddonotacta'Courts'butonlyas'administrators'and
'adjudicators.'Intheproceedingsbeforethem,theydonottry

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'anaccused'forcommissionof'anycrime'(notmerelyan
offence)butdeterminetheliabilityoftheconlravenorforthe
breachofhis'obligations'imposedundertheAct.They
imposed'penalty'forthebreachofthe'Civilobligations'laid
downundertheActandnotimposeany'sentence'forthe
commissionofanoffence.Theexpression'penalty'isaword
ofwidesignificance.Sometime,itmeansrecoveryofan
amountasapenalmeasureevenincivilproceedings.An
exactionwhichisnotcompensatorincharacterisalsotermed
as'penalty'.Whenpenaltyisimposedbyanadjudicating
officer,itisdonesoin'adjudicatoryproceedings;'andnotby
wayoffineasaresultof'prosecution'ofan'accused'for
commissionofan'accused'forcommissionofan'offence'ina
criminalCourt.Therefore,merelybecausepenaltyclause
existsinSection23(1)(a),thenatureoftheproceedings
undertheSectionisnotchangedfrom'adjudicator'to
'criminal'prosecution.Anordermadebyanadjudicating
authorityundertheActisnotthatofconvictionbutof
determinationofthebreachofthecivilobligationbythe
offender........Apenaltyimposedforataxdelinquencyisa
civilobligation,remedialandcoerciveinitsnature,andisfor
differentfromthepenaltyforacrimeorafineofforfeiture
providedaspunishmentfortheviolationofcriminallaws.We
areinagreementwiththeaforesaidviewandinouropinion,
whatappliesto'taxdelinquency'equallyholdsgoodforthe
'blameworthy'conductforcontraventionoftheprovisionsof
FERA,1947.We,therefore,holdthatmens-rea(as
understoodincriminallaw)isnotanessentialingredientfor
holdingadelinquentliabletopaypenaltyunderSection23(1)
ofFERA1947forcontraventionoftheprovisionsofSection
10ofFERA,1947andthatpenaltyisattractedunderSection
23(1)(a)assoonascontraventionofthestatutoryobligation
contemplatedbySection10(1)(a)isestablished.TheHigh
Courtapparentlyfellinerrorintreatingthe'blameworthy
conduct'undertheActasequivalenttothecommissionofa
'criminaloffence',overlookingthepositionthatthe
'blameworthyconduct'intheadjudicatoryproceedingsis
establishedbyproofonlyofthebreachofaCivilobligation
undertheAct,forwhichthedefaulterisobligedtomake
amendsbypaymentofthepenaltyimposedunderSection23
(1)(a)oftheActirrespectiveofthefactwhetherhecommitted
thebreachwithorwithoutanyguiltyintention.Ouranswer

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tothefirstquestionformulatedbyusaboveis,thereforein
thenegative."

112.InCommissionerofSalesTaxv.RamaandSons,
GeneralMerchant,Ballia,1999UPTC25,theAllahabadHigh
Courtobservedasunder:-

"TheprincipleofmensreacomesfromEnglishCriminalLaw
fromtimeswhenthelawwasnotcodified.Itwassaidthat
actusnonfacitreumnisimenssitrea(theintentandact
mustbothconcurtoconstitutethecrime).Butthisprinciple
haslostmuchofitssignificanceowingtogreaterprecisionof
modernstatutes.Thenatureofintentortheingredientsof
offencesarenowclearlystatedinthestatutesandnothing
furtherisrequiredtoestablishasoffencethenwhatthe
statutespecified.Wehavewordslike'voluntarily',
'intentionally','negligetly','knowingly',fraudulently',
'dishonestly','rashly','omits','withoutlawfulauthority'ect.,
'omits','withoutlawfulauthority'ect.,usedinvarious
sectionsSectionoftheIndianPenalCodedefiningvariousoffence.
ProofoftheStateofmindoroftheconductofthepersonas
indicatedbytheaforesaidwordestablishestheoffenceand
nofurtherguiltyintentormensreaneedbeproved.Infact
therearemanyactswhichareoffencesanddonotrequire
proofanymensreaorguiltyintention,forexample
possessionofillicitfirearm."

113.AFullBenchofAndhraPradeshHighCourt,inAdditional,
Commissioner,IncomeTaxv.DurgaPandariNathTulijayya
Co.,1977TaxLR258,observedasunder:-

"Thedoctrineofmensreaisofcommonlaworigindeveloped
byJudge-madelaw.IthasnoplaceintheLegislator'slaw.It
hasnoplaceintheLegislator'slawwhereoffencesare
definedwithsufficientaccuracy....Mensreaisanessential
ingredientofanoffence.However,itisaruleofconstruction.
Ifthereisaconflictbetweenthecommonlawandthe
statutorylaw,ithasalwaysbeenheldthatitisasoundrule
toconstrueastatuteinconformitywiththecommonlaw.But

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itcannotbepostulatedthatstatutecannotalterthecourseof
thecommonlaw.Theparliament,inexerciseofits
constitutionalpowersmakesstatutesandinexerciseofthose
powersitcanaffirm,alterortakeawaythecommonlaw
altogether.Therefore,ifitisplainfromthestatutethatit
intendstoalterthecourseofthecommonlaw,thentheplaint
meaningshouldbeaccepted.Theexistenceofmensreaas
anessentialingredientofanoffencehastobemadeoutby
theconstructionofthestatute."

114.Whiledecidingthesaidcase,theFullCourtplacedreliance
uponajudgmentbyWright,J.inSherrasv.DeRuten,1985-1
QB918,whereinitwasobservedasunder:-

"Thereisapresumptionthatmensrea,anevilintentionora
knowledgeofthewrongfulnessoftheact,isanessential
ingredientineveryoffence,butthatpresumptionisliableto
bedisplacedeitherbythewordsofthestatutecreatingthe
offenceorbythesubjectmatterwithwhichitdeals,andboth
mustbeconsidered.......Inordertofindoutwhethermens
reai.e.aguiltymindisaningredientornot,referencehasto
bemadetothelanguageoftheenactment,theobjectand
subjectmatterofthestatuteandthenatureandcharacterof
theActsoughttosoughttobepunished."

115.TheHon'bleSupremeCourtinGujaratTravancore
agencyv.CommissionerofIncomeTax,AIR1989SC1971,
whereintheCourtconsideredtheprovisionofSection271(1)(a)of
theIncomeTaxActandheldthattheelementofmensreaisnot
involvedbecausethepenaltyimposedincivilmattersisalwaysof
acivilnatureanditismisnomertotreatsuchproceedingsas
quasi-criminalmerelybecausepenaltyisimposed,andobserved
asunder:-

"Inmostcasesofcriminalliability,theintentionoflegislature
isthatpenaltyshouldserveasadeterrent.Thecreationof

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anoffencebythestatuteproceedswithapresumptionthat
societysuffersinjurybytheactoromissionofdefaulterand
thatadeterrentsentencemustbeimposedtodiscouragethe
repetitionoftheoffence.Inacaseofproceedingsunder
Section271(1)(a),however,itseemsthattheintentionofthe
legislatureistoemphasisthefactoflossofrevenueandto
providearemedyforsuchloss,although,nodoubt,an
elementofcoercionispresentinthepenalty.Inthis
connection,theterminwhichpenaltyfallstobemeasured,is
significant.Unlessthereissomethinginthenatureofstatute
indicationtheneedtoestablishtheelementofmensrea,itis
generallysufficienttoprovethatadefaultincomplyingwith
thestatutehasoccurred.Inouropinion,thereisnothingin
Section271(1)(a)whichrequiresthatmensreamustbe
provedbeforepenaltycanbeleviedunderthatprovisions.....
Accordingly,weholdthattheelementofmensreawasnot
requiredtobeprovedintheproceedingstakenbytheIncome
TaxOfficerunderSection271(1)(a)oftheIncomeTaxAct
againsttheassessee."

116.AConstitutionBenchoftheHon'bleSupremeCourtinJain
Bros.andSectionOrs.v.TheUnionofIndiaandOrs.,AIR1970SC
778,whileexaminingacaseofimposingthepenaltyunderthe
SectionIncomeTaxAct,heldthatpenaltywasmerelyanadditionaltax
beingacivilliabilityundertheTaxStatute,andobservedas
under:-

"Althoughpenaltyhasbeenregardedasanadditionallaxin
acertainsenseandforcertainpurpose,itisnotpossibleto
holdthatpenaltyproceedingsarejudicialandessentiallya
continuationoftheproceedingsrelatingtoassessmentwhere
areturnhasbeenfiled."

117.SectionInCommissionerofIncomeTaxv.KalyanDasRastogi,
1993(Suppl)1SCC663,theHon'bleSupremeCourtplaced
relianceupon,approvedandfollowedthejudgmentin
Gujarat-TravancoreAgency(supra)andreiteratedthesameview.

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118.SectionInCommissionerofIncomeTax,Gujaratv.I.M.Patel
Co.,1993(Suppl)(1)SCC621,theHon'bleSupremeCourt
consideredalargenumberofitsearlierjudgments,including
GujaratTravancoreAgency(supra)andKalyanDasRastogi
(supra)andcategoricallyheldthatinalaxliability,thepleaof
mensreacannotbetaken.

119.SectionInIncomeTaxCommissioner,AndhraPradesh,
Hyderabadv.BhikajiDadabhaiCo.,AIR1961SC1265,the
ApexCourtheldthatpenaltyisanadditionaltaximposedupona
personinviewofhisdishonestyorcontumaciousconduct.

120.InCorpusJurisSecundum,85580,ithasbeenstatedas
under:-

"Apenaltyimposedforataxdelinquencyisacivilobligation,
remedialandcoerciveinitsnature,andisfardifferentfrom
thepenaltyforacrimeofafineorforfeitureprovidedas
punishmentfortheviolationofcriminalorpenallaws."

121.SectionInM/s.HindustanSteelLtd.v.TheStateofOrissa,AIR
1970SC253,theHon'bleSupremeCourtconsideredthe
provisionsoftheOrissaSalesTaxact,1947,particularlythe
provisionsrelatingtoimpositionofpenaltyimposedfordefaultin
registeringasadealerunderSection9(1)readwithSection25(1)

(a)ofthesaidAct,andheldasunder:-

"Buttheliabilitytopaypenaltydoesnotarisemerelyupon
proofofdefaultinregisteringasadealer.AnOrderimposing
penaltyforfailuretocarryoutastatutoryobligationisthe
resultofaquasi-criminalproceedings,andpenaltywillnot

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ordinarilybeimposedunlessthepartyobligedeitheracted
deliberatelyindefianceoflaworwasguiltyofconduct
contumaciousordishonest,oractedincontumaciousor
dishonest,oractedinconsciousdisregardofitsobligation.
Penaltywillnotalsobeimposedmerelybecauseitislawful
todoso.Whetherpenaltyshouldbeimposedforfailureto
performastatutoryobligationisamatterofdiscretionofthe
authoritytobeexercisedjudiciallyandonaconsiderationof
alltherelevantcircumstances.Evenifaminimumpenaltyis
prescribed,theauthoritycompetenttoimposethepenaltywill
bejustifiedinrefusingtoimposepenalty,whenthereisa
technicalorvenialbreachoftheprovisionsoftheActor
wherethebreachflowsfromabonafidebeliefthatthe
offenderisnotliabletoactinthemannerprescribedbythe
statute.ThoseinchargeoftheaffairsoftheCompanyin
failingtoregistertheCompanyasadealeractedinthe
honestandgenuinebeliefthattheCompanywasnota
dealer.Grantingthattheyerred,nocaseforimposing
penaltywasmadeout."

122.Followingtheaforesaidprovisions,whileinterpretingthe
provisionsoftheMadhyaPradeshGeneralSalesTaxAct,1959,
theHon'bleSupremeCourt,intheSectionCementMarketingCo.of
IndiaLtd.v.TheAsstt.CommissionerofSalesTax,Indora
andOrs.,AIR1980SC346,heldthatimpositionofpenaltyis
penalincharacterandunlessthefilingofaninaccuratereturnis
accompaniedbyaguiltymind,theSectioncannotbeinvokedfor
imposingpenalty.Ifthecontraryviewistaken,theresultwould
bethateveniftheassesseeraisesabonafidecontentionthata
particularitemisnotliabletobeincludedinthetaxable
turnover,hewouldhavetoshowitasformingpartofthetaxable
turnoverinhisreturnandpaytaxuponitonpainofbeingheld
liableforpenaltyincasehiscontentionisultimatelyfoundbythe
Courttobenotacceptable.

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123.InOmPrakashSheoPrakashandOrs.etc.etc.v.Union
ofIndiaAnr.,AIR1984SC1194,theHon'bleSupremeCourt
consideredtheprovisionsoftheAmendingSalesTaxAct,made
applicableretrospectivelyimposingthepenaltyalso,and
examineditsvalidityonthetouch-stoneofprovisionsofSectionArticle
19(1)(f)Section(g)andSectionArticle21oftheConstitutionofIndia,asSectionArticle
21oftheConstitutionofIndia,asSectionArticle20oftheConstitution
guaranteestheprotectioninrespectofconvictionfortheoffence
underanylawforthetime-beinginforceunlesstheother
conditionsprovidedthereinarecompliedwith.TheHon'bleApex
Courtconsideredalargenumberofitsearlierjudgments,
includingthemeaninganddefinitionof"penalty"andreachedthe
conclusionthat"apenaltyimposedbytheSalesTaxAuthorityis
onlyacivilliability,thoughpenalinnature,anditcanbe
imposedprovidedthedefaultcommittedbythedealeris
establishedataninquiryaftergivingthedealerconcernedan
opportunityofbeingheard.Moreso,thedegreeofremissness
involvedinthedefaultisarelevantfactortobetakeninto
accountwhilelevyingpenalty.SectionAstheActprovidesboththe
minimumandthemaximumamountofpenaltyleviableanditis
corelatedtotheamountoftaxwhichwouldhavehavebeen
avoidediftheturnoverreturnedbysuchdealerhadbeen
acceptedascorrect.Theorderlevyingpenaltyisquasi-judicialin
characterandinvolvesexerciseofjudicialdiscretion.

124.AConstitutionBenchoftheHon'bleSupremeCourt,in
KhemkaandCo.(Agencies)Pvt.Ltd.v.Stateof

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Maharashtra,AIR1975SC1549,consideredtheprovisionsof
theCentralSalesTaxact,1956inacaseofdefaultinpaymentof
taxinrespectofSectionCentralActwithintheprescribedtime,andheld
asunder:-

"Penaltyisnotmerelysanction.Itisnotmerelyadjunctto
assessment.Itisnotmerelyconsequentialtoassessment.It
isnotmerelymachinery.Penaltyisinadditiontotaxandisa
liabilityundertheAct."

125.TheConstitutionBenchoftheSupremeCourtinSectionMaqbool
Hussainv.StateofBombay,AIR1953SC325,consideringthe
natureofproceedingsundertheSeaCustomsActandFERA,
1947,dealingwiththeprincipleandscopeunderlyinginSectionArticle
20(2)oftheitsConstitutionofIndia,heldasunder:-

"TheSeaCustomAuthoritieswerenotajudicialtribunaland
theadjudgingofconfiscation,increasedrateofdutyor
penaltyundertheprovisionsoftheSeaCustomsActdidnot
constituteajudgmentororderofaCourtofjudicialtribunal
necessaryforthepurposeofsupportingapleaofdouble
jeopardy."

126.ASevenJudgesBenchoftheHon'bleSupremeCourt,in
R.S.Joshietc.v.AjitMillsLtd.andAnr.etc.,AIR1977SC
2279,consideredthescopeofmens-reawhileinterpretingthe
provisionsofBombaySalesTaxAct,1959,andalsoconsidered
variousfacetsoftheexpression'penalty'.TheCourtobservedas
under;-

"Therewasacontentionthattheexpression'forfeiture'did
notdenoteapenalty.Thus,perhaps,mayhavetobedecided
inthespecificsettingofastatute.Butspeakinggenerally,
andhavinginmindtheobjectofSection37readwithSection
46,weareinclinedtotheviewthatforfeiturehasapunitive

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impact.Black'slegalDictionarystatesthat'toforfeit'is'to
lose,orlosetherightto,bysomeerror,fault,offenceorcrime,
'toincurapenalty.''Forfeiture',asjudicallyannotted,is'a
punishmentannexedbylawtosomeillegalactor
negligence....',somethingimposedasapunishmentforan
offenceofdelinquency.Theword,inthissense,isfrequently
associatedwiththeword"penalty."AccordingtoBlack's
LegalDictionary,'theterms'fine','forfeiture'and'penalty'are
oftenusedloosely,andevenconfusedly,butwhena
discriminationismade,theword'penalty'isfoundtobe
genericinitscharacter,includingbothfineandforfeiture.A
'fine'isapecuniarypenalty,andiscommonly(perhaps
always)tobecollectedbysuitinsomeform.A'forfeiture'isa
penaltybywhichoneloseshisrightsandinterestinhis
property.

.......Theword'forfeiture'mustbearthesamemeaningofa
penaltyforbreachofaprohibitorydirection.Thefactthat
thereisarithmeticalidentity,assumingittobeso,between
thefiguresoftheillegalcollectionsmadebythedealersand
theamountsforfeitedtotheStatecannotcreatea
conceptualconfusionthatwhatisprovidedisnot
punishmentbutatransferenceoffunds.Ifthisviewbe
correct,andweholdsothelegislature,byinflictingthe
forfeiture,doesnotgooutsidethecreasewhenithitsout
againstthedealeranddepriveshim,bythepenaltyofthe
law,oftheamountillegallygatheredfromthecustomers.
TheSectionCriminalProcedureCode,CustomsandExciseLaws
andseveralotherpenalstatutesinIndiahaveuseddiction,
whichacceptsforfeitureasakindofpenalty.When
discussingtherelingsofthisCourtwewillexplorewhether
thistruenatureof'forfeiture'iscontradictedbyanythingwe
canfindinSection37(1),Section46or63.Evenherewemayreject
thenotionthatapenaltyorapunishmentcannotbecastin
theformofanabsoluteornofaultliabilitybutmustbe
proceededbymensrea.Theclassicalviewthat'nomens
rea,nocrime'haslongagobeenerodedandseverallawsin
India,andabroad,especiallyregardingeconomiccrimes
anddepartmentalpenalties,havecreatedsevere
punishmentsevenwheretheoffenceshavebeendefinedto
excludemensrea.Therefore,thecontentionthatSection

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37(1)fastensaheavyliabilityregardlessoffaulthasnoforce
indeprivingtheforfeitureofthecharacterofpenalty."

127.SectionInStateofRajasthanv.D.P.Metals,AIR2001SC3076,
theHon'bleSupremeCourtconsideredthevalidityofthe
provisionsofSection78(5)oftheRajasthanSalesTaxAct,1994,
whichprovidesforimposingthepenaltyifthegoodsbeingcarried
inavehiclearebeingfoundwithoutdocumentsrequiredunder
theActandtheRulesframedthereunder,orthedocumentsare
foundtobefalseorforged.TheCourtheldasunder:-

"PersonInchargeofthegoodsshouldhavealltherequisite
documentsrelatingtothetitleorsaleofthegoods,whichare
beingtransported.PenaltyunderSection78(5)isleviable
undertwocircumstances:firstly,ifthereisnon-compliance
withSection78(2)(a),i.e.notearringthedocuments
mentionedinthatclause;andsecondly,iffalseorforged
documentsordeclarationissubmitted.ThisSub-section
cannotrelatetopersonalbelongingswhicharenotmeantfor
salebutwouldrelatetothosetypesofgoods,inrespectof
whichdocumentsreferredtoinSection78(2)(a)existorcan
exist.Suchsubmissionoffalseorforgeddocumentsor
declarationatanycheckpostoreventhereaftercansafelybe
presumedtohavebeenmotivatedbydesiretomisleadthe
Authorities.Hidingthetruthandtenderfalsehoodwouldper
se,soexistenceofmens-reaevenifrequired.

Similarly,wheredespiteopportunityhavingbeengranted
underSection78(5),iftherequisitedocumentsreferredto
inClause(a)ofSub-section(2)arenotproduced,even
thoughthesameareexisting,wouldclearlyprovetheguilty
intent.Itisnotpossibletoagreewiththelearnedcounsel
forrespondentsthatthebreachreferredtoinSection78(5)
canberegardedastechnicalorvenial.Oncetheingredients
ofSection78(5)areestablishedaftergivingahearingand
complyingwiththeprinciplesofnaturaljustice,thereisno
discretionnottolevyorlevylesseramountofpenalty."

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128.SectionInBengalIronMerchantAssociationandAnr.v.
Commissioner,CommercialTaxandAnr.,1996(7)SCC537,
theHon'bleSupremeCourtexaminedtheprovisionsofRule89-A
(2)oftheBengalSalesTaxRules,1941,andheldthatthesaid
provisionsofRule89-A(2)ofthesaidRules,1941requiredthat
anyconsignmentofnotifiedgoodsshallbeaccompaniedbya
declarationbytheconsignororhisauthorisedagentinrelationto
theconsignmentortocomplywiththem.Therulesquarely
placedanobligationupontheconsignor/vendortoissuesucha
declarationandtheconsignee/purchaserstocarrythe
declaration.Theconsigneeswerenotentitledtocomplainthat
becauseironandsteelweretaxableonlyatthefirstpointofsale,
thesellers(manufacturers)werenotissuingthedeclarationas
contemplatedbyRule89-A(2)andtheywere,therefore,notina
positiontoproducethedeclarationwhendemandedbythe
authorities,incaseoffailuretoproducethesaiddeclaration
form,theywereliabletopaythepenalty,asperthesaidRules,
1941.

129.SectionInKishoriLalRakeshKumarMandiv.Commissionerof
SalesTax,1985UPTC211,aDivisionBenchoftheAllahabad
HighCourt,whiledecidingareferenceoninterpretationof
Section15-A(a)(g)oftheUttarPradeshSalesTaxAct,1948,
whichreferredtorenewalofregistrationandfordefault,whether
penaltycanbeimposedwithoutprovingmensrea,expressedthe
viewthemensreaisnotnecessaryforimposingpenaltyfor
defaultcoveredbyClause(g),observingasunder:-

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"....thoughmensreaisanecessaryingredientofanoffence
buttheLegislaturecanfreeanyprovisionrelatingtoan
offenceinastatutefromthisfetter.Clause(g)isfreefromthe
bonodageofmensrea."

130.SectionInSaiElectricals(P)Ltd.v.CommissionerofSalesTax,
1997UPTC721,whiledealingwiththeprovisionsofSection4-B
oftheU.P.TradeTax,1948,theAllahabadHighCourtobserved
thatmensreaisnotintendedbythelegislatureforimposingthe
penalty,andheldasunder:-

"Apenaltyimposedforataxdelinquencyisacivilobligation,
remedialandcoerciveinitsnature,andisfardifferentfrom
thepenaltyforacrimeorafineorforfeitureprovidedas
punishmentfortheviolationofcriminalorpenallaws."

131.InM/s.RamaandSons,GeneralMerchant,Ballia(supra),
theAllahabadHighCourt,whiledealingwiththeprovisionsof
Section10-AofCentralSalesTaxAct,1956,observedthat
penaltyisleviableifapersonbeingaregistereddealer,falsely
representswhenpurchasinganyclassofgoodsthatgoodsof
suchclassarecoveredbyhiscertificateofregistration,andheld
asunder:-

"Thestatementsmadebythedealerswere,therefore,untrue
butthepenaltyhasbeenquashedonthegroundthatthere
wasnomensreainmakingthewrongavermentsinFormC."

132.TheCourtfurthercametotheconclusionthattheword
'falsification'mighthaveslightlydifferentinterpretationifthe
criminalprosecutionwaslaunched,butitwasacaseofpenalty,
whichwasleviedtocompensatetheRevenueandtocausethe
delinquenttocomplywiththelaw;therefore,mensreawasnotat

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allattractedinthecase.

133.TheDivisionBenchoftheMadrasHighCourtinSectionVijaya
Electricalsv.StateofTamilNadu,199182STC268,while
interpretingtheanalogousprovisionsofSection10-Areadwith
Section10(b)oftheAct,heldthatmensreaneednotbe
establishedandifrepresentationisfoundtobefalse,itis
sufficienttolevythepenalty.

134.SimilarviewwasreiteratedbytheDivisionBenchofthe
MadhyaPradeshHighCourtinSectionCentralIndiaMotorsv.C.L.
Sharma,AssistantCommissionerofSalesTax,Indore
Region,IndoreandAnr.,198046STC.

135.SectionInStateofMadhyaPradeshv.NarainSinghandOrs.,
1983(3)SCC596,theHon'bleSupremeCourtconsideredascase
wheretwotruckscarryingfertilizerswereinterceptedbythe
MadhyaPradeshAuthoritiesundertheSectionEssentialCommodities
Actandtheaccuseddidnotdenythetransportoffertilizerbags
orinterceptionofitslorriesorseizureoffertilizerbagsandthe
onlydefencetakenthereinwasthantheywerenotawareofthe
contentsofthedocumentsseizedfromthemandtheywerenot
engagedinexportingthefertilizerbagsfromMadhyaPradeshto
MaharashtrainconsciousviolationofprovisionsoftheFertilizer
MovementControlOrder,1973readwithSections3andSection7ofthe
EssentialCommoditiesAct,1955.TheHon'bleSupremeCourt,
reversingtheorderofacquittal,heldthatmensreawasnotatall
attractedastheprovisionsofSection7(1)oftheEssential

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Commoditiesactrequiredtobeinterpretedintrueperspective
anditprovidedtatifanypersoncontravenes,whetherknowingly,
intentionallyorotherwiseanyordermadeunderSection3,he
willbepunishedundertheF.M.C.O.TheCourtheldthatthe
elementofmensreainexportoffertilizerbagswithoutavalid
permitwas,therefore,notanecessaryingredientforconvicting
personforcontraventionoftheordermadeunderSection3ofthe
F.M.C.O.ifthefactumofexportorattempttoexportisprovedby
theevidenceadduced.Thisjudgmentisanauthoritytoshowthat
mensreamaybeanessentialingredientinacaseofoffencefor
punishingaperson,butlegislatureiscompetenttoprovidefor
punishmentincludingtheimprisonmenteveninacriminalcase,
excludingthescopeorattractionofmensrea.

136.SectionInC.A.Abrahimv.IncomeTaxOfficer,AIR1961SC609,
theApexCourtlaiddowntheguidelinesininterpretingthe
provisionsofFiscalStatutes,observingasunder:-

"Ininterpretingafiscalstatute,theCourtcannotproceedto
makegoodthedeficiency,iftherebeany;theCourtmust
interprettheStatuteasitstandsandincaseofdoubt,ina
mannerfavourabletothetax-paper.Butwhereasinthe
presentcase,byuseofthewords'capableofcomprehensive
import,provisionismadeforimposingliabilityforpenalty
upontax-paperguiltyoffraud,grossnegligenceorm
contumaciousconduct,aassumptionthatthewordswere
usedinarestrictedsensesoastodefeattheavadeobjectof
thelegislaturequaandcertainclauseswillnotbelightly
met."

137.SimilarviewhasbeenreiteratedinM/s.BhikajiDadabhai
Co.(supra),.

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138.Similarly,inSectionCommissionerofSalesTaxv.ParsonTools
Plants,AIR1975SC1039,theApexCourtobservedas
under:-

"Wherethelegislatureclearlydeclaresitsintentinthe
schemeandlanguageofastatute,itisthedutyoftheCourt
togiveeffecttothesamewithoutscanningitswisdomor
policy,andwithoutengrafting,addingorimplyinganything
whichisnotcongenialtoorconsistentwithsuchexpressed
intentofthelaw-giver;moresoifthestatuteisataxing
statute."

RelevantprovisionsofSection22-AoftheActreadsas
under:-

"(3)Theownerorpersoninchargeofavehicle,boator
animalshallcarrywithhimagoodsvehiclerecord,tripsheet
oralogbook,asthecasemaybe,and(suchother
documents)asmaybeprescribedinrespectofthegoods
carriedinoronthevehicle,boatoranimal,asthecasemay
be,andproducethesamebeforeanyofficerinchargeof
check-postorbarrieroranyotherofficerasmaybe
empoweredbytheGovernmentinthatbehalf.Theowneror
personinchargeofavehicle,boatoranimalenteringthe
StatelimitsorleavingtheStatelimitsshallalsogivea
declarationcontainingsuchparticularsasmaybeprescribed
ofthegoodscarriedinoronthevehicle,boatoranimal,as
thecasemaybe,beforetheofficerinchargeofthecheckpost
rbarrierortheofficerempoweredasaforesaidandgiveone
copyofthedeclarationtosuchofficer,andkeeponecopy
withhim.

(7)(a)Theofficerinchargeofthecheckpostorbarrierorany
otherofficernotbelowtherankofanAssistantCommercial
TaxesOfficer,empoweredinthisbehalfmay,aftergivingthe
ownerorpersoninchargeofthegoodsreasonable
opportunityofbeingheardandafterholdingsuchfurther
enquiryashemaydeemfit,imposeonhimforpossessionof
goodsnotcoveredbygoodsvehiclerecord,anyother
documentsprescribedunderSub-section(3)orforsub

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missionoffalsedeclarationordocuments,apenaltyequalto
fivetimesoftherateoftaxnotifiedunderSection5oftheAct,
forsuchgoodsor30%ofthevalueofsuchgoods,asmaybe
determinedbysuchofficerwhicheverisless.
Providedthatwherethegoodsarebeingcarriedwithout
properdocumentsasrequiredbySub-section(3)orwithany
falsedeclarationorstatementsandtheownerortheincharge
orthedriverofthevehicle,boatoranimalcarryingsuch
goodsisfoundincollusionforsuchcarryingofgoods,the
vehicleboatoranimalshallalsobeseizedbytheofficer
empoweredunderSub-section(7)andsuchofficer,after
affordinganopportunityofbeingheardtosuchowner,
inchargeordrivermayimposeapenaltynotexceeding30%
ofthevalueofthegoodsbeingcarriedandshallreleasethe
vehicle,boatoranimalonthepaymentofthesaidpenalty,or
onfurnishingsuchsecurityinsuchformasprescribedunder
Clause(b)ofSub-section(7)................"

139.SectionInMahaveerConductorsv.AssistantCommercialTaxes
Officer,1997(104)STC65,thisCourthasinterpretedthe
provisionsofSection22-A(7)holdingthatmensreawasa
necessaryingredient,observingasunder:-

"....Anyorderimposingpenaltyforfailuretocarryout
statutoryobligationisquasi-criminalinnature.TheStatute
hasnotprovidedanypresumptionabouttheexistenceof
mensreaagainstthedefaulter,therefore,asaprosecutor,
burdenofprovingisprimarilyontheRevenue.TheRevenue
hasfailedtodischargeitsburdeninasmuchasithasmerely
reachedapresumptionofsuchdeliberatebreach....."]

140.SimilarviewhasbeenreiteratedinSectionAssistantCommercial
TaxOfficer,FlyingSquadev.VoltasLtd.,2000(120)STC270.
Whiledecidingthesaidcase,reliancehasbeenplaceduponthe
earlierjudgmentsinMahaveerConductors(supra)and
HindustanSteelLtd.(supra).

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141.ADivisionBenchoftheRajasthanHighCourtinSectionLalji
MooljiTransportCompanyv.StateofRajasthan,DBCWPNo.
324/2002.,decidedon10.4.2002,consideringthejudgmentsof
theHon'bleSupremeCourtinR.S.JoshiandM/s.D.P.Metal
(supra)andM/s.D.P.Metals(supra)etc.,hastakenaviewthatit
wouldnotbecorrecttoprotectataxevadersayingthattherewas
absenceofmensrea.Thesubmissionoffalseofforgeddocument
ofdeclarationatthecheckpostoreventhereafter,cansafelybe
presumedtohavebeenmotivatedbydesiretomisleadthe
authorities.Thus,itisnotalwaysnecessarythatthedoctrineof
mensreaisattractedineveryfiscalstatuteinallsituations.The
Courtfurtherheldasunder:-

"Therequirementoflawismeanttobestrictlyconstrued,
particularlyinareasofevasionoftax.Wecannotlosesightof
thefactthatofthethereareattemptstoavoidstatutory
obligationorrequirementofobliquereason.Anundue
indulgenceandleniencyinfavourofthetax-evaderson
technicalormisplacedsympatheticgroundsleadstoserious
consequence'saffectingtherevenue,andassuch,
developmentandsecurityoftheState.Wearenotobliviousof
thefactthatthepenaltyprovisionscannotbeusedasa
revenue-yieldingprovision.Theobjecttothepenaltyprovision
istoensurecomplianceinthelargerpublicinterest."

142..Finallyintheaforesaidcontext,wemayrefertoadecision
oftheSupremeCourtinthecaseofSectionTamilNaduHousingBoard
vs.CollectorofCentralExcise,reportedin1994Supp.4SCR
62,whereintheSupremeCourt,whiledealingwiththescopeof
theprovisotoSection11AoftheCentralExciseSectionSaltAct,1944,
observedasunder;

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"Whenthelawrequiresanintentiontoevadepaymentof
dutythenitisnotmerefailuretopayduty,Itmustbe
somethingmore.Thatis,theassesseemustbeawarethat
thedutywasleviableanditmustdeliberatelyavoidpaying
it.Theword'evade'inthecontextmeansdefeatingthe
provisionoflawofpayingduty.Itismademorestringentby
useoftheword'intent'.Inotherwordstheassesseemust
deliberatelyavoidpaymentofdutywhichispayablein
accordancewithlaw.SectionInPadminiProductsv.Collectorof
CentralExcise,itwasheldthatwheretherewasscopefor
doubtwhethercasefordutywasmadeoutornottheproviso
toSection11AoftheActwouldnotbeattracted.The
appellantisastatutorybody.Ithadtakenoutlicencefor
concreteasitwasbeingsoldtooutsiders.Nolicencewas
takenoutforwoodproductsasaccordingtoititwasadvised
sobytheExciseDepartmentitself.Itwouldhavebeenbetter
iftheappellantwouldhaveexaminedtheofficerwhowas
advisednottotakelicence.Butmerenon-examinationof
officercouldnotgiverisetoaninferencethattheappellant
wasintentionallyevadingpaymentofduty.Whenthe
appellantwasfoundnottohavebeenmakinganyprofitand
ithadtakenoutlicenceforconcreteunittheninabsenceof
anyothermaterialtoproveanydeliberateactofthe
appellantthepresumptionofreasonabledoubtofthe
appellantcannotbesaidtohavebeensuccessfullyrebutted.
ThefindingoftheTribunalthattherewasanintentiononthe
partoftheappellanttoevadepaymentofduty,isnotbased
onanymaterial.Itwasaninferencedrawnforwhichthere
wasnobasis."

143.Confiscationproceedingisaquasijudicialproceedingand
notacriminalproceeding.Ordinarily,proofbeyondreasonable
doubtandproofofmensreaareforeigntothescopeofthe
confiscationproceeding.However,thelanguageofthestatute
shouldbereadclosely.Sometimes,thelanguageofthestatute
mayindicatetheneedtoestablishtheelementofmensrea.Itis
truethatmensreaisnotanessentialelementforimposing

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penaltyforbreachofcivilobligationsorliabilities.However,
applyingthedictumoftheSupremeCourtaslaidinTamilNadu
HousingBoard(supra),theprovisionsofSection130oftheActis
mademorestringentbyuseoftheword"intent".Whenthelaw
requiresintentiontoevadepaymentofduty,thenitisnotmere
failuretopayduty.Itmustbesomethingmore.Thissomething
moreshouldnotbeconstruedasobligatoryonthepartofthe
Revenuetoestablishorprovethenecessarymensreaforthe
purposeofconfiscationandpenalty.

144.Whenitcomestoconfiscatingthevehicle,theconsideration
wouldbealtogetherdifferent.Theideaistoconfiscatethe
vehicle,irrespectiveofitsownershiporparticipationoftheowner
intheactualtransportofthegoodsincontraventionofthe
provisionoftheActortheRules.Itiswhatiscalledaprovision
oflaw"tocondemnthevehicle".Inotherwords,becausethe
vehiclecarriedthegoodsincontraventionoftheprovisionsofthe
ActortheRuleswithanintenttoevadethepaymentoftax,it
hadbecometaintedandis,therefore,liabletobeconfiscated.Of
course,Section130providesthattheownerofthevehiclemay
payredemptionfineinlieuofconfiscation.Theownerofthe
conveyancecanalsoprovethatthevehiclewasusedwithouthis
knowledgeorconnivanceorhisagentorthepersoninchargeof
theconveyance.

145.Inanappropriatecase,evenafterdeterminingtheamount
oftaxandpenaltyunderSection129oftheActandreleaseofthe
goodsandvehicle,theauthoritiesmaybejustifiedinissuing

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noticeunderSection130oftheActforthepurposeofinitiating
confiscationproceedings.Inotherwords,atthestageofSection
129oftheAct,theremaynotbesufficientevidenceforthe
purposeofcomingtotheconclusionthatthecaseisonewhere
theownerofthegoodsorthedriverofthevehiclehadthe
intentiontoevadepaymentoftax.Afurtherinquiryinthisregard
mayrevealofsuchintentiontoevadetax.Insuchcircumstances
also,theauthoritymaybejustifiedininitiatingtheconfiscation
proceedings.

146.ItwasvociferouslyarguedbeforeusthatSection130ofthe
Actcanbeinvokedonlyiftheperson,transportinganygoods,or
theownerofthegoods,failstopaytheamountoftaxandpenalty
asprovidedinsub-section(1)ofSection129within14daysof
detentionorseizure.Inotherwords,theargumentisthatthe
goodsortheconveyanceareliabletobeconfiscatedonlyinthe
eventofnon-complianceoftheprovisionofSection129(6)ofthe
Act.Weareafraid,suchargumentisnotsustainableinlaw.We
havealreadytakentheviewthatSections129andSection130oftheAct
aremutuallyexclusiveandindependentofeachother.Inour
opinion,Section130oftheActisnotdependentonSection
129(6)oftheAct.Thereasonwhywearesayingsoisthatifthe
amountoftaxandpenaltyisdeterminedbytheauthority
concernedunderSection129oftheActforthepurposeofrelease
ofthegoodsandtheconveyance,andsuchamountis,ultimately,
notdeposited,thentheobviousconsequenceofthesamewould
beforfeitureofthegoodsandthevehiclewiththeGovernment.
Theauthoritiesarenotexpectedtokeepthegoodsorthevehicle

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intheirpossessionforanindefiniteperiodoftime.Clause(5)of
Section130makesitclearthatwherethegoodsorconveyance
areconfiscatedundertheAct,thetitleofsuchgoodsor
conveyancewouldvestintheGovernment.

147.However,evenincaseoffailuretocomplywithclause(6)of
Section129oftheAct,theconfiscationwouldnotbeautomatic
butanoticewillhavetobeissued,callingupontheownerofthe
goodstoshow-causeastowhythegoodsshouldnotbe
confiscated.

148.However,intheaforesaidcontext,wewouldliketoclarify
something.Ifasituationariseswhereinafterthedetermination
ofthetaxandpenaltyinaccordancewiththeprovisionsof
Sections129(2)and(3)respectively,iftheperson,transporting
anygoods,ortheownerofthegoods,failtopaytheamountof
taxandpenaltywithin14daysofsuchdetentionorseizure,then
furtherproceedingswouldbeinitiatedinaccordancewiththe
provisionsofSection130,i.e,forthepurposeofconfiscation.
However,insuchaneventuality,itwouldnotbenecessaryfor
thedepartmenttoestablishanyintentiontoevadepaymentof
tax.Sub-clause(6)ofSection129providesaneventuality,by
which,itwouldbeopenfortheauthoritytoputthegoodsand
theconveyancetoauctionanddepositthesaleproceedthereof
withtheGovernment.

149.Itwasalsosoughttobearguedonbehalfofthepetitioners
thatoncethereisdetentionandseizureofgoodsandconveyance,

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thenitismandatoryfortheproperofficer,detainingorseizing
goodsorconveyancetoissueanoticespecifyingthetaxand
penaltypayableand,thereafterpassanorderforpaymentoftax
andpenaltyunderclause(a)orclause(b)orclause(c).The
emphasisissoughttobeplacedontheword"shall"inclause(3)
ofSection129.Theargumentproceedsonthefootingthat
withoutanynotice,ascontemplatedunderSection129(3)ofthe
Act,thereisnoscopefortheauthoritytostraightwayproceedto
Section130oftheActforthepurposeofconfiscation.

150.Theaforesaidsubmissioncanbelookedintoandanswered
intwoways.First,theword"shall"shouldbereadin
conjunctionwithclause(4)ofSection129.Clause(4)provides
thatnotax,interestorpenaltycanbedeterminedunder
sub-section(1)withoutgivingthepersonconcernedan
opportunityofhearing.Thus,forthepurposeofgivingan
opportunityofhearing,noticeundersub-section(3)isamust.
Thisdoesnotnecessarilyimplythattherecannotbeproceedings
forconfiscationintheabsenceofanyactionunderSection129of
theActfirstinpointoftime.Thesecondwayoflookingatthis
submissionistoconstruetheword"shall"as"may".Inother
words,theword"shall"shouldbereadasdirectoryandnot
mandatory.Inthisregard,Mr.Trivedi,thelearnedAdvocate
GeneralinvitedtheattentionofthisCourttoadecisionofthe
SupremeCourtinthecaseofSectionMayGeorgevs.Special
TahsildarOrs.,reportedin(2010)13SCC98.Mr.Trivedi
placedrelianceontheobservationsmadebytheSupremeCourt
inparas-13to26.ThecasebeforetheSupremeCourtwasone

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undertheSectionLandAcquisitionAct,1894.Section9(3)oftheAct,
1894wasasubjectmatterofconsiderationbeforetheSupreme
Court.Wequotetherelevantparas;

"13.Section9(3)oftheActreadsasunder:-
"TheCollectorshallalsoservenoticetothesameeffectonthe
occupier(ifany)ofsuchlandandonallsuchpersonsknown
orbelievedtobeinterestedtherein,ortobeentitledtoactfor
personssointerested,asresideorhaveagentsauthorizedto
receiveserviceontheirbehalf,withintherevenuedistrictin
whichthelandissituate"

14.Section9oftheActprovidesforanopportunitytothe
"personinterested"tofileaclaimpetitionwithdocumentary
evidencefordeterminingthemarketvalueofthelandandin
caseapersondoesnotfileaclaimunderSection9evenafter
receivingthenotice,hestillhasarighttomakean
applicationformakingareferenceunderSection18ofthe
Act.Therefore,schemeoftheActissuchthatitdoesnot
causeanyprejudicialconsequenceincasethenoticeunder
Section9(3)isnotserveduponthepersoninterested.

15.Whiledeterminingwhetheraprovisionismandatoryor
directory,inadditiontothelanguageusedtherein,theCourt
hastoexaminethecontextinwhichtheprovisionisusedand
thepurposeitseekstoachieve.Itmayalsobenecessaryto
findouttheintentofthelegislatureforenactingitandthe
seriousandgeneralinconveniencesorinjusticetopersons
relatingtheretofromitsapplication.Theprovisionis
mandatoryifitispassedforthepurposeofenablingthe
doingofsomethingandprescribestheformalitiesfordoing
certainthings.

16.InDattatrayaMoreshwarVs.TheStateofBombay
Ors.,AIR1952SC181,thisCourtobservedthatlawwhich
createspublicdutiesisdirectorybutifitconfersprivate
rightsitismandatory.Relevantpassagefromthisjudgment
isquotedbelow:-

"Itiswellsettledthatgenerallyspeakingtheprovisionsofthe
statutecreatingpublicdutiesaredirectoryandthose

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conferringprivaterightsareimperative.Whentheprovision
ofastatuterelatetotheperformanceofapublicdutyandthe
caseissuchthattoholdnullandvoidactsdoneinneglectof
thisdutywouldworkseriousgeneralinconvenienceor
injusticetopersonswhohavenocontroloverthoseentrusted
withthedutyandatthesametimewouldnotpromotethe
mainobjectoflegislature,ithasbeenthepracticeofthe
Courtstoholdsuchprovisionstobedirectoryonlytheneglect
ofthemnotaffectingthevalidityoftheactsdone."

17.AConstitutionBenchofthisCourtinStateofU.P.Ors.
Vs.BabuRamUpadhyaAIR1961SC751,decidedtheissue
observing:-

"ForascertainingtherealintentionoftheLegislature,the
Courtmayconsider,interalia,thenatureandthedesignof
thestatute,andtheconsequenceswhichwouldfollowfrom
construingittheonewayortheother,theimpactofother
provisionswherebythenecessityofcomplyingwiththe
provisionsinquestionisavoided,thecircumstance,namely,
thatthestatuteprovidesforacontingencyofthe
non-compliancewiththeprovisions,thefactthatthe
non-compliancewiththeprovisionsisorisnotvisitedby
somepenalty,theseriousortrivialconsequencesthatflow
therefrom,and,aboveall,whethertheobjectofthe
legislationwillbedefeatedorfurthered."

18.InRazaBulandSugarCo.Ltd.,RampurVs.Municipal
Board,RampurAIR1965SC895;andSectionStateofMysoreVs.
V.K.Kangan,AIR1975SC2190,thisCourtheldthatasto
whetheraprovisionismandatoryordirectory,would,inthe
ultimateanalysis,dependupontheintentofthelaw-maker
andthathastobegatherednotonlyfromthephraseologyof
theprovisionbutalsobyconsideringitsnature,itsdesign
andtheconsequencewhichwouldfollowfromconstruingitin
onewayortheother.

19.InSharif-Ud-DinVs.AbdulGaniLoneAIR1980SC303,
thisCourtheldthatthedifferencebetweenamandatoryand
directoryruleisthattheformerrequiresstrictobservance
whileinthecaseoflatter,substantialcomplianceoftherule
maybeenoughandwherethestatuteprovidesthatfailureto
makeobservanceofaparticularrulewouldleadtoaspecific

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consequence,theprovisionhastobeconstruedas
mandatory.

20.SimilarviewhasbeenreiteratedbythisCourtinBalwant
SinghOrs.Vs.AnandKumarSharmaOrs.(2003)3SCC
433;BhavnagarUniversityVs.PalitanaSugarMillPvt.Ltd.
Ors.AIR2003SC511;andChandrikaPrasadYadavVs.
StateofBiharOrs.,AIR2004SC2036.

21.InM/s.RubberHouseVs.M/s.ExcellsiorNeedle
IndustriesPvt.Ltd.AIR1989SC1160,thisCourtconsidered
theprovisionsoftheHaryana(ControlofRentEviction)
Rules,1976,whichprovidedformentioningtheamountof
arrearsofrentintheapplicationandheldtheprovisiontobe
directorythoughtheword"shall"hasbeenusedinthe
statutoryprovisionforthereasonthatnon-complianceofthe
rule,i.e.non-mentioningofthequantumofarrearsofrentdid
involvenoinvalidatingconsequenceandalsodidnotvisit
anypenalty.

22.InB.S.KhuranaOrs.Vs.MunicipalCorporationof
DelhiOrs.(2000)7SCC679,thisCourtconsideredthe
provisionsoftheDelhiMunicipalCorporationAct,1957,
particularlythosedealingwithtransferofimmovable
propertyownedbytheMunicipalCorporation.After
consideringtheschemeoftheActforthepurposeof
transferringthepropertybelongingtotheCorporation,the
CourtheldthattheCommissionercouldalienatetheproperty
onlyonobtainingthepriorsanctionoftheCorporationand
thisconditionwasheldtobemandatoryforthereasonthat
theeffectofnon-observanceofthestatutoryprescription
wouldvitiatethetransferthoughnospecificpowerhadbeen
conferredupontheCorporationtotransfertheproperty.

23.InStateofHaryanaAnr.Vs.RaghubirDayal(1995)1
SCC133,thisCourthasobservedasunder:-

"Theuseoftheword`shall'isordinarilymandatorybutitis
sometimesnotsointerpretedifthescopeoftheenactment,on
consequencestoflowfromsuchconstructionwouldnotso
demand.Normally,theword`shall'primafacieoughttobe
consideredmandatorybutitisthefunctionoftheCourtto
ascertaintherealintentionofthelegislaturebyacareful
examinationofthewholescopeofthestatute,thepurposeit
seekstoserveandtheconsequencesthatwouldflowfrom

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theconstructiontobeplacedthereon.Theword`shall',
therefore,oughttobeconstruednotaccordingtothe
languagewithwhichitisclothedbutinthecontextinwhich
itisusedandthepurposeitseekstoserve.Themeaninghas
tobedescribedtotheword`shall;asmandatoryoras
directoryaccordingly.Equally,itissettledlawthatwhena
statuteispassedforthepurposeofenablingthedoingof
somethingandprescribestheformalitieswhicharetobe
attendedforthepurpose,thoseprescribedformalitieswhich
areessentialtothevalidityofsuchthing,wouldbe
mandatory.However,ifbyholdingthemtobemandatory,
seriousgeneralinconvenienceiscausedtoinnocentpersons
orgeneralpublic,withoutverymuchfurtheringtheobjectof
theAct,thesamewouldbeconstruedasdirectory."

[email protected]
Pavani(2009)1SCC714,thisCourtwhiledealingwitha
similarissueheldasunder:

"...Theexpression"may"usedintheopeningwordsofSection
5isnotdirectory,ashasbeensoughttobeargued,but
mandatoryandnon-fulfilmentthereofwouldnotpermita
marriageundertheActbetweentwoHindus.Section7ofthe
1955ActistobereadalongwithSection5inthataHindu
Marriage,asunderstoodunderSection5,couldbe
solemnisedaccordingtotheceremoniesindicatedtherein"

25.Thelawonthisissuecanbesummarisedtotheeffect
thatinordertodeclareaprovisionmandatory,thetesttobe
appliedisastowhethernon-complianceoftheprovision
couldrenderentireproceedingsinvalidornot.Whetherthe
provisionismandatoryordirectory,dependsupontheintent
ofLegislatureandnotuponthelanguageforwhichtheintent
isclothed.Theissueistobeexaminedhavingregardtothe
context,subjectmatterandobjectofthestatutoryprovisions
inquestion.TheCourtmayfindoutaswhatwouldbethe
consequencewhichwouldflowfromconstruingitinoneway
ortheotherandastowhethertheStatuteprovidesfora
contingencyofthenon-complianceoftheprovisionsandasto
whetherthenon-complianceisvisitedbysmallpenaltyor
seriousconsequencewouldflowtherefromandastowhether
aparticularinterpretationwoulddefeatorfrustratethe
legislationandiftheprovisionismandatory,theactdonein

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breachthereofwillbeinvalid.

26.Theinstantcaseisrequiredtobeexaminedinthelightof
theaforesaidsettledlegalprovision.Infact,failureof
issuanceofnoticeunderSectionsection9(3)wouldnotadversely
affectthesubsequentproceedingsincludingtheAwardand
titleofthegovernmentintheacquiredland.Sofarasthe
personinterestedisconcerned,heisentitledonlytoreceive
thecompensationandtherefore,theremaybealarge
numberofdisputesregardingtheapportionmentofthe
compensation.Insuchaneventuality,hemayapproachthe
CollectortomakeareferencetotheCourtunderSectionsection30of
theAct."

151.However,tosaythatconfiscationispermissibleonlyinthe
eventoffailuretocomplywithSection129(6)oftheActisnot
tenableinlaw.Atthisstage,wemayrefertoadecisionofthe
KeralaHighCourt,uponwhich,strongreliancehasbeenplaced
bythelearnedcounselappearingforthepetitioners.Weare
referringtothedecisioninthecaseofSectionNoushadAllakkatvs.
StateTaxOfficer(WC),(2019)101taxmann.com75(Kerala).
Relianceissoughttobeplacedonthefollowingobservations;

"7.WenoticefromSection129thattheconfiscation
proceedingsunderSection130wouldbepossibleonlyifthe
dealerfailstopaytheapplicabletaxandpenaltyimposedby
anorderunderSection129(3).Confiscationishencea
coercivemeasuretoensurepaymentofthetaxandpenalty
leviedonadelinquentdealer;whootherwiseisatthreatof
loosingthegoodsitself.Confiscationisnotanautomatic
consequenceensuingfromdetentionandanorderpassed
underSection129(3),oftherebeingacontraventionofthe
provisionsoftheActorrulesmadethereunder.Wewouldnot
lookatothersituations,whereinconfiscationismandated,
whichisnotrelevantforthepurposeofdetentionsimplicitor
underSection129.Whensuchapplicabletaxandpenaltyis
notpaid,therecouldbeproceedingsinitiatedunderSection
130,whichwouldleadtoconfiscationofthegoodsitself.This

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provisionisapplicableonly,intheeventoffailureonthepart
ofthedealertopaytheapplicabletaxandpenalty.Inthe
presentcase,thedealerwasallowedreleaseofthegoodsby
furnishingbankguaranteeforthetaxandpenalty.The
dealerhasalsofurnishedasecurityequivalenttothevalue
ofthegoods.Thereis,hence,noquestionoftheapplicable
taxandpenaltybeingnotpaid,sinceatanytimethebank
guaranteecouldbeenforced."

152.Aclosereadingofpara-7oftheKeralaHighCourtdecision,
referredtoabove,wouldindicatethatthesame,onthecontrary,
supportstheviewwehavetaken.Inpara-7,therelevant
observationsare"wewouldnotlookatothersituationswherein
confiscationismandatedwhichisnotrelevantforthepurposeof
detentionsimplicitorunderSection129".Theothersituations
whichtheKeralaHighCourtistalkingaboutarethesituations
asenvisagedinSection130oftheAct.Inouropinion,para-7of
theKeralaHighCourtjudgmentdoesnotlaydownaproposition
oflawthattheproceedingsunderSection130oftheActcanbe
initiatedonlyintheeventoftheapplicabletaxandpenaltynot
paid.

153.Ithasalsobeenarguedbeforeusbythelearnedcounsel
appearingforthepetitionersbyplacingrelianceonthe
explanation(1)totheprovisionsofSection74oftheActthat
Section130oftheActcannotbeinvokedbythedepartmentfor
thetransactionwithrespecttowhichthetheassesseehas
alreadypaidtheamountoftaxandpenaltyintermsofSection
129oftheAct.

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154.Wearenotimpressedbysuchsubmission.Inouropinion,
theexplanationneitherprovidesthattheconfiscation
proceedingsagainstthepersonconcernedwouldbedeemedtobe
concludednorthattheconfiscationproceedingsagainst"allother
persons"wouldbedeemedtobeconcluded.Itmerelystipulates
thattheproceedingsrelatedtothe"penalty"undertheprovisions
ofSections122,Section125,Section129andSection130oftheActwouldbedeemedto
beconcluded.Inouropinion,theexplanationisnothelpfulto
thepetitionersinanymanner.WeareoftheviewthatSection
130oftheActcanbeinvokedevenincaseswheretheamountof
taxandpenaltyispaidintermsoftheprovisionsofSection129
oftheAct.Thiswouldbeprovided,thecaseisfallinginanyofthe
fiveeventualitiesprescribedinSection130(1)oftheAct.Whenit
comestoconfiscationoverandabovethetaxandpenalty,fine
canbeimposed.Suchfineleviableshallnotexceedthemarket
valueofthegoodsconfiscated,andatthesametime,the
aggregateofsuchfineandpenaltyleviablewillnotbelessthan
theamountofpenaltyleviableundersub-section(1)ofSection

129.

155.WeareatonewithMr.Trivedi,thelearnedAdvocate
GeneralappearingfortheStatethatitisincorrectonthepartof
thepetitionerstocontendthattheprovisionsofSections129and
Section130oftheActaresub-setsofSection122oftheAct.Rather,the
saidSections129andSection130oftheActcanbeinvokedforthe
eventualitieswhicharenotmentionedinSection122oftheAct
andhence,thesamecannotbesaidtoberelatedtothe
provisionsofSection122oftheAct,exceptforquantificationof

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theamountofpenalty.Inadditiontothis,itisalsonotcorrecton
thepartofthePetitionerstocontendthattheprovisionsof
Section122oftheActaregeneralinnatureandtheprovisionsof
Sections129andSection130arespecificinnatureandhence,
non-obstanteclausesofthesaidsectionswouldoverridethe
provisionsofSection122oftheAct.Thesaidargumentfallsflat
onthebasicgroundthattheprovisionsofSections129andSection130
oftheActthemselvesrefertotheprovisionsofSection122ofthe
Act,soastodecide/computetheamountofpenaltytobe
imposedupontheAssessees.Thus,oncethereisnoconflict
betweentheprovisionsofSection122oftheActononehandand
Sections129andSection130oftheActontheother,therearisesno
questionofinvocationof'non-obstante'clauseinsucha
situation.

156.WearealsoatonewithMr.Trivedithatreferenceto
Sections73andSection74oftheActisnotwarrantedforinterpreting
Sections129andSection130oftheAct,moreparticularly,whentheyall
areindependentofeachother.TheprovisionsofSections73and
Section74oftheActaresimilartotheprovisionsofSection11Aofthe
CentralExciseActandSection28oftheCustomsAct,whichdeal
withtheadjudicationproceedings.Despitethis,Section110is
presentintheSectionCustomsAct,whichspeaksaboutseizureand
similarly,Section129ispresentintheActfordetention/seizure.
Therefore,Sections129andSection130oftheActhavenon-obstante
clauses,wherebytheycanbeoperateduponinspiteofSections
73andSection74oftheAct.

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157.Intheaforesaidcontext,wemaylookintothedecisionof
theSupremeCourtinthecaseofSectionSalexTaxOfficerOrs.vs.
DuttaTraders,(2007)14SCC215,uponwhichstrongreliance
hasbeenplacedbyMr.Trivedi,moreparticularly,the
observationsmadeinparas-16and17.Wequoteparas-16and
17asunder;

"16.Itiswellsettledthattheconceptsofchargeability,
assessment,quantificationandrecoveryoftaxare
independentconceptsunderanytaxinglaw.Section12of
theActreferstoassessmentwhereasprovisionsafterSection
15ofthesaidActreferstorecoveryandcollectionoftax.The
schemeoftheAct,therefore,isbasedonthedichotomy
betweenassessmentononehandandrecoveryoftaxonthe
otherhand.UnderSection12,theassessingofficerhasto
examinethereturns.Hemayacceptthereturns.Ifhefinds
thatthereturnsarenotinorder,subjecttogivingnoticetothe
assessee,heisentitledtopassappropriateassessment
orders.However,incasesfallingunderSection16-Dwhere
evasionisdetectedatthecheck-postbytheSalesTaxOfficer
(Vigilance)andinordertogetthegoodsreleased,which
goodshavebeenseizedbythesaidofficer,theperson(s)
namedinthesectionofferstopaythetax,then,insucha
case,theSalesTaxOfficerisexpresslygiventheauthorityto
computethetaxandcalluponsuchperson(s)tomakethe
payment.Onsuchpaymentoftaxtogetherwithpenalty,the
SalesTaxOfficer(Vigilance)isrequiredtoreleasethegoods
whichhavebeenseized.Henceitisthecaseofcomputation
oftaxofandincidentaltotherecoveryoftaxonthespot.

17.Themainargumentadvancedonbehalfofthe
respondentisthattheSalesTaxOfficer(Vigilance)hasno
powertoassessthetax.Itiscontendedthatthepowerto
assesstaxexistsonlyinSection12oftheAct.Itiscontended
thattheSalesTaxOfficer(Vigilance)whocarriesoutsearch
andwhoseizesthegoodsunderSection16-Dhasnopower
toassessthetaxand,inthecircumstances,thesaidofficer
canonlycarryoutthesearch,seizethetruckandgoodsand
referthemattertotheassessingofficerwhois,thereafter,

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requiredtocarryouttheassessmentproceedingsagainstthe
defaulter.Wefindnomeritinthisargument.Theword
`assess'inSection16-Dhasdifferentconnotation.Inour
view,theword`assess'inSection16-Dtalksabout
computation.Computationisalsoassessment.Section16-D
isaCodebyitself.Itoperatesinadifferentsphere.Under
Section12oftheAct,theassessingofficeranalyzesthe
returnswhicharefiledbythedealerwhereasincasesfalling
underSection16-Dwheretheassesseeofferstopaythetax
onthespotforreleaseofhisgoods/vehicle,theSalesTax
Officer(Vigilance)isrequiredtocalculate/computethetax
and,onpaymentoftax,heallowsthegoods/trucktobe
released.Inourview,thiscomputationundertakenbythe
SalesTaxOfficer(Vigilance)onthespotisalsoan
assessment.However,thatassessment(computation)ofthe
taxhasnothingtodowiththeregularassessmentunder
Section12oftheAct."

158.Inmanymattersofthepresenttype,wehavenoticedthat
thegoodsaredetainedonthegroundthatthetaxpaidonthe
productwasless.Insuchmatters,althoughthedocumentswere
foundtobeinorderandthedescriptionoftheproductalso
accordedwiththerelevantdeclaration,stilltheconsignmentwere
detainedonthegroundthatthetaxpaidwasless.

159.Inouropinion,thedetentionandseizureofgoodsonsuch
groundcannotbejustified.Insuchaneventuality,thecorrect
procedurewhichtheinspectingauthorityisexpectedtofollowis
toalerttheAssessingAuthoritytoinitiatetheproceedings"for
assessmentofanyallegedsaleatwhichthedealerwillhavehis
opportunitiestoputforwardhispleasonlawandonfact.What
wewanttoconveyisthattheprocessofdetentionofthegoods
cannotberesortedtowhenthedisputeisbonafideespecially
concerningtheexigibilityoftaxand,moreparticularly,therateof

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thattax.Intheaforesaidcontext,wemayrefertoandrelyupona
decisionoftheKeralaHighCourtinthecaseofN.V.K.
MohammedSulthanRawtgerSonsDindigul,TamilNadu,
RepresentedbySectionManagingPartner,RajaMohammedOrs.,
vs.UnionofIndiaOrs.,reportedin(2019)61GSTR307,
whereinalearnedSingleJudgeoftheKeralaHighCourtobserved
asunder;

"24.DetentionundertheKSGSTActhasanelaborate
remedialmechanism.Now,wefocusonthereleaseofthe
product,anditliesinnarrowconfines.Sufficeitformeto
examinethissingularissue:CantheStateTaxOfficerinvoke
Section129oftheActanddetaingoodsonthegroundthetax
paidontheproductisless?Here,thedocumentsareinorder
andtheproductdescriptionaccordswithwhatthefirst
petitionerhasalreadydeclared,say,inhisreturnsbeforethe
assessingauthority.Then,cantheASTOstillholdupthe
consignmentbecausethedeclarationalreadymadedoesnot
suithisnotionofwhattheproductis?

25.True,aliteralreadingofSection129oftheActpresentsa
differentpictureand,perhaps,lendssupporttotheState's
view.Butpurposiveinterpretationandthepractical
commercialconsiderationstrumpthatview.

26.ChapterXVIoftheCombinedActsdealswithinspection,
search,andseizure.Section129underChapterXIXprovides
themechanismfordetention,seizure,andreleaseofgoods
andconveyancesintransit.Itbeginswithanon-obstante
clauseandgoesontolaydowntheprocedure.Ifanyperson
transportsorstoresanygoods"contraveningthisAct"orits
rules,allthosegoodsandmeansoftransportanddocuments
relatingtothosegoodsandconveyancewillbedetainedor
seized.Theywill,however,bereleasedtotheownerofthe
goods(a)onitspayingtheapplicabletaxandpenaltyequal
toonehundredpercentofthetaxpayableonthegoods.Ifthe
goodsbelongtoanexemptedcategory,adifferentrate
applies,though.

27.TheRevenueassertsthatthereis"contravention",and

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thatcontraventionconcernsmisbrandingtheproductand
payinglesstax.UndertheerstwhileKeralaValueAddedTax
Act,thefirstpetitionerandthosetradinginthesame
product--betelnut--havehadmanyroundsoflitigation.
Eventually,asseenfromtheExts.P1toP5proceedings,this
CourtandtheRevenueacceptedthattheproductisnot
suparianditattractslessertax.TheExts.P6,P6(a),P7,and
P7(a)arethefirstpetitioner'spurchaseandsupplyinvoices.

28.TheExts.P8andP8(a)areimportant;theyarethefirst
petitioner'srecentGSTreturnsforJuneandAugust,2018.In
thosereturns,thefirstpetitionerhasassignedthesameHSN
Code,ashedidreflectintheExt.P9invoice.Hepaidtaxonly
at5%.Thusthedocumentsbeforetheassessingauthority
andthosethataccompaniedtheconsignmentaccordwith
oneanother.

29.Inthiscontext,wemayexamineSectionJ.K.SyntheticsLimited
v.CommercialTaxesOfficer,(1994)4SCC276.Onhowto
interpretTaxStatutes,theSupremeCourthasheldthat
chargingprovisionsmustbeconstruedstrictly,butnotthe
machineryprovisions,"whichshouldbeconstruedlikeany
otherstatute".Ithasalsoheldthat"thepowertolevyand
collectinterestissubstantivelawthoughpartofmachinery
provision".

30.InJ.K.SyntheticsLimitedtheissuewaswhetherthe
appellantshouldpayinterestontheadditionalsalestax.The
Revenue,asithasdonehere,contendedthatwhenthelaw
enjoinsontheAssesseetofilesa'return',itcanonlymeana
trueandcorrectreturn,thatis,areturnwhichreflectsthetax
dueonfinalassessment.TheSupremeCourtinthatcontext
hasheldthattheinformationtobefurnishedinthereturn
"mustbe'correctandcomplete',thatis,trueandcompleteto
thebestofknowledgeandbelief,withoutthedealerbeing
guiltyofwillfulomission."Thedealer,accordingtoJ.K.
SyntheticsLimited,mustdepositthefulltaxdue,basedon
theinformationfurnished.Andthatinformationmustbe
correctandcompletetothebestofthedealer'sknowledge
andbelief.Ifthedealerhasfurnishedfullparticulars
regardinghisbusiness,withoutwillfullyomittingor
withholdinganyparticularinformationaffectingthe
assessmentoftax,andifhehonestlybelievestobe'correct
andcomplete',thedealerissaidtohaveacted'bonafide'in

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depositingthetaxdueandfilingthereturn.Ofcourse,thetax
sodepositedistobedeemedtobeprovisionalandsubjectto
necessaryadjustmentsunderthefinalassessment.

31.Tosupportitsratio,J.K.SyntheticsLimitedacceptsthe
minorityofviewinAssociatedCementCo.Ltd..v.CTO,
(1981)4SCC578Andithasfinallyheldthatiftheassessee
paysthetax,whichaccordingtohimisduebasedonthe
informationsuppliedinhisreturn,therewouldbenodefault
onhisparttomeethisstatutoryobligation.Therefore,it
wouldbedifficulttoholdthatthe'taxpayable'byhim'isnot
paid'andthatheisliableforconsequences.

32.ThecorrectnessoftheExts.P8andP8(a)accepted,as
heldinJ.K.SyntheticsLimited,wewillexaminewhat
amountstostatutoryviolationorcontraventionunderSection
129oftheAct.AptisthecasedecidedbythisCourt:SectionRamsv.
SalesTaxOfficer.ThepetitionerinRamscontractedwiththe
GovernmentofIndiatoprintandsupplyalargenumberof
telephonedirectories.Forthispurpose,heprocuredpaper
fromtheTamilNadugovernmentagency.Whenthepaper
wasundertransport,atKochiasalestaxofficerdetainedthe
lorry,underSection29A(2)oftheKeralaGeneralSalesTax
Act,1963.

33.Thedetentionwasbecausethepetitioner,an
unregistereddealer,hadallegedlyattemptedtoevadethe
salestax.Thepetitioner'sproducingallthedocumentshad
noimpact.Instead,thedetainingofficerinsistedonthe
petitioner'sfurnishingbankguaranteeforcertainsumasa
conditionforreleaseofthegoods,pendingenquiry.

34.TheorderinenquiryaffirmedthattheEnquiryOfficer
was"satisfied"thattherewasattemptatevasionoftax.So
thepenaltyfollowed.Inthiscontext,alearnedSingleJudge
ofthisCourthasobservedthatwhenthereisscopefora
genuinedisputeregardinganyliabilityfortax,thequestionof
detainingthegoodsatthecheck-postorimposingpenalty
underSection29Adoesnotarise.Thereisagroundfora
genuinedisputewhethertherewasanytaxablesaleatall.
Rams,then,furtherobserves:

"Insuchcasesitisnotforthecheck-postauthoritytoacton
meresuspicionandtofindthatthereisanyattemptat
evasionofpaymentoftax,whichalonevestshimwiththe

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jurisdictiontoactunderSectionS.29A.Atbest,hecanonlyalertthe
assessingauthorityinErnakulamtoinitiateproceedingsfor
assessmentofanyallegedsale,atwhichthepetitionerwill
haveallhisopportunitiestoputforwardhispicasonlawand
onfact.Theprocessofdetentionofthegoodsatthecheck
post,cannotberesortedtoinsuchcaseswhenthereisa
bonafidedisputeregardingtheveryexistenceofasaleand
exigibilityfortax.S.29Aisnotintendedtosubservesuchan
object.

35.ImayexaminetheimpugnedExt.P11notice,orinother
wordstheactofdetention,inthelightofthedictainJ.K.
SyntheticsLimitedandRams.Intheformer,theSupreme
Courthasemphaticallyheldthatifthedealerfurnishesall
particularsabouthisbusiness,assessesthetaxashe
honestlybelievestobecorrect,andpaysit;hisconduct
cannotbefaultedasmalafideorasanefforttoevadetax.
Here,theExts.P8andP8(a)arethereturnsfortworecent
months.ThefirstpetitionerdeclaredtheHSNCodehehas
felthisproductwouldattractandpaidthetaxaccordingly.
Thereturnsareverymuchonrecordbeforetheassessing
officer.Therefore,tothatextentthefirstpetitioner'sconduct
cannotbefaulted,norcanhebeaccusedofevadingthetax.

36.Then,ImayexaminethedictumofRams,ajudgment
renderedbythisCourt.Insomewhatananalogoussituation
aswefacehere,Ramsheldthattheinspectingauthoritymay
entertainasuspicionthatthereisanattempttoevadetax.
Butiftherecordsheseizestrulyreflectthetransactionand
theassessee'sexplanationaccordswithhispastconduct,for
example,thereturnshehasfiledearlier,thedetentionisnot
theanswer.InthewordsofRams,atbesttheinspecting
authoritycanalerttheassessingauthoritytoinitiatethe
proceedings"forassessmentofanyallegedsale,atwhich
thepetitionerwillhaveallhisopportunitiestoputforward
hispleasonlawandonfact."Indeed,emphaticisthe
enunciationoflawinRamsthattheprocessofdetentionof
thegoodscannotberesortedtowhenthedisputeisbona
fide,especially,concerningtheexigibilityoftaxand,more
particularly,therateofthattax."

160.Weareinfullagreementwiththeaforesaidenunciationof

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lawlaiddownbytheKeralaHighCourt.Thus,inacaseofa
bonafidedisputewithregardtotheclassificationbetweenthe
transporterofthegoodsandtheSquadOfficer,theSquadOfficer
mayinterceptthegoods,detainthemforthepurposeof
preparingtherelevantpapersforeffectivetransmissiontothe
jurisdictionalAssessingOfficer.ItisnotopentotheSquad
Officertodetainthegoodsbeyondareasonableperiod.The
processcan,atbest,takeafewhours.Itgoeswithoutsaying
thattheperson,whoisinchargeoftransportation,willhaveto
necessarilycooperatewiththeSquadOfficerforpreparingthe
relevantpapers.[SeeJeyyamGlobalFoods(P.)SectionLtd.vs.Unionof
IndiaOrs.,(2019)64GSTR129(Mad.)]

161.Inthecourseofthehearingofthesematters,anattempt
wasalsomadeonbehalfofthelearnedcounselappearingforthe
petitionerstocomparetheprovisionsoftheSectionCustomsAct/SectionExcise
ActwiththeprovisionsoftheAct,2017,moreparticularly,
Section129oftheAct.

162.Section110(1)oftheCustomsActcannotbecomparedwith
Section129(1)oftheActinasmuchas,theprovisionsofSection
110oftheCustomsActcontemplatesthattheproperofficermay
seizethegoodswhichareliableforconfiscation,whereasthe
provisionsofSection129contemplatethattheproperofficermay
detain/seizethegoods/conveyanceintransitincontraventionof
theprovisionsoftheActortheRules.

163.TheprovisionsofSections110(2)andSection124respectivelyofthe

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CustomsActdonotcontemplatethatthegoodswhichareseized
aretobereleasedinaspecifictimelimit,muchless,withina
periodofsixmonths.Aproposthis,thesaidsectionsmerelycast
adutyonthedepartmenttoissueashowcausenoticewithina
periodofsixmonthsfromthedateoftheseizureofthegoods,
butthesamedoesnotcontemplateastoinhowmuchtime,the
samehastobeadjudicatedupon.Therefore,thecontention
raisedonbehalfofthePetitionersthatthegoodswhichareseized
aretobereleasedwithinashortspanoftimeandthatthe
legislaturehasnotcontemplatedtoretainthegoodspendingthe
confiscationproceedings,isnottenable.

164.Inadditiontotheabove,evenotherwise,theprovisionsof
Section110AoftheCustomsAct,whichdealwiththe'provisional
release'ofthegoods,donotcontemplatethereleaseofthegoods
onlyonpaymentofpenaltyandinterestbut,theproposed
amountoffineisalsotobeincludedfortheprovisionalreleaseof
thegoods.Inviewofthis,theamountoffineshouldbetakeninto
accountwhiledirectingtheprovisionalreleaseofthe
goods/conveyanceasperSection129(2)readwithSection67(6)
oftheActreadwithRule-140oftheRules.

165.Weshallnowproceedtodealwiththelastsubmissionas
regardsthephysicalavailabilityofthegoodsandtheconveyance
forthepurposeofredemptionoffine.Thissubmissionhasbeen
canvassedbyMr.P.M.Dave,thelearnedcounselappearingfor
thewritapplicantsoftheSpecialCivilApplicationNo.9105of
2019.TheargumentofMr.Daveisthattheconceptof

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redemptionfineisembodiedinSection130oftheAct.Evenwhile
orderingconfiscation,theofficerconcernedhastogive,theowner
ofthegoods,anoptiontopay,inlieuofconfiscation,suchfineas
thesaidofficermaydeemfit.Thisiscalledtheconceptof
redemptionoffine.Itissubmittedthattheconceptof
redemptionfinearisesintheeventthegoodsareavailableand
aretoberedeemed.Ifthegoodsarenotavailable,thereisno
questionofredemptionofthegoods.Therefore,accordingtoMr.
Dave,oncethegoodsarereleaseduponpaymentoftaxand
penaltyunderSection129oftheAct,thenthegoodsarenot
availablewiththeauthorityforthepurposeofredemptionfine.
Therefore,accordingtoMr.Dave,thereisnoquestionof
proceedingfurtherunderSection130oftheActforthepurpose
ofconfiscation.Mr.Dave,insupportoftheaforesaid
submission,hasplacedrelianceonthefollowingdecisions;

"(1)InthecaseofCommissionerofCustoms(import),
Mumbaivs.FinesseCreationInc.,reportedin2009(248)
ELT122(Bom.);

(2)CommissionerofCustoms,Amritsarvs.Raja
Impex(P.)Ltd.,2008(235)ELT623(Tri.-LB)

166.InFinesseCreationInc.(supra),theBombayHighCourt
heldasunder;

"4.CESTATinitsorderreliedonthejudgmentofthePunjab
HaryanaHighCourtinthecaseofCommissionerof
Customs,AmritsarVs.RajaImpex(P)Ltd.2008(229)ELT
185(PH).ThelearnedDivisionBenchamongstothers,
wasconsideringthesubstantialquestionoflaw,namely

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whetherredemptionfineunderSectionsection125oftheCustoms
Act,1962canbeimposedevenifthegoodsareneither
availableforconfiscationnorclearedonundertaking/bond.

Afterconsideringthevariouscontentionsandjudgments
reliedupon,thelearnedDivisionBenchofthePunjab
HaryanaHighCourtupheldtheorderofthetribunalthatin
theabsenceofthegoodsbeingavailablenofinecanbe
imposed.Revenuehadreliedonthejudgmentofthe
SupremeCourtinWestonComponentsLtd.Vs.
CommissionerofCustoms,NewDelhi2000(115)E.L.T.278
(S.C.).TheSupremeCourttherenotedthatthegoodswere
releasedontheapplicationbytheappellantandappellant
executedabond.Thecourtthenobservedthatinthese
circumstances,ifsubsequentlyitisfoundthattheimport
wasnotvalidorthattherewasanyotherirregularitywhich
wouldentitlethecustomsauthoritiestoconfiscatethesaid
goods,thenthemerefactthatthegoodswerereleasedon
thebondbeingexecuted,wouldnottakeawaythepowerof
thecustomsauthoritiestolevyredemptionfine.The
contentiontherefore,oftheappellantstherethatthe
redemptioncannotbeimposedbecausethegoodswerenot
availableforcustodyoftherespondentauthoritieswas
rejected.

5.Inouropinion,theconceptofredemptionfinearisesin
theeventthegoodsareavailableandaretoberedeemed.If
thegoodsarenotavailable,thereisnoquestionof
redemptionofthegoods.UnderSection125apoweris
conferredontheCustomsAuthoritiesincaseimportof
goodsbecomingprohibitedonaccountofbreachofthe
provisionsoftheAct,rulesornotification,toorder
confiscationofthegoodswithadiscretionintheauthorities
onpassingtheorderofconfiscation,toreleasethegoodson
paymentofredemptionfine.Suchanordercanonlybe
passedifthegoodsareavailable,forredemption.The
questionofconfiscatingthegoodswouldnotariseifthere
arenogoodsavailableforconfiscationnorconsequently
redemption.Oncegoodscannotberedeemednofinecanbe
imposed.Thefineisinthenatureofcomputationtothe
stateforthewrongdonebytheimporter/exporter.

6.Inthesecircumstances,inouropinion,thetribunalwas
rightinholdingthatintheabsenceofthegoodsbeing

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availablenofineinlieuofconfiscationcouldhavebeen
imposed.Thegoodsinfacthadbeenclearedearlier.The
judgmentinWeston(supra)isclearlydistinguishable.In
ouropinion,therefore,thereisnomeritinthequestionsas
framed.Consequentlyappealstandsdismissed."

167.InRajaImpex(supra),thePunjabHaryanaHighCourt
heldasunder;

"11.Therespondentinthepresentcasetookclearanceof
importedmachineryunderBillofEntryNo.1546dated
04.12.2004.Theshowcausenoticewasissuedsubsequently
on31.03.2005andtheAdjudicatingAuthorityordered
confiscationofmachineryunderSection111oftheActand
imposedredemptionfineandpenalty.Sincethegoodshad
beenreleasedunconditionallyandwerenotavailable,those
couldnotbeconfiscated.TheCommissionerofCustoms
foundthatproceedingsfortheconfiscationofgoodswere
invalidastheyhadbeeninitiatedbyissuingshowcause
noticeafterclearanceofthegoodsandthereisnoaverment
intheshowcausenotice,whichmayshowthatthe
appellantsweretheownersofthegoodsatthetimeof
issuingoftheshowcausenotice.TheCommissionerof
Customsalsofoundthatthegoodswerenotavailableandno
undertakinghadbeenobtainedbythedepartmentatthe
timeofreleaseofgoodsandtherefore,confiscationofthe
goods,cannotbemaintainedandnofineinlieuof
confiscationcanbeimposedespeciallywherethegoodswere
neitherseizednorclearedonundertaking.Whilepassingthe
saidorder,theCommissionerofCustomshasrelieduponthe
observationsofHon'bleApexCourtinthecaseofM/s
WestonComponentsLtd.Vs.CommissionerofCustoms,
NewDelhi(supra),RamKhazanaElectronicvs.CC
(AIRCargo)Jaipurreportedas2003(156)ELT122
(Indel)andChinkuExportsvs.CC,Calcuttareportedas
1999(112)ELT400(Tri.).BeforetheTribunal,the
contentionoftherevenuewasthatevenincaseswherethe
goodsarenotavailable,orderofconfiscationcanbepassed.

However,theTribunalvideimpugnedorder,relieduponthe
observationoftheHon'bleApexCourtinthecaseofM/s
WestonComponentsLtd.Vs.CommissionerofCustoms,

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NewDelhi(supra)andthejudgmentoftheTribunalinthe
caseofSectionRamKhazanaElectronicv.CC(AirCargo),
Jaipur(supra)andheldthatthereisnoerrorinthe
impugnedorders,whicharebaseduponthejudgmentofthe
Hon'bleApexCourt.

12.ItmayalsobenoticedherethatinthecaseofM/s
WestonComponentsLtd.Vs.CommissionerofCustoms,
NewDelhi(supra),thegoodswerereleasedtotheassessee
onanapplicationmadebyitandontheexecutionofabond
bytheassesseeandinthosecircumstances,theHon'ble
ApexCourtheldthatthemerefactthatthegoodswere
releasedonthebondbeingexecutedwouldnottakeaway
thepowerofcustomauthoritytolevyredemptionfine.A
readingofthejudgment/orderoftheHon'bleApexCourtin
M/sWestonComponentsLtd.Vs.Commissionerof
Customs,NewDelhi(supra),wouldshowthattheApex
Courthastakentheviewthatredemptionfinecanbe
imposedevenintheabsenceofthegoodsasthegoodswere
releasedtotheappellantonanapplicationmadebyitandon
theappellantexecutingabond.Sincethegoodswere
releasedonabondthepositionisasifthegoodswere
available.Theratiooftheabovedecisioncannotbe
understoodthatinallcasesthegoodswerepermittedtobe
clearedinitiallyandlaterproceedingsweretakenfor
under-valuationorotherirregularity,eventhenredemption
finecouldbeimposed.Weare,therefore,notinclinedto
acceptthecontentionraisedbytheappellantonthisissue
andsetasidetheredemptionfine.

13.Therelianceoflearnedcounselfortherevenueuponthe
provisionsofSection125oftheActisalsomisconceived.
Section125oftheActisapplicableonlyinthosecaseswhich
havebeenclearedbytheconcernedauthoritiessubjectto
furnishingundertaking/bondetc.However,inthepresent
case,admittedly,thegoodswereclearedbythe
respondent-authoritieswithoutexecutionofany
bond/undertakingbytheassessee.Thus,inviewofthefact
andcircumstancesofthecase,wefindnoerrorinthe
impugnedorders.Nosubstantialquestionoflawarisesfor
ourdeterminationinthepresentappealandthesameis
herebydismissed.."

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168.Theprinciplediscerniblefromtheaforesaidtwodecisionsis
thattheredemptioncannotbeimposedifthegoodsarenot
available.Redemptioncanbeimposedprovidedthegoodswere
handedovertotheowneruponexecutionofany
bond/undertaking.

169.IntheSupremeCourtdecision,thegoodswerereleasedon
executionofbond.However,later,whenthesaidgoodsbecame
liableforconfiscation,andthegoodswereavailable,ithasbeen
heldthatthepoweroftheCustomsAuthoritytoconfiscatethe
goods,orinlieuthereof,toreleasethesameonpaymentof
redemptionfineisnottakenawaymerelybecausethegoodswere
initiallyreleasedonexecutionofbond/undertaking.Inthetwo
HighCourtdecisions,thegoodswerenotavailablefor
confiscation,andinsuchcircumstances,therewasneithera
questionofconfiscationofgoodsnorredemptionthereof.
AccordingtoMr.Trivedi,ifthegoodsareunderseizure,orthey
wereclearedonunderstandingthatthesamewouldbemade
availableincaseoforderofconfiscationthereof,theninthat
case,thegoodscaneitherbeconfiscatedorredeemed(released)
onpaymentoffineinlieuofconfiscation,providedtheyare
availableatthattime.Inspiteofhavingreleasedthegoodson
executionofbondandundertaking,,ifthesamearenotmade
availabletotheauthoritiesatthetimeofconfiscation
proceedings,theninthatcase,thoughconfiscationor
redemptionmaynotbephysicallypossible,thetermsofthebond
andundertaking/bankguaranteecanbeenforcedbyseekingto

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recoverthefullvalueofthegoods.Hence,innutshell,itcouldbe
saidthatifthegoodsareavailableforconfiscation,thenonlythe
questionofgivinganoptionofredemptionfineinlieuof
confiscationarisesandnotincaseswherethegoodsarenot
availableforconfiscation.

170.Atthisstage,wemustlookintothedecisionofthe
SupremeCourtinthecaseofSectionWestonComponentsLtd.vs.
CommissionerofCustoms,NewDelhi,2000(115)ELT278
(S.C.),whereintheSupremeCourt,inaveryshortorder,has
observedasunder;

"tiscontendedbythelearnedcounselfortheappellant
thatredemptionfinecouldnotbeimposedbecausethe
goodswerenologerinthecustodyofthe
respondent-authority.Itisanadmittedfactthatthe
goodswerereleasedtotheappellantonanapplication
madebyitandontheappellantexecutingabond.
Underthesecircumstancesifsubsequentlyitisfound
thattheimportwasnotvalidorthattherewasany
otherirregularitywhichwouldentitlethecustoms
authoritiestoconfiscatethesaidgoods,thenthemere
factthatthegoodswerereleasedonthebondbeing
executedwouldnottakeawaythepowerofthecustoms
authoritiestolevyredemptionfine."

171.Wearenotimpressedwiththeaforesaidsubmissionas
regardsredemptionoffineintheabsenceofthegoods.

172.Section130(2)hasprovidedforanoptiontopayfineinlieu
ofconfiscation.Section130(2)alongwiththethreeprovisosreads
asunder;

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"130(2):-Wheneverconfiscationofanygoodsorconveyance
isauthorisedbythisAct,theofficeradjudgingitshallgiveto
theownerofthegoodsanoptiontopayinlieuof
confiscation,suchfineasthesaidofficerthinksfit:
Providedthatsuchfineleviableshallnotexceedthemarket
valueofthegoodsconfiscated,lessthetaxchargeable
thereon:

Providedfurtherthattheaggregateofsuchfineandpenalty
leviableshallnotbelessthantheamountofpenaltyleviable
undersub-section(1)ofSectionsection129:

Providedalsothatwhereanysuchconveyanceisusedfor
thecarriageofthegoodsorpassengersforhire,theownerof
theconveyanceshallbegivenanoptiontopayinlieuofthe
confiscationoftheconveyanceafineequaltothetaxpayable
onthegoodsbeingtransportedthereon."

173.Themeaningofthenoun"redemption"asfoundinthe
"CompactOxfordDictionary,ThesaurusandWordpowerGuide",
(Ninthimpression-2004)(DictionaryEditor:CatherineSoanes)",
whichmeans,"theactionofredeemingorthestateofbeing
redeemed".Thus,anyredemptionisnotnecessarilyconfinedto
thegoodsinquestion,buttheredemptioniswithregardtothe
conductaswell.

174.Theper-requisiteformakinganofferoffineunderSection
130oftheActispursuanttothefindingthatthegoodsareliable
tobeconfiscated.Inotherwords,ifthereisnoauthorisationfor
confiscationofsuchgoods,thequestionofmakinganofferbythe
properofficertopaythe"redemptionfine",wouldnotarise.
Therefore,thebasicpremiseuponwhichthecitadelofSection
130oftheActrestsisthatthegoodsinquestionareliabletobe
confiscatedundertheAct.It,therefore,followsthatwhatis

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soughttobeofferedtoberedeemed,arethegoods,butnotthe
improperconductoftheownertotransportthegoodsin
contraventionoftheprovisionsoftheActortheRules.Wemust
alsobareinmindthattheownerofthegoodsisliabletopay
penaltyunderSection122oftheAct.Thefinecontemplatedisfor
redeemingthegoods,whereastheownerofthegoodsispenalized
underSection122fordoingoromittingtodoanyactwhich
renderedsuchgoodsliabletobeconfiscatedunderSection130of
theAct.Intheaforesaidcontext,wemayrefertoandrelyupona
decisionoftheMadrasHighCourtinthecaseofM/s.Visteon
AutomotiveSystemsvs.TheCustoms,ExciseServiceTax
AppellateTribunal,C.M.ANo.2857of2011,decidedon11th
August,2017,whereinthefollowinghasbeenobservedin
para-23;

"23.ThepenaltydirectedagainsttheimporterunderSection
112andthefinepayableunderSection125operateintwo
differentfields.ThefineunderSection125isinlieuof
confiscationofthegoods.Thepaymentoffinefollowedupby
paymentofdutyandotherchargesleviable,asper
sub-section(2)ofSection125,fetchesreliefforthegoods
fromgettingconfiscated.Bysubjectingthegoodstopayment
ofdutyandothercharges,theimproperandirregular
importationissoughttoberegularised,whereas,by
subjectingthegoodstopaymentoffineundersub-section(1)
ofSection125,thegoodsaresavedfromgettingconfiscated.
Hence,theavailabilityofthegoodsisnotnecessaryfor
imposingtheredemptionfine.TheopeningwordsofSection
125,"Wheneverconfiscationofanygoodsisauthorisedby
thisAct....",bringsoutthepointclearly.Thepowertoimpose
redemptionfinespringsfromtheauthorisationofconfiscation
ofgoodsprovidedforunderSection111oftheAct.When
oncepowerofauthorisationforconfiscationofgoodsgets
tracedtothesaidSection111oftheAct,weareofthe
opinionthatthephysicalavailabilityofgoodsisnotsomuch

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relevant.Theredemptionfineisinfacttoavoidsuch
consequencesflowingfromSection111only.Hence,the
paymentofredemptionfinesavesthegoodsfromgetting
confiscated.Hence,theirphysicalavailabilitydoesnothave
anysignificanceforimpositionofredemptionfineunder
Section125oftheAct.WeaccordinglyanswerquestionNo.

(iii)."

175.Wewouldliketofollowthedictumaslaiddownbythe
MadrasHighCourtinpara-23,referredtoabove.

176.WemayalsorefertoandrelyuponaSupremeCourt
decisioninthecaseofSectionM.G.AbrolvsM/S.Shantilal
ChhotalalCo,AIR1965SC197,whereintheSupremeCourt
dealtwiththeverysameissueandheldasunder;

"Anothercontentionraisedfortherespondentisthatthe
AdditionalCollectorcouldnotconfiscatethegoodsafterthey
hadleftthecountryandthatthereforehisorderof
confiscationofthescrapwhichaccordingtohimwasnot
steelskullscrapwasbadinlaw.Theaffidavitfiledbythe
AdditionalCollector,appellantNo.1,mentionsthe
circumstancesinwhichthescrapexportedbyrespondent
wasallowedtoleavethecountry.Itwasallowedtoleavethe
countryaftertheCollectorhadformallyseizeditandafter
theagentsoftheshippingcompanyhadundertakennotto
releasethedocumentsinrespectofthecargotoits
consignees.Thisundertakingmeantthatthecargowould
remainunderthecontrolofthecustomsauthoritiesasseized
cargotillfurtherordersfromtheAdditionalCollector
releasingthecargoandmakingitavailabletotheconsignees
bythedeliveryofthenecessarydocumentstothem.The
documentswereallowedtobedeliveredtothemonthe
applicationoftherespondentsprayingforthepassingonof
thenecessarydocumentstothepurchasersofthegoodsin
Japanandontherespondentsgivingabankguaranteethat
thefullf.o.b.valuetobereleasedfromthesaidparchwould
bepaidtothecustomsauthoritiestowardspenaltyorfinein

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lieuofconfiscationthatmightbeimposeduponthe
respondentsbytheadjudicatingauthority.Thecustoms
authoritieshadseizedthegoodswhentheywerewithintheir
jurisdiction.Itisimmaterialwheretheseizedgoodsbekept.
Inthecircumstancesofthecase,theseizedgoodsremained
ontheshipandwerecarriedtoJapan.Theseizurewaslifted
bytheAdditionalCollectoronlywhentherespondents
requestedandgavebankguarantee.'Theeffectofthe
guaranteewasthatincasetheAdditionalCollector
adjudicatedthatpartofthegoodsexportedwasnotin
accordancewiththelicenceandhadtobeconfiscated,the
respondents,would,inlieuofconfiscationofthegoods,pay
thefineequivalenttotheofthebankguarantee.Section183
oftheActprovidesthatwheneverconfiscationisauthorised
bytheActtheOfficeradjudgingitwouldgivetheownerof
thegoodsoptiontopayinlieuofconfiscationsuchfineasthe
officerthinksfit.Thisoptionwasextendedtotherespondent
atthestagebeforethegoodswerereleasedfromseizure.The
formalorderofconfiscationhadtobepassedafterthe
necessaryenquiryandthereforewhenpassedinthepresent
caseafterthegoodshadactuallyleftthiscountrycannotbe
saidtobeanorderwhichcouldnotbepassedbythe
CustomsAuthorities.I,therefore,donotagreewiththis
contention."

ScopeofinterferencebytheHighCourtunderSectionArticle226of
theConstitutionofIndiaduringthependencyofthe
confiscationproceedings.

177.SectionArticle226oftheConstitutionofIndiaconferspowerupon
theHighCourttoissueordersorwritstoanypersonorauthority
includinginappropriatecases,anyGovernmentwritsinthe
natureofhabeascorpus,mandamus,prohibition,quowarranto
andcertiorarifortheenforcementofanyoftherightsconferred
byPart-IIIorforanyotherpurpose.Similarly,SectionArticle227ofthe
ConstitutionofIndiaconfersthepowerofsuperintendenceover

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alltheCourtsandTribunalsthroughouttheterritoriesinrelation
towhichanyHighCourtexercisesitsjurisdiction.Itisan
acknowledgedpositionoflawthatthepowersoftheHighCourt
underArticles226and227oftheConstitutionofIndiacannotbe
curtailedunderanycircumstanceasthepowerflowsfromthe
Constitutionitself.Nostatutorybarcaneffectthepowerofthe
HighCourtunderArticles226and227oftheConstitutionof
India.

178.Despitesuchwideanduntrammeledpowers,theCourts
haveevolvedcertainself-imposedlimitswhileexercisingthese
powers.TheHighCourts,normally,wouldnotgobeyondthe
justifiedinhibitionsunderanyStatuteexceptwherethereisa
completejettisoningoftheruleoflaworunderexceptional
circumstanceswhichdemandtimelyjudicialinterdict.This
inhibitionisbasicallyordained,keepinginmindthatthereisa
nationalwealbehindanyvalidpieceofLegislationincorporating
andinheringinitselfthesocialobjectivebehindanyLegislation.
Though,nolimitationsorfettershavebeenputonthepowersof
theHighCourtunderArticles226and227oftheConstitutionof
India,astheHighCourtsperformassentinelonthequi-vive,but
suchpowerisnottobeexercisedcasuallyandwithoutcomingto
theconclusionthatnon-exerciseofsuchpowerwouldleadto
positiveinjustice.Timeswithoutnumber,ithasbeenheldbythe
HighCourtsthatonlyunderconditionofapersonestablishing
thatsubstantialinjusticehasorislikelytoensue,such
extraordinarypowerscanbeexercised.Itneedsnoadumbration
bythisdatethattheplenarypowersoftheHighCourthaveonly

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tobeexercisedintheinterestofjustice.

179.Thus,anorderofreleaseofgoodsorconveyancemaybe
passedunderSectionArticle226oftheConstitutionofIndia,even
pendingtheconfiscationproceedings,butonlywhenitis
establishedbeforetheCourtthattheprocedureprescribedand
thelawinthatregardhasbeencompletelyfloutedandthatthere
iscompleteviolationoftheprocedureprescribedforconfiscation,
viz.,noticetotheoffenderbeforeconfiscation,allowinghim
opportunityofgivingwrittenrepresentationandaffordinghearing
ontheissuetohimandthatsuchinjusticecannotberemedied
withouttheexerciseoftheextraordinarypower.

180.NeedlesstostatethatunderSectionArticle226oftheConstitution
ofIndia,theCourtwillnotgointothedisputedquestionoffacts.

181.Thus,thepowersdirectingforreleaseofthevehiclesor
goods,duringthependencyoftheconfiscation,canonlybe
sparinglyexercisedunderextraordinarysituationsand
circumstanceswheninjusticeoccursbecauseofnon-fulfillment
oftheconditionsforconfiscation.

FINALCONCLUSION:-

182.Wewouldsumupourconclusionofthepointsraisedinthe
writapplicationsasfollows;

"(i)Section129oftheActtalksaboutdetention,seizureand
releaseofgoodsandconveyancesintransit.Ontheotherhand,
Section130talksaboutconfiscationofgoodsorconveyanceand

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levyoftax,penaltyandfinethereof.Although,boththesections
startwithanon-obstanteclause,yet,theharmoniousreadingof
thetwosections,keepinginmindtheobjectandpurposebehind
theenactmentthereof,wouldindicatethattheyareindependent
ofeachother.Section130oftheAct,whichprovidesfor
confiscationofthegoodsorconveyanceisnot,inanymanner,
dependentorsubjecttoSection129oftheAct.Boththesections
aremutuallyexclusive..

(ii)Thephrase"withanintenttoevadethepaymentoftax"in
Section130oftheActassumesimportance.Whenthelaw
requiresanintentiontoevadepaymentoftax,thenitisnotmere
failuretopaytax.Itmustbesomethingmore.Theword"evade"
inthecontextmeansdefeatingtheprovisionsoflawofpaying
tax.Itismademorestringentbyuseoftheword"intent".The
assesseemustdeliberatelyavoidthepaymentoftaxwhichis
payableinaccordancewithlaw.However,theelementofmens
reacannotbereadintoSection130oftheAct.

(iii)Forthepurposeofissuinganoticeofconfiscationunder
Section130oftheActatthethreshold,i.e.,atthestageof
detentionandseizureofthegoodsandconveyance,thecasehas
tobeofsuchanaturethatonthefaceoftheentiretransaction,
theauthorityconcernedshouldbeconvincedthatthe
contraventionwaswithadefiniteintenttoevadepaymentoftax.
Theaction,insuchcircumstances,shouldbeingoodfaithand
notbeamerepretence.Inotherwords,theauthoritiesneedto
makeoutaverystrongcase.Meresuspicionmaynotbe

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sufficienttoinvokeSection130oftheActstraightway.

(iv)Iftheauthoritiesareoftheviewthatthecaseisoneof
invokingSection130oftheActattheverythreshold,thenthey
needtorecordtheirreasonsforsuchbeliefinwriting,andsuch
reasonsrecordedinwritingshould,thereafter,belookedintoby
thesuperiorauthoritysothatthesuperiorauthoritycantakean
appropriatedecisionwhetherthecaseisoneofstraightway
invokingSection130oftheAct.

(v)Evenifthegoodsortheconveyanceisreleasedupon
paymentofthetaxandpenaltyunderSection129oftheAct,
later,iftheauthoritiesfindsomethingincriminatingagainstthe
ownerofthegoodsinthecourseoftheinquiry,ifany,thenit
wouldbepermissibletothemtoinitiatetheconfiscation
proceedingsunderSection130oftheAct.

(vi)Section130oftheActisnotdependentonclause(6)of
Section129oftheAct.

(vii)Sections129andSection130respectivelyoftheActaremutually
exclusiveandindependentofeachother.Iftheamountoftaxand
penalty,asdeterminedunderSection129oftheActforthe
purposeofreleaseofthegoodsandtheconveyance,isnot
depositedwithinthestatutorytimeperiod,thentheconsequence
ofthesamewouldbeforfeitureofthegoodsandthevehiclewith
theGovernment.Thisdoesnotnecessarilyimplythatthe
confiscationproceedingscanbeinitiatedonlyintheeventofthe
failureonthepartoftheownerofthegoodsortheconveyancein

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depositingtheamounttowardsthetaxandliabilitydetermined
underSection129oftheAct.

(viii)ForthepurposeofSection129(6)oftheAct,itwouldnotbe
necessaryforthedepartmenttoestablishanyintentiontoevade
paymentoftax.Ifthetaxandpenalty,asdeterminedunder
Section129,isnotdepositedwithinthestatutorytimeperiod,
thenthegoodsandtheconveyanceshallbeliabletobeputto
auctionandthesaleproceedsshallbedepositedwiththe
Government.

(ix)Similarly,thereferencetoSections73andSection74respectively
oftheActisnotwarrantedforthepurposeofinterpreting
Sections129andSection130oftheAct,moreparticularly,whentheyall
areindependentofeachother.TheprovisionsofSections73and
Section74oftheActaresimilartotheprovisionsofSection11Aofthe
CentralExciseActandSection28oftheCustomsAct,whichdeal
withtheadjudicationproceedings.Despitethis,Section110is
presentintheSectionCustomsAct,whichspeaksaboutseizureand
similarly,Section129ispresentintheActfordetention/seizure.
Therefore,Sections129andSection130oftheActhavenon-obstante
clauses,wherebytheycanbeoperateduponinspiteofSections
73andSection74oftheAct.

(x)TheprovisionsofSectionsections73andSection74respectivelyoftheAct
dealwiththe'demandsandrecovery'tobemadebytheassessing
officerbasedupontheassessment,whereastheprovisionsof
Section129oftheActdealwiththe'detention/seizure'.While
assessingthereturns,iftheassessingofficerfindsthatthe

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amountoftaxhasnotbeenpaidorerroneouslyrefunded,or
wheretheinputtaxcredithasbeenwronglyavailedorutilizedfor
anyreason,eitherwithmalafideintentionorwithoutthesame,
asthecasemaybe,theprovisionsofSection73/Section74oftheAct
wouldbeinvoked.However,theprovisionsofSection129ofthe
Actdealwithsituationwheretheevasionoftax/contraventionof
theAct/Rulesisdetectedduringtransititself,requiringthe
adoptionofsummarylikeproceedings.Therefore,thesaid
provisionsoperateindifferentspheres.

(xi)ThecomparisonoftheprovisionsofSectionCustomsAct/SectionExcise
ActononehandandtheprovisionsoftheActontheother,as
soughttobedrawnonbehalfofthewritapplicants,isnot
correct.Section110(1)oftheCustomsActisnotcomparableto
Section129(1)oftheActinasmuchas,theprovisionsofSection
110oftheCustomsActcontemplatesthattheproperofficermay
seizethegoodswhichareliableforconfiscation,whereasthe
provisionsofSection129contemplatethattheproperofficermay
detain/seizethegoods/conveyanceintransitincontravention
oftheprovisionsoftheActortheRules.

(xii)TheprovisionsofSections110(2)andSection124oftheCustoms
Actdonotcontemplatethatthegoodswhichareseizedaretobe
releasedinaspecifictimelimit,muchless,withinaperiodofsix
months.Aproposthis,thesaidsectionsmerelycastadutyonthe
departmenttoissueashowcausenoticewithinaperiodofsix
monthsfromthedateofseizureofgoods,butthesamedoesnot
contemplateastoinhowmuchtime,thesamehastobe
adjudicatedupon.Therefore,thecontentionraisedonbehalfof

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thewritapplicantsthatthegoodswhichareseizedaretobe
releasedwithinashortspanoftimeandthatthelegislaturehas
notcontemplatedtoretainthegoodspendingtheconfiscation
proceedings.isnottenable.Inadditiontotheabove,even
otherwise,theprovisionsofSection110AoftheCustomsAct,
whichdealwiththe'provisionalrelease'ofthegoods,donot
contemplatethereleaseofthegoodsonlyonpaymentofpenalty
andinterestbuttheproposedamountoffineisalsotobe
includedforprovisionalreleaseofthegoods.Inviewofthis,the
amountoffineshouldbetakenintoaccountwhiledirectingthe
provisionalreleaseofthegoods/conveyanceasperSection
129(2)readwithSection67(6)oftheActreadwithRule140of
theRules.

(xiii)Althoughthereisnoseriouschallengetothevalidityofthe
provisionsofSections129andSection130respectivelyoftheAct,yetit
isasettledprincipleoflawthatthepowertolevytaxincludesall
theincidentalpowerstopreventtheevasionofsuchtax.The
powertoseizeandconfiscatethegoodsintheeventofevasionof
taxandthepowertolevypenaltyaremeanttochecktaxevasion
andisintendedtooperateasadeterrentagainstthetax-evaders
andare,therefore,ancillaryorincidentaltothepowertolevytax
onthegoodsandthus,fallwithintheambitandscopeofthe
legislativepowers.

(xiv)Thegoodsarenotliabletobedetainedonthegroundthat
thetaxpaidontheproductwasless.Insuchcircumstances,the
InspectingAuthorityisexpectedtoalerttheAssessingAuthority
toinitiateappropriateproceedings"forassessmentofanyalleged

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saleatwhichthedealerwillhavehisopportunitiestoputforward
hispleasonlawandonfact.Theprocessofdetentionofthe
goodscannotberesortedtowhenthedisputeisbonafide,
especiallyconcerningtheexigibilityoftaxand,moreparticularly,
therateofthattax.

(xv)Evenintheabsenceofthephysicalavailabilityofthegoods
ortheconveyance,theauthoritycanproceedtopassanorderof
confiscationandalsopassanorderofredemptionfineinlieuof
theconfiscation.Inotherwords,evenifthegoodsorthe
conveyancehasbeenreleasedunderSection129oftheActand,
later,confiscationproceedingsareinitiated,theneveninthe
absenceofthegoodsortheconveyance,thepaymentof
redemptionfineinlieuofconfiscationcanbepassed.

(xvi)TheextraordinarypowersunderSectionArticle226ofthe
Constitution,directingforreleaseofthevehiclesorgoods,during
thependencyoftheconfiscation,canonlybesparinglyexercised
underextraordinarysituationsandcircumstanceswheninjustice
occursbecauseofnon-fulfillmentoftheconditionsfor
confiscation.

183.Oneandallshouldbemindfulofthefactthatthecountry
hasaltogetheranewtaxregime.Ithasbeenjusttwoyearssince
thenewtaxregime,intheformofGST,hasbeenimplemented.
Although,thispath-breakingreformmeetsthelongstanding
demandoftradeandindustrytosimplifyandstreamlinethetax
regimeinthecountry,yet,therearemanyissueswhichneedto
beaddressed.Theassesseesneedtobeeducatedsofarasthe

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newtaxregimeisconcerned.Ithasbeenbroughttoournotice
thatthegovernmenthaspreparedtheModelGSTLawinEnglish.
Further,alltheacts,rules,regulationsandFAQregardingGST
areavailableinEnglishlanguage.Entrepreneursofmany
establishmentsinIndiamaynothaveproficiencyinEnglish
languagetounderstandtheModelGSTLawandtherules
associatedwithit.Thegovernmentmusttranslatetheexisting
GSTrulesandregulationsinvernacularlanguagessothatitcan
bebetterunderstoodbyalltheassesses,especiallyintheMSME
sector.

184.Wewouldalsoliketoobservethatanefficientdispute
resolutionmechanismisrequiredtobesetuptosettlethe
disputesinatime-boundmanner.Thegovernmentmayconsider
theformationofdisputeresolutioncommitteesinallthestates
andunionterritoriesforhearingsuchdisputes.These
committeesmustbestaffedwithexpertsfromthelegalandaudit
profession.

185.AsaCourtoflaw,wecanonlyurgetheassesseestokeep
theirtransactionsfairandtransparent.Ifthetransactionsare
fairandtransparent,thenthereshouldbenoroomforany
complaint.Atthesametime,wealsoexpecttheGSTAuthorities
toensurethatnoundueharassmentiscausedtotheassessees.
TheGSTAuthoritiesshouldtrytounderstandthevarious
provisionsoftheActaswellastheRulesinthebestpossible
mannerforthepurposeofsmoothexecutionandimplementation
ofthelaw.Thenewtaxregimeinthecountry,overaperiodof

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time,willprovetobeaneffectiveone,andwiththepassageof
timeandproperimplementationoftheprovisionsoftheAct,the
difficultieswhichtheassesseesarefacingtodaywillgetminimal.
Allthatweintendtosayisthat,inagivesituation,the
authoritiesshouldadoptapracticalapproachtoresolvethe
disputeratherthanenterintoalongdrawnlitigation.The
Governmentshouldstrivehardtoensurethatthelitigation
arisingfromthenewtaxregimegetsminimizedoveraperiodof
time.

186.Weclarifythatwehave,otherwise,notgoneintothemerits
ofthepetitions.Allthepetitionsareatthestageofnoticeforthe
purposeofconfiscation.Inallthecases,thisCourthasordered
interimreleaseofthegoodsaswellastheconveyance.This
releaseissubjecttothefinaloutcomeoftheconfiscation
proceedings.Wehavenotexaminedindividualpetitionforthe
purposeoffindingoutwhetherthenoticeforconfiscationunder
Section130oftheActisjustifiedinthefactsandcircumstances
ofthecaseornot.Wehavelaiddowngeneralprincipleswith
regardtotheapplicabilityofSections129andSection130oftheAct.Let
thesemattersnowbenotifiedbeforetheHon'bleCourttakingup
taxmattersforthepurposeofdecidingwhethertheconfiscation
noticedeservestobequashedandsetasideornot.

(J.B.PARDIWALA,J)

(A.C.RAO,J)

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(PER:HONOURABLEMR.JUSTICEA.C.RAO)

187.Ihavehadthebenefitofgoingthroughthefinalconclusion
drawnbymyLearnedBrotherJusticeJ.B.Pardiwalainthe
judgment,withwhich,Ihaveconcurred.However,Iwouldliketo
addfewwordsofmyownonthesubject.

188.FromtheplainreadingofSections129andSection130oftheAct,
itisclearthatthesuppliersorreceiversofthegoodstransport
anygoodsincontraventionofprovisionsoftheActortheRules
madethereunderareliableforthedetentionorseizureofthe
goodsunderSection129oftheActandunderSection130(i)(v)of
theActforconfiscationofthegoodsandconveyance.Thus,for
thesamebreachand/orcontraventionoftheprovisionsofthe
Act,therearetwotypesofpenaltiesprovidedunderSection129
andSection130(i)(v)oftheAct.

189.Inthisregard,wewouldliketoobserveasheldbythe
SupremeCourtthatitwouldbeimportanttonoticecertainwell
settledcanonsofinterpretationofstatutes.Theprimaryand
foremosttaskofaCourtininterpretingastatute,istoascertain
theintentionofthelegislature,actualorimputed.Having
ascertainedtheintention,theCourtmustthenstrivetoso
interpretthestatuteastopromoteandadvancetheobjectand
purposeoftheenactments.Iftwoconstructionsarepossible
uponthelanguageofthestatute,theCourtmustchoosetheone
whichisconsistentwithgoodsenseandfairness,andeschewthe
otherwhichmakesitsoperationundulyoppressive,unjustor
unreasonableorwhichwouldleadtostrange,inconsistent
resultsorotherwiseintroduceanelementofbewildering

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uncertaintyandpracticalinconvenienceintheworkingofthe
statute.Forthispurpose,wherenecessary,theCourtmayeven
departfromtherulethatplainwordsshouldbeinterpreted
accordingtotheirplainmeaning.Thereneednotbemeekand
mutesubmissionstotheplainnessofthelanguage.Toavoid
patentinjustice,anomalyorasburdity,theCourtwouldwellbe
justifiedindepartingfromtheso-calledgoldenruleof
constructionsoastogiveeffecttotheobjectandpurposeofthe
enactmentbysupplementingthewrittenwordifnecessary.
Thoughnormallyitisnotpermissibletoreadwordsinastatute
whicharenotthere,but,"wherethealternativeliesbetween
eithersupplyingbyimplicationwordswhichappeartohavebeen
accidentlyomittedoradoptingaconstructionwhichdeprives
certainexistingwordsofallmeaning,itispermissibletosupply
thewords."Havingregardtothecontextinwhichaprovision
appearsandtheobjectofstatuteinwhichthesaidprovisionis
enacted,theCourtshouldconstrueitinaharmoniouswayto
makeitmeaningful.Anattemptmustalwaysbemadesoasto
reconciletherelevantprovisionsastoadvancetheremedy
intendedbythestatute.

190.IamoftheviewthattheLegislatureshould,onceagain,
lookintoboththeprovisions,i.e,Sections129andSection130oftheAct
andamendthesectionsaccordinglysoastoremovecertain
inconsistenciesinthetwoprovisions.Letthisaspectbelooked
intobytheStateGovernmentinaccordancewithlaw.

(A.C.RAO,J)
Vahid

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