In WP (C) No. 24656 of 2023 -KER HC- Kerala High Court upholds confiscation of goods under Section 130 of CGST Act, rejects need for prior Section 129 proceeding
Justice C.S. Dias [ 27-07-2023]

Read Order: Muhammad Saleem Shemsudeen V. The Enforcement Officer

Chahat Varma

New Delhi, August 21, 2023: In a recent decision, the Kerala High Court has held that the Enforcement Officer was justified in directly invoking Section 130 of the Central Goods and Services Tax Act (CGST Act), without first proceeding under Section 129 of the CGST Act.

The petitioner in this case, had filed the writ petition with the primary aim of quashing a confiscation order issued by the Enforcement Officer. The petitioner, engaged in business activities, had sold 12,860 kg of iron scrap to a GST registered dealer in Goa. This transaction involved the movement of goods through a conveyance accompanied by an E-way bill. However, while the consignment was en route in Kayamkulam, the Enforcement Officer intercepted the conveyance and served notices to the driver, initiating a physical verification process of both the conveyance and the goods, as well as the related documents. Subsequently, the Enforcement Officer issued a notice in GST MOV-10, requiring the petitioner to provide reasons why the goods and the conveyance should not be subject to confiscation. The allegation made was that the petitioner's inward supplies were fake, and the suppliers had been suspended. Following this, the Enforcement Officer issued a confiscation order under GST MOV-11, which resulted in the confiscation of both the conveyance and the goods. The petitioner argued that the Enforcement Officer should have initially proceeded under Section 129 of the CGST Act, before moving on to Section 130 of the CGST Act.

The single-judge bench of Justice C.S. Dias noted that an analysis of the post-amended Section 130 of the CGST Act makes it clear that if an individual violates any provisions of the Act with the intention of evading tax payment, the goods or conveyance involved are subject to confiscation, and the person is also liable to pay damages.

The bench highlighted that after the CGST Act was amended, the Government of India had issued a circular outlining the prescribed procedure. Clause (l) of the circular explicitly states that if the proper officer believes that the movement of the goods is being affected to evade payment of tax, he is entitled to invoke Section 130 of the CGST Act directly. This can be done by issuing a notice in Form GST MOV-10, which proposes the confiscation of the goods and conveyance.

Thus, the bench determined that the Enforcement Officer had proceeded according to the established procedure.

The bench concluded that there were no exceptional circumstances warranting the consideration of the writ petition through the exercise of the Court's inherent powers under Article 226 of the Constitution of India. The petitioner was advised to resort to the available statutory remedies provided under the GST Act instead.