Section 130: Confiscation of Goods or Conveyance and levy of penalty

What does Section 130 say?

Section 130 of the CGST ACT 2017 deals with the Confiscation of Goods or Conveyance and levy of Penalty and the reference from the Act is hereby described below:

1. Notwithstanding anything contained in this Act, if any person -

(i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

(ii) does not account for any goods on which he is liable to pay tax under this Act; or

(iii) supplies any goods liable to tax under this Act without having applied for registration; or

(iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

(v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.

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

Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:

Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129:

Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given the option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.

3. Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.

4. No order for confiscation of goods or conveyance or for the imposition of penalty shall be issued without giving the person an opportunity of being heard.

5. Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.

6. The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.

7. The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.

Q1. Why Section 130 was introduced?

Ans: Section 130 was introduced with a view to avoid any transportation of Goods using unfair means , where the taxpayer has the intention to evade tax.

Q2.Can a fine be levied on the Owner of the Conveyance?

Ans: The answer to this question is Yes being involvement in such evasion of tax they are also responsible for fine to be levied. The fine shall be leviable equals to the tax payable on goods being transported.

Q3. How much fine shall be levied?

Ans: The fine shall leviable shall not exceed the market value of goods less tax chargeable which shall not be less than the amount of penalty leviable under sub-section (1) of section 129.

Q4. What shall be the Market Value of Goods?

Ans: The market value  as per CGST ACT 2017 shall be the full amount which a recipient of a supply is required to pay in order to obtain goods or services or both of like kind and quality at or about same time and at the same commercial level where the recipient and  the supplier are not related.

Q5. Will a reasonable opportunity be provided?

Ans: No order for confiscation of goods or conveyance or imposition of penalty shall be issued without providing an opportunity of being heard given.

Q6.Can proper officers dispose of confiscated goods or conveyance?

Ans: The Proper officer may after satisfying and providing reasonable time not exceeding three months to pay the fine in lieu of confiscation dispose of such goods or conveyance and deposit sale proceeds to the Government.

Q7. Who shall hold the title of confiscated goods or conveyance?

Ans: The Government shall hold the title of such confiscated goods or conveyance.

Appeal: The appeal against the order passed under section 130 can be filed.

The crux of the act has been answered in the Question and Answer format as described above.

Some judicial decisions

1. Section 130 of the CGST ACT which provides for confiscation of goods or conveyance is not in any manner dependent or subject to Section 129 of the CGST ACT.(M.S. Meghdoot Logistics Vs Commercial Tax Officer).
2. Section 130 of the CGST ACT is altogether an independent provision that provides for the confiscation of goods or conveyance. (Vasu Corporation Vs State of Gujarat).
3. Undervaluation of Goods in the invoice cannot be ground for the detention of the Goods and Conveyance for proceedings to be made in section 129 of the CGST ACT. (K.P. Sugandha Ltd Vs State of Chhattisgarh).
4. Vehicle Presence at different routes cannot be the basis for the detention of goods and the levy of tax and penalty on the same. (M/s Commercial Steel Co Vs Assistant of State Tax).
5. Competent Authority without considering the objection filed by the Assessee passed an order of confiscation of goods and conveyance that deserved to be set aside. (Shree Enterprises Vs Commercial Tax Officer).
6. Mere suspicion is not sufficient evidence to invoke a provision of confiscation.(A.P. Refinery (P) Ltd Vs State of Uttarakhand).

The above article is the author's viewpoint only, please refer to the respective sections, rules framed under GST.