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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
D.B. CIVIL WRIT PETITION NO. _____/2018
SHAN MOHAMMAD
S/O. FAUJDAR
VILLAGE POST- PURE,
AMIYA, TILOI,
RAEBARELI (U.P.)
PETITIONER.
Versus
1. UNION OF INDIA
THROUGH SECRETARY,
FINANCE DEPARTMENT,
GOVERNMENT OF INDIA,
NEW DELHI
2. THE CHAIRMAN
GST COUNCIL
GOVERNMENT OF INDIA,
NEW DELHI
3 THE STATE OF RAJASTHAN
THROUGH FINANCE SECRETARY,
GOVERNMENT OF RAJASTHAN, SECRETARIATE,
JAIPUR.
4. COMMISSIONER
CENTRAL GOODS AND SERVICE TAX,
JAIPUR
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5. STATE TAX OFFICER,
ANTI EVASION-I,
BHIWADI, DIVISION- ALWAR
RAJASTHAN
RESPONDENTS.
IN THE MATTER OF
PROTECTION, REMEDY, REDRESS
UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA IN THE
NATURE OF WRIT OF MANDAMUS,
CERTIORARI, PROHIBITION QUO-
WARRANTO OR ANY OTHER LIKE
WRIT, DIRECTION EX-DEBITO
JUSTICE
IN THE MATTER OF
ARTICLE 14, 19, 21, 265, 286, 300A, 301,
OF THE CONSTITUTION OF INDIA, 1950;
IN THE MATTER OF
THE CENTRAL GOODS AND SERVICE TAX ACT, 2017 r.w.
CENTRAL GOODS AND SERVICES TAX RULES, 2017 AND
RAJASTHAN GOODS & SERVICES TAX ACT, 2017 r.w.
RAJASTHAN GOODS & SERVICES TAX RULES, 2017
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IN THE MATTER OF
CONSTITUTIONAL VALIDITY & VIRES OF SECTION 129 OF
THE CENTRAL GOODS & SERVICES TAX ACT, 2017 AND
SECTION 129 OF RAJASTHAN GOODS AND SERVICE TAX
ACT, 2017
To
The Hon'ble Chief Justice
And his Companion Judges of the High
Court of Judicature for Rajasthan
At Jaipur Bench, Jaipur.
MAY IT PLEASE YOUR LORDSHIPS,
The Humble petitioners most respectfully submit as
under: -
1. That the petitioner is the driver of the vehicle No. HR
55P-6196 and is filing this writ petition challenging
the levy under the provisions of the GST Act of tax,
interest and penalty by virtue of invoking of the
provisions of Section 129, 130 of the Central Goods
and Services Tax Act (hereinafter referred as “CGST
Act”). The petitioner is citizen of India and is
competent to invoke the extraordinary jurisdiction
under Article 226 of the Constitution of India of this
Hon’ble Court.
2. That by means of this writ petition, the petitioner seek
to challenge the constitutional validity of Section 129
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and 130 of Central Goods & Services Tax Act, 2017
and Section 129 and 130 of Rajasthan Goods &
Services Tax Act, 2017 (hereinafter referred to as the
impugned Acts). Section 129 and 130 of the
impugned acts is reproduced as under:-
129. Detention, seizure and release of goods and
conveyances in transit.
129. (1) Notwithstanding anything contained in
this Act, where any person transports any goods or
stores any goods while they are in transit in
contravention of the provisions of this Act or the rules
made thereunder, all such goods and conveyance used
as a means of transport for carrying the said goods
and documents relating to such goods and conveyance
shall be liable to detention or seizure and after
detention or seizure, shall be released,––
(a) on payment of the applicable tax and penalty
equal to one hundred per cent. of the tax payable on
such goods and, in case of exempted goods, on
payment of an amount equal to two per cent. of the
value of goods or twenty-five thousand rupees,
whichever is less, where the owner of the goods comes
forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty
equal to the fifty per cent. of the value of the goods
reduced by the tax amount paid thereon and, in case
of exempted goods, on payment of an amount equal to
five per cent. of the value of goods or twenty-five
thousand rupees, whichever is less, where the owner
of the goods does not come forward for payment of
such tax and penalty;
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(c) upon furnishing a security equivalent to the
amount payable under clause (a) or clause (b) in such
form and manner as may be prescribed:
Provided that no such goods or conveyance shall be
detained or seized without serving an order of
detention or seizure on the person transporting the
goods.
(2) The provisions of sub-section (6) of section 67 shall,
mutatis mutandis, apply for detention and seizure of
goods and conveyances.
(3) The proper officer detaining or seizing goods or
conveyances shall issue a notice specifying the tax
and penalty payable and thereafter, pass an order for
payment of tax and penalty under clause (a) or clause
(b) or clause (c).
(4) No tax, interest or penalty shall be determined
under sub-section (3) without giving the person
concerned an opportunity of being heard.
(5) On payment of amount referred in sub-section (1),
all proceedings in respect of the notice specified in sub-
section (3) shall be deemed to be concluded.
(6) Where the person transporting any goods or the
owner of the goods fails to pay the amount of tax and
penalty as provided in sub-section (1) within seven
days of such detention or seizure, further proceedings
shall be initiated in accordance with the provisions of
section 130:
Provided that where the detained or seized goods are
perishable or hazardous in nature or are likely to
depreciate in value with passage of time, the said
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period of seven days may be reduced by the proper
officer.
130. (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 authorised
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
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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 an 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
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
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Brief Facts are as under:-
3. That the conveyance bearing No. HR 55P 6196 was
intercepted by the respondent No. 5 on 11.07.2018 at
Sahajahapur Toll Naka. The petitioner is the Driver
of aforesaid vehicle. On interception of the aforesaid
vehicle, the respondent No. 4 found certain
discrepancies and for the alleged discrepancies
during movement the goods were detained under Sub
Section 1 of Section 129 of the CGST Act and order of
detention was issued.
4. That according to Sub Section 1 of Section129 of the
impugned act goods can be released on payment of
tax and penalty. Under clause (a) of sub section 1
provides payment of applicable tax and penalty equal
to 100 percent of the tax payable on such goods and
in case exempted goods payment of amount equal to
2% of the value of goods or 25000.00 Rs. whichever is
less where owner of the goods comes forward for
payment of such tax and penalty. Under clause (b) of
sub section 1 provided payment of the applicable tax
and penalty equal to 50% of the value of goods
reduced by the tax amount paid thereon and in case
of exempted goods, on payment of amount equal to
5% of the value of goods or Rs. 25000.00 whichever is
less, where owner of goods does not come forward for
payment of such tax and penalty. Under clause (c)
conveyance would be released upon furnishing a
security equivalent to the amount payment under
clause (a) or clause (b).
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5. That the respondent No. 5 passed order / notice in
Form GST MOV - 07 whereby the amount of tax and
penalty was calculated and the petitioner was
directed to appear on 22.07.2018. Copy of order /
notice Form GST MOV- 07 is enclosed and marked as
Annexure-1.
6. That the respondent No. 5 passed order of demand of
tax and penalty in Form GST MOV- 09 on 23.07.2018
wherein it has been mentioned that in response to
the notice MOV- 07, the owner of the goods Sh. Shan
Mohammad has come forward and made the payment
of tax and penalty as proposed, thus the applicable
tax and penalty proposed are confirmed. Copy of
order dated 23.07.2018 Form GST MOV- 09 is
enclosed and marked as Annexure-2. It is submitted
that the respondent No. 5 mentioned above statement
as incorrect as the petitioner never came forward for
payment of tax and penalty as proposed.
7. That the respondent No. 5 issued notice in Form GST
MOV-10 for confiscation of goods for conveyance and
levy of penalty under section 130 of the RGST Act
r/w. relevant provisions of CGST Act. In the notice it
has been mentioned that neither the owner of the
goods nor the person incharge of the conveyance
came forward to make the payment of applicable tax
and penalty within the time allowed in the order and
as such the respondent No. 5 proposed to confiscate
the above goods and conveyance. Copy of notice Form
GST MOV-10 is enclosed and marked as Annexure-3.
8. That according to the provisions of Section 129,
where any goods while they were in transit in
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contravention of the provisions of the Act or the rules,
all such goods and conveyance used as a means of
transport for carrying the said goods and documents
relating to such goods and conveyance shall be liable
to detention of seizure. Release of such goods and
conveyance is provided as when owner of goods
comes forward for payment of tax and penalty, on
payment of applicable tax and penalty equal to 100%
of the tax payable on such goods and where the
owner of the goods does not come forward for
payment of such tax and penalty, on payment of the
applicable tax and penalty equal to 50% of the value
of goods reduced by the tax amount paid thereon.
Further the detention or seizure of goods and
conveyance can also be released upon furnishing a
security equivalent to the amount payable under
clause (a) or clause (b) of section 129. Thus the
provision has been made in the manner that
whenever the goods and conveyance in transit is
detained by the authority, its release could only be on
payment of tax and penalty as provided in Sub
Section (a) or Sub Section (b) as the case may be and
in Sub Section (c) release could be made on
furnishing security equivalent to the amount payable
under clause (a) or clause (b). The provisions do not
contain anything which provides that in case the
person shows that he is bonafide or that the seizure
or detention was not warranted, then also there is no
provision to release the goods and conveyance which
is detained or seized in transit, without payment of
tax and penalty as provided in the section. The
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provisions of Section 129 do not conform to
established principles of natural justice as they do
not provide an opportunity to the Taxpayer to defend
his case and prove his innocence. Thus the provision
appears to be ultra vires to the Constitution of India
and beyond the legislative competence of the
Parliament.
9. That the provisions of Section 129 are framed in the
manner that once the goods and conveyance is seized
in transit, its release could only be after payment of
penalty. The penalty as provided in section 129 is
very harsh and there is no rationality and is
disproportionate. Further the payment as provided in
section 129 for release of goods has been made in the
name of applicable tax even if the tax has already
been paid. There is no distinction provided between
tax paid and tax not paid. Therefore, also the
provisions of section 129 are ultra vires to the
Constitution of India and beyond the legislative
competence of the Parliament.
10. That even though the goods intercepted during
transit were duty paid and valid Invoice pertaining to
the said purchase was produced at the time when the
documents were asked for by the concerned officer,
the taxpayer was asked to deposit the Tax again on
the same goods. The same was never the intention of
the legislature. When only due to a technical mistake
E-way bill could not be produced at the time of
checking, it could not be concluded that the Tax on
such goods is not paid even when an Invoice showing
the payment of tax is produced. Therefore, it cannot
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be the case that the Tax is to be paid twice on the
same goods. The tax already paid on the goods is not
being taken into consideration by the officer passing
an order under Section 129. This is an absurd
situation leading to double taxation. Such provision
is against the legislative intention and is liable to
declared unconstitutional.
11. That it is also pertinent to mention here that the
proviso to sub section 1 of section 129 provides that
no such goods or conveyance shall be detained or
seized without serving an order of detention or
seizure on the person transporting the goods. There is
no provision mentioned that the owner of the goods
may also be served with notice. It is submitted that
the goods is transported by means of transport and
the person transporting the goods is often driver of
the vehicle and not the owner of the goods. Therefore,
the provisions of section 129 in view of the facts that
the notice of detention or seizure is not provided to
the owner of the goods, is arbitrary and contrary to
the interest of the owner of the goods and thus it is
apparently ultra vires to the Constitution of India as
it violates the principle of nature justice.
12. That the provisions of Section 129 of the CGST Act,
2017 are framed in the manner that everything
appears to be pre-determined and there is no room
for flexibility or any exception as may arise in the
facts and circumstances of a particular case. Once
the goods and conveyance is detained or seized in
transit, immediately the process of penalty starts. The
seized goods could only be released by making
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payment of applicable tax and penalty under clause
(a) or clause (b) of sub section 1. Thereafter the
procedure provided is that if the person transporting
any goods or the owner of the goods fails to pay the
amount of tax and penalty as provided in sub section
1 within 7 days, then further proceeding is initiated
in accordance of section 130. Section130 is regarding
confiscation of goods or conveyance and levy of
penalty. Under section 130 the penalty shall be equal
to be value of the goods. Thus the provisions of
section 129 are framed in the manner that the time
given as 7 days is too less for applying principles of
nature justice as no opportunity of hearing is
provided to the owner of goods. Thus the provisions of
section 129 ultra vires to the Constitution of India are
beyond the legislative competence of the parliament.
13. That it is also submitted that under section 129,
there is no provision for issue of notice to the owner
of the goods as soon as the goods are detained or
seized. The word used in the section is any person
transporting any goods. Under sub-section (6), first
time owner of the goods is mentioned and that too
that in case he fails to pay the amount of tax and
penalty as provided in sub-section (1) within 7 days of
such detention or seizure, further proceeding is
initiated under section 130. Thus from the language
of the provisions of section 129 it appears that prior
to imposition of penalty, there is no provision for
giving notice to the owner of the goods, who is the
most affected party as the goods contained in the
conveyance belongs to owner of the goods. Thus not
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containing any provision for giving notice to owner of
the goods offends Article 14 of the Constitution of
India and also offends the principles of natural
justice. Thus the provisions of section 129 are ultra
vires to the Constitution of India.
14. That for computation of tax and penalty as provided
in section 129, the respondent No. 5 made valuation
of the goods whereas no such procedure is provided
in Section 129 as to making valuation of the goods.
Further the respondent No. 5 made valuation without
any basis as to how he assessed the value of goods.
15. That the respondent No. 5 has valued the goods
detained without providing any rationale behind
coming to such conclusion and has imposed such tax
and penalty. No procedure whatsoever is prescribed
under Section 129 of the CGST Act, 2017 or RGST
Act, 2017 or IGST Act, 2017 as to how the valuation
of the goods is to be done. It bestows upon the
respondent No. 5 incorrigible powers to decide the
value of goods and impose the Tax and Penalty
according to their whims and fancies.
16. That in the scheme of Goods and Service Tax Act, tax
is levied under CGST and State GST. In case of inter-
state trade IGST is applicable. In the instant case the
goods which was detained was transported in course
of interstate trade and thus provisions of neither
CGST nor RGST are applicable. Section 129 and 130
of the CGST Act and RGST Act cannot be made
applicable in case of interest trade.
17. That since in the instant case the goods were
transported in course of inter-state trade and thus
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tax and penalty cannot be imposed under section 129
of the CGST Act and RGST Act. In case of interstate
trade provisions of IGST are applicable. The
respondent No. 5 applied provisions of Section 129 of
the CGST Act and RGST Act on the erroneous
approach and without having jurisdiction and
authority of law to apply the provisions of CGST Act
and RGST Act.
18. That the penalty as prescribed under section 129 is
very excessive which could be understand by taking
example where taxable goods worth Rs. 10,00,000.00
(taxable @ 18%) were seized u/s. 129. Amount
payable for release of goods would be determined in
the following manner:
Section Amount to be paid
129(1)(a): Where person comes
forward to pay tax and penalty
Tax i.e. Rs. 1,80,000.00 +
Penalty of 100% of tax i.e.
1,80,000.00 = Rs. 3,60,000.00
129(1)(b): Where person does
not come forward to pay tax
and penalty
Tax i.e. Rs. 1,80,000.00 +
Penalty of 50% of value of
goods i.e. 5,00,000.00 = Rs.
6,80,000.00
129(1)(c) Upon furnishing security of the
amount payable under clause
(a) or (b)
If such amount prescribed is not paid within 7 days of
seizure then proceedings of confiscation u/s. 130 shall
be initiated.
19. That it is also submitted that under section 129(1) of the
CGST Act, the payment of tax and penalty is provided
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for release of goods from detention which is amount of
applicable tax and penalty equal to 100% of the tax
payable under section 129(1)(a) and the penalty is
provided @ 50% of the value of goods under section
129(1)(b) of the Act. A bare perusal of these provisions it
appears that full penalty on entire applicable Tax is
made applicable both under CGST Act and also under
the State GST Act and thus these provisions appear to
be unreasonable, arbitrary and contrary to the spirit of
Constitution of India as full penalty on entire applicable
Tax once provided under one Act it cannot be imposed
in the name of other Act for the same act. It is
submitted that full penalty once imposed under the
provisions of CGST Act it cannot be imposed under the
provisions of RGST Act for the same transaction. Section
129 provides penalty under both the act and thus the
provisions of Section 129 are apparently ultra vires to
the Constitution of India and beyond the legislative
competence of the Parliament.
20. That under Section 129(6) of the CGST Act the
provisions are made in the manner that the person
transporting any goods or the owner of goods fails to pay
the amount of tax and penalty as provided in sub
section (1) within 7 days of such detention or seizure,
further proceedings shall be initiated in accordance with
section 130. Accorded to section 130 of the CGST Act
the authority makes confiscation of goods or conveyance
and then levies penalty. The penalty provided in the said
section is not specified as there is no basis specified in
order to determine such penalty. It is proposed to be
imposed in the manner that fine levyable shall not
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exceed the market value of the goods confiscated.
Further it is provided that the aggregate of final penalty
levyable shall not be less than the amount of penalty
levyable under sub section (1) of section 129. Thus the
provisions of section130 are made in the manner that it
left open to the authority to levy penalty upto the
amount equal to the market value of the goods
confiscated. Thus the provisions of section 130 are
apparently very harsh and the penalty provided is
grossly disproportionate to the alleged act. Thus such
provisions offend the basic scheme of the Constitution
of India which is a welfare state.
21. That section 129 and 130 of the CGST Act both are
arbitrary, unreasonable and ultra vires to the
Constitution of India for this reason also that under
section 129(1) payment of tax and penalty is provided
for release of goods and conveyance which is detained.
Further in section 129 the procedure is provided in
different steps and finally under section 129(6) it is
provided that if payment of tax and penalty as provided
in section 129(1) is not paid within 7 days, proceeding
are liable to be initiated according to section 130. Thus
such provision apparently offends the basic structure of
the Constitution and it is apparently arbitrary as once
payment of applicable tax and penalty is applied, the
proper procedure is only to make recovery of such
applicable tax and penalty whereas according to section
129(6), if amount is not paid proceeding of section 130
is automatically made applicable and under section 139
the goods is confiscated and then there is provision of
levy of penalty which could be equal to the market value
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of the goods confiscated. Thus apparently the provision
section 129 and 130 is ultra vires to the Constitution of
India and beyond the legislative competence of the
Parliament.
22. Because Section 130 of the Central Goods & Services
Tax Act, 2017 is prima facie ultra vires the constitution
and is against the spirit of the new Indirect Tax law.
Such harsh proceedings of confiscation are attracted
without affording a reasonable opportunity to the
Taxpayer to defend the allegations. Penalty in such a
case is arbitrary and highly detrimental to the interest of
the Taxpayer. The Penalty imposed is equivalent to the
value of goods in transit which makes it a draconian
provision liable to struck down in its entirety.
23. That according to scheme of section 129 and 130 the
proceedings of section 130 are automatically applicable
in case of non-payment of the amount of tax and
penalty as provided under section 129. It is submitted
that section 129 provides certain procedure wherein
amount of applicable tax and penalty is provided and if
such applicable tax and penalty is not paid then the
procedure which could be applied by the authority is
only to make recovery of such tax and penalty whereas
according to section 129 and 130 of the CGST Act if tax
and penalty is not paid under section 129 then
automatically proceedings of section 130 is initiated.
Thus the provisions of section 129 and 130 gives power
and authority to the State to recover undue amount
from the assesseee and such practice amounts to undue
enrichment by the State which is offensive of the
provisions of the Constitution of India.
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24. That in case the Taxpayer comes forward to deposit the
amount as demanded in the Order passed under
Section 129(3) the respondent No. 5 is requiring the
Taxpayer to pay the tax and penalty amount by applying
for a new Temporary Registration under GST and then
depositing the said amount of Tax and Penalty as a new
and separate Taxpayer. When a Taxpayer is already
registered under GST and possesses a GSTIN he cannot
be required to register again under GST as a separate
Taxpayer and pay the Tax and Penalty. The facility of
registering temporarily is available only in the case
where the unregistered Transporter pays the Tax and
Penalty. It creates an absurd situation where a person
who is registered under GST is required to obtain
temporary registration only to pay Penalty under Section
129. In such cases where the owner of the goods is the
recipient and he is required to pay tax and penalty, he
cannot even take Input Tax Credit of the tax so paid on
purchase as a separate legal entity is created only for
the payment of Tax and Penalty. Another aspect of it
would be, that if the recipient being the owner of goods
pays tax on goods on which tax has already been paid
by the Seller it would lead to double taxation and it
would be against the spirit of the legislature and is ultra
vires the Constitution of India.
25. That prima-facie the impugned Section 129 and 130 of
the CGST Act / RGST Act 2017 is ultra vires to the
Constitution of India and beyond the Legislature
competence of the State legislature. The petitioner
assails the validity of provision of the Act on following
amongst other grounds:
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GROUNDS TO THE WRIT PETITION
(a) Because the impugned Section 129 of the CGST / RGST
Act, 2017 is ultra vires to the Constitution of India and
beyond the Legislative competence of the State
legislature and thus is liable to be held unconstitutional
and ultra – vires to the Constitution of India. The
impugned section 129 is drafted in a manner where
everything is pre-determined and from a bare reading of
the provisions it appears that the provisions do not
contain anything which covers the possibility that in
case the person shows bonafides and he satisfies the
authority that detention or seizure of the goods is not
warranted then also there is no provision to release the
goods without imposition of tax and penalty. Thus the
provisions are contrary to the provisions of the
Constitution of India. The Notice issued to the person
transporting the goods is with a pre-determined mind
that there is contravention of the provisions of the Act
and only on the basis of preliminary inspection of the
vehicle the liability is ascertained without offering a fair
opportunity to the person transporting the goods or the
owner of the goods to present their case. The order of
detention is also issued on the same day of interception
which shows the prejudiced mindset of the respondent
No. 5 against the Assessee. Further the penalty provided
is excessive and there is no rationality in imposing such
high penalty even if it is established that there is no
evasion of tax and the detention or seizure of the goods
and conveyance is detained in transit on some technical
reason. Thus the provision of section 129 are drafted in
the manner which causes undue enrichment to the
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state at the cost of the taxpayers and thus it offends the
provisions of Constitution of India and thus ultra vires
to the Constitution of India and beyond the legislative
competence of the Parliament.
(b) Because the provisions of Section 129 of CGST Act are
framed in the manner that everything is pre-determined
and once the goods detained or seized, there is no
provision for releasing the same without imposing
penalty. Further in sub section (1) and (2), it is provided
that detention or seizure of the goods shall be released
on payment of applicable tax, even if it is established
that tax is already paid. Thus on seizure of the goods,
payment of tax as provided appears to be unreasonable
as there is no clause that in case the tax is already paid,
the tax shall not be payable again. It appears that the
legislature has framed the provisions in the manner that
once the conveyance in transit containing goods is
seized then automatically penalty is attached even if
bonafide is shown and even if it is established that there
is no evasion of tax and there is no loss to the public
exchequer. Thus the provisions of section 129 of the
CGST Act are ultra vires to the Constitution of India and
beyond the legislative competence of the Parliament.
(c) Because the provisions of section 129 of the CGST Act
has been made in the manner that whenever the goods
and conveyance in transit is detained by the authority,
its release could only be on payment of tax and penalty
as provided in Sub Section (a) or Sub Section (b) as the
case may be and in Sub Section (c) release could be
made on furnishing security equivalent to the amount
payable under clause (a) or clause (b). The provisions do
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not contain anything which suggest for providing that in
case the person shows his bonafide or that the seizure
or detention was not warranted, then the goods may be
released. There is no provision to release the goods and
conveyance which is detained or seized in transit,
without payment of tax and penalty as provided in the
section. Thus the provision appears to be ultra vires to
the Constitution of India and beyond the legislative
competence of the Parliament.
(d) Because the provisions of Section 129 are framed in the
manner that once the goods and conveyance is seized in
transit, its release could only be after payment of
penalty. The penalty as provided in section 129 is very
harsh and disproportionate. Further the payment as
provided in section 129 for release of goods has been
made in the name of applicable tax even if the tax has
already been paid. There is no distinction provided
between tax paid and tax not paid. Therefore, also the
provisions of section 129 are ultra vires to the
Constitution of India and beyond the legislative
competence of the Parliament.
(e) Because it is also pertinent to mention here that the
proviso of sub section 1 of section 129 provides that no
such goods or conveyance shall be detained or seized
without serving an order of detention or seizure on the
person transporting the goods. There is no provision
mentioned that the owner of the goods may also be
served with notice. It is submitted that the goods is
transported by means of transport and the person
transporting the goods is often driver of the vehicle and
not the owner of the goods. Therefore, the provisions of
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23
section 129 in view of the facts that the notice of
detention or seizure is not provided to the owner of the
goods, is arbitrary and contrary to the interest of the
owner of the goods and thus it is apparently ultra vires
to the Constitution of India as it violates the principle of
nature justice.
(f) Because the provisions of Section 129 of the CGST Act,
2017 are framed in the manner that everything appears
to be pre-determined and there is no room for flexibility
or any exception as may arise in the facts and
circumstances of a particular case. Once the goods and
conveyance is detained or seized in transit, immediately
the process of imposing penalty starts. The seized goods
could only be released by making payment of applicable
tax and penalty under clause (a) or clause (b) of sub
section 1. Thereafter the procedure provided is that if
the person transporting any goods or the owner of the
goods fails to pay the amount of tax and penalty as
provided in sub section 1 within 7 days, then further
proceeding is initiated in accordance of section 130.
Section 130 is regarding confiscation of goods or
conveyance and levy of penalty. Under section 130 the
penalty shall be equal to the value of the goods. Thus
the provisions of section 129 are framed in the manner
that the time given as 7 days is too less for applying
principles of nature justice as no opportunity of hearing
is provided to the owner of goods. Thus the provisions of
section 129 ultra vires to the Constitution of India and
beyond the legislative competence of the parliament.
(g) Because it is also submitted that under section 129,
there is no provision for issuing notice to the owner of
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24
the goods as soon as the goods are detained or seized.
The word used in the section is any person transporting
any goods. Under sub section 6, first time owner of the
goods is mentioned and that too in case he fails to pay
the amount of tax and penalty as provided in sub
section 1 within 7 days of such detention or seizure,
further proceeding is initiated under section 130. Thus
from the language the provisions of section 129 it
appears that prior to imposition of penalty, there is no
provision for giving notice to the owner of the goods,
who is the most affected party as the goods contained in
the conveyance belongs to owner of the goods. Thus not
containing any provision for giving notice to owner of the
goods offends Article 14 of the Constitution of India and
also offends the principles of natural justice. Thus the
provisions of section 129 are ultra vires to the
Constitution of India.
(h) Because since in the instant case the goods were
transported in course of inter-state trade and thus tax
and penalty cannot be imposed under section 129 of the
CGST Act and RGST Act. In case of inter-state trade
provisions of IGST are applicable. The respondent No. 5
applied provisions of Section 129 of the CGST Act and
RGST Act on the erroneous approach and without
having jurisdiction and authority of law to apply the
provisions of CGST Act and RGST Act.
(i) Because it is also submitted that under section 129(1) of
the CGST Act, the payment of tax and penalty is
provided for release of goods from detention which is
amount of applicable tax and penalty equal to 100% of
the tax payable under section 129(1)(a) and the penalty
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25
is provided @ 50% of the value of goods under section
129(1)(b) of the Act. A bare perusal of these provisions it
appears that full penalty is made applicable both under
CGST Act and also under the State GST Act and thus
these provisions are appears to be unreasonable,
arbitrary and contrary to the spirit of Constitution of
India as penalty once provided under one Act it cannot
be imposed in the name of other Act for the same act. It
is submitted that penalty once imposed under the
provisions of CGST Act it cannot be imposed under the
provisions of RGST Act for the same transaction. Section
129 provides penalty under both the act and thus the
provisions of Section 129 are apparently ultra vires to
the Constitution of India and beyond the legislative
competence of the Parliament.
(j) Because under section 129(6) of the CGST Act the
provisions are made in the manner that the person
transporting any goods or the owner of goods fails to pay
the amount of tax and penalty as provided in sub
section (1) within 7 days of such detention or seizure,
further proceedings shall be initiated in accordance with
section 130. Accorded to section 130 of the CGST Act
the authority makes confiscation of goods or conveyance
and then levy penalty. The penalty provided in section is
not specified and only it is made in the manner that fine
levyable shall not exceed the market value of the goods
confiscated. Further it is provided that the aggregate of
final penalty levyable shall not be less than the amount
of penalty levyable under sub section (1) of section 129.
Thus the provisions of section 130 are made in the
manner that it leave open to the authority to levy
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26
penalty upto equal the amount of market value of the
goods confiscated. Thus the provisions of section 130
are apparently very harsh and the penalty provided is
grossly disproportionate to the alleged act. Thus such
provisions offends the basic scheme of the Constitution
of India in the welfare state.
(k) Because section 129 and 130 of the CGST Act both are
arbitrary, unreasonable and ultra vires to the
Constitution of India for this reason also that under
section 129(1) payment of tax and penalty is provided
for release of goods and conveyance which is detained.
Further in section 129 procedure is provided in different
steps and finally under section 129(6) it is provided that
if payment of tax and penalty as provided in section
129(1) is not paid within 7 days, proceeding are liable to
be initiated according to section 130. Thus such
provision apparently offends the basic structure of the
Constitution and it is apparently arbitrary as once
payment of applicable tax and penalty is applied, the
proper procedure is only to make recovery of such
applicable tax and penalty whereas according to section
129(6), if amount is not paid proceeding of section 130
is automatically made applicable and under section 130
the goods is confiscated and then there is provision of
levy of penalty which could be equal to the market value
of the goods confiscated. Thus apparently the provision
section 129 and 130 is ultra vires to the Constitution of
India and beyond the legislative competence of the
Parliament.
(l) Because Section 130 of the Central Goods & Services
Tax Act, 2017 is prima facie ultra vires the constitution
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27
and is against the spirit of the new Indirect Tax law.
Such harsh proceedings of confiscation are attracted
without affording a reasonable opportunity to the
Taxpayer to defend the allegations. Penalty in such a
case is arbitrary and highly detrimental to the interest of
the Taxpayer. The Penalty imposed is equivalent to the
value of goods in transit which makes it a draconian
provision liable to struck down in its entirety. The Form
GST MOV-1 to Form GST MOV-11 under which the
entire proceedings of detention, confiscation under
Section 129 and Section 130 are conducted do not have
any legal tenability as the said Forms are not notified
under the CGST Rules, 2017 and all the proceedings
conducted under it are against the spirit of the Act.
(m) Because according to scheme of section 129 and 130,
the proceedings of section 130 automatically apply in
case of non-payment of the amount of tax and penalty
as provided under section 129. It is submitted that
section 129 provides certain procedure wherein amount
of applicable tax and penalty is provided and if such
applicable tax and penalty is not paid then the
procedure which could be applied by the authority is
only make recovery of such tax and penalty whereas
according to section 129 and 130 of the CGST Act if tax
and penalty is not paid under section 129 then
automatically proceeding of section 130 is initiated.
Thus the provisions of section 129 and 130 gives power
and authority to the State to recover undue amount
from the assesseee and such practice amount to undue
enrichment by the State which is offensive of the
provisions of the Constitution of India.
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28
(n) Because other submission would be stated at the time of
arguments.
24 That the petitioner has no other alternative and
efficacious remedy except to approach this Hon’ble High
Court under its extra ordinary jurisdiction under Article
226 of the Constitution of India as vires of impugned act
has been challenged.
25 That the petitioner has not filed any petition on the same
grounds before the Hon’ble Supreme Court or before this
Hon’ble Court.
PRAYER
In view of the above, it is humbly prayed that by an
appropriate writ, order or direction, the Hon'ble Court may
please: -
i. Declare the impugned Section 129 of the CGST Act,
2017 and Section 129 of the RGST Act, 2017 as illegal,
ultra vires and beyond the Legislature competence of the
respondent State.
ii. Declare the impugned Section 130 of the CGST Act,
2017 and Section 130 of the RGST Act, 2017 as illegal,
ultra vires and beyond the Legislature competence of the
respondent State.
iii. Quash / Set aside GST MOV - 07 dated 22.07.2018
Annexure-1, order dated 23.07.2018 Form GST MOV-
09 Annexure-2, notice Form GST MOV-10 Annexure-3.
iv. Restrain the respondents to proceed further in regard to
notice issued to the petitioner in Form GST MOV –10
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29
v. Any other appropriate writ, order or direction which may
be considered just and proper in the facts and
circumstances of the case may kindly also be issued in
favour the petitioner.
HUMBLE PETITIONER
THROUGH COUNSEL
(PANKAJ GHIYA / MEENAL GHIYA / PAWAN SHARMA /PRIYAMVADA JOSHI)
ADVOCATES
10, Ganesh Colony,Bhairav Path, JLN Marg,
Jaipur, 302004En. No. R/532/1999
Mob. 9829013626pankaj.ghiya@hotmail.com
Notes:
1. That no such writ petition has been filed prior to this.
2. This has been typed in my office by my personaltypist.
3. That P.F. Notices and extra set will be submitted intime.
4. That since pie papers are not readily available it istyped on stout papers.
5. That this is D.B. writ petition as the vires of the Acthave been challenged.
6. That this matter pertains to Jaipur Bench of Hon’bleRajasthan High Court.
COUNSEL FOR THE PETITIONER
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30
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
D.B. CIVIL WRIT PETITION NO. _____/2018
M/S. SHAN MOHAMMAD
PETITIONER.
Versus
UNION OF INDIA & OTHERS
RESPONDENTS.
AFFIDAVIT IN SUPPORT OF THE WRIT PETITION.
I Shan Mohammad S/o Sh. Faujdar Aged 26 years, vllage-Post-
Pure, Amiya, Tiloi, Raebareli (U.P.) do hereby make oath and
state as under :-
1. That I am the petitioner in the above mentioned case
and as such am fully conversant with the facts and
circumstances of the case.
2. That the annexed writ petition has been drafted by my
Counsel under my instructions and I have understood
the contents of same.
3. That the contents of annexed writ petition para No. 1 to
25 and sub-paras (a) to (n) are true and correct to the
best of my knowledge and the legal submissions made
therein are believed to be true and correct on the basis
of legal advice tendered to me by the counsels.
DEPONENT
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31
VERIFICATION
I, the above named deponent do hereby verify that the
contents of aforesaid affidavit para 1 to 3 are true and correct
to my personal knowledge. Nothing material has been
concealed and no part of it is false. "SO HELP ME GOD".
DEPONENT
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32
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
D.B. CIVIL WRIT PETITION NO. _____/2018
M/S. SHAN MOHAMMAD
PETITIONER.
Versus
UNION OF INDIA & OTHERS
RESPONDENTS
AFFIDAVIT IN SUPPORT OF THE DOCUMENTS
I Shan Mohammad S/o Sh. Faujdar Aged 26 years, r/o. Village
Post- Pure, Amiya, Tiloi, Raebareli (U.P.) do hereby make oath
and state as under :-
1. That I am the petitioner in the above mentioned case and
as such am fully conversant with the facts and
circumstances of the case.
2. That the annexed documents Annexure 1 to 3 are true and
correct photo copies of their respective original.
DEPONENT
VERIFICATION
I, the above named deponent do hereby verify that the
contents of aforesaid affidavit para 1 to 2 are true and correct
to my personal knowledge. Nothing material has been
concealed and no part of it is false. “SO HELP ME GOD”.
DEPONENT
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33
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
DB CIVIL MISC. STAY APPLICATION NO. __/2018
IN
D.B. CIVIL WRIT PETITION NO. /2018
SHAN MOHAMMAD
S/O. FAUJDAR
VILLAGE POST- PURE,
AMIYA, TILOI,
RAEBARELI (U.P.)
PETITIONER.
Versus
1. UNION OF INDIA
THROUGH SECRETARY,
FINANCE DEPARTMENT,
GOVERNMENT OF INDIA,
NEW DELHI
2. THE CHAIRMAN
GST COUNCIL
GOVERNMENT OF INDIA,
NEW DELHI
3 THE STATE OF RAJASTHAN
THROUGH FINANCE SECRETARY,
GOVERNMENT OF RAJASTHAN, SECRETARIATE,
JAIPUR.
4. COMMISSIONER
CENTRAL GOODS AND SERVICE TAX,
JAIPUR
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34
5. STATE TAX OFFICER,
ANTI EVASION-I,
BHIWADI, DIVISION- ALWAR
RAJASTHAN
RESPONDENTS.
STAY APPLICATION UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA.
To
The Hon'ble Chief Justice
And his Companion Judges of the High
Court of Judicature for Rajasthan
At Jaipur Bench, Jaipur.
MAY IT PLEASE YOUR LORDSHIPS,
The Humble petitioners most respectfully submit as
under: -
1. That the petitioner has filed above mentioned writ
petition before this Hon’ble Court. The petitioner has
every hope of success and the writ petition is based
on sound legal grounds which are taken in the writ
petition. Grounds of writ petition may kindly treated
part of this stay application also.
2. That the goods and conveyance has been seized and
after proceedings in view of Section 129 of the CGST
Act and RGST Act, the authority has now issued
notice for confiscation of the goods and proposed
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35
penalty under section 130 of the CGST / RGST Act
which is equal to the amount of value of goods.
3. That if the goods is not released provisionally the
petitioner will suffer irreparable injury. Balance of
convenience is in favour of the petitioner.
It is therefore most respectfully prayed that Your
Lordships may graciously be pleased to accept this stay
application and be further pleased to direct the
respondents to release the goods and conveyance
provisionally by taking a reasons security during the
pendency of Writ petition.
Any other appropriate writ, order or direction, which may
be considered just and proper in the facts and
circumstances of the case may kindly, also be issued in
favour the petitioner.
HUMBLE PETITIONER
THROUGH COUNSEL
(PANKAJ GHIYA/MEENAL GHIYAPAWAN SHARMA / PRIYAMVADA JOSHI)
ADVOCATES
Notes:
1. That no such stay application has been filed prior tothis.
2. This has been typed in my office by my personaltypist.
3. That P.F. Notices and extra set will be submitted intime.
4. That since pie papers are not readily available it istyped on stout papers.
COUNSEL FOR THE PETITIONER
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36
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
D.B. CIVIL MISC. STAY APPLICATION NO. /2018
IN
D.B. CIVIL WRIT PETITION NO. _____/2018
M/S. SHAN MOHAMMAD
PETITIONER.
Versus
UNION OF INDIA & OTHERS
RESPONDENTS.
AFFIDAVIT IN SUPPORT OF STAY APPLICATION
I Shan Mohammad S/o Sh. Faujdar Aged 26 years, r/o. Village
Post- Pure, Amiya, Tiloi, Raebareli (U.P.) do hereby make oath
and state as under :-
1. That I am the petitioner in the above mentioned case
and as such am fully conversant with the facts and
circumstances of the case.
2. That the annexed stay application has been drafted by
my Counsel under my instructions and I have
understood the contents of same.
3. That the contents of annexed stay application para No. 1
to 3 are true and correct to my knowledge and on the
basis of legal advice tendered to me by the counsels.
DEPONENT
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37
VERIFICATION
I, the above named deponent do hereby verify that the
contents of aforesaid affidavit para 1 to 3 are true and correct
to my personal knowledge. Nothing material has been
concealed and no part of it is false. "SO HELP ME GOD".
DEPONENT
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38
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
D.B. CIVIL WRIT PETITION NO. _____/2018
M/S. SHAN MOHAMMAD
PETITIONER.
Versus
UNION OF INDIA & OTHERS
RESPONDENTS
INDEX
S.No. Particulars Page No.
1. Writ Petition
2. Affidavit in support of Writ Petition
3. Stay Application
4. Affidavit in support of stay
application
5. Annexure /Documents
Annexure-1 Copy of order / notice Form GST
MOV- 07
Annexure-2 Copy of order dated 23.07.2018
Form GST MOV- 09
Annexure-3 Copy of notice Form GST MOV-10
6. Affidavit in support of documents
Counsel for the Petitioner
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39
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
JAIPUR BENCH, JAIPUR
D.B. CIVIL WRIT PETITION NO. _____/2018
M/S. SHAN MOHAMMAD
PETITIONER.
Versus
UNION OF INDIA & OTHERS
RESPONDENTS
SYNOPSIS
By means of this writ petition, the petitioner seek to challenge
the constitutional validity of Section 129 and 130 of Central
Goods & Services Tax Act, 2017 and Section 129 and 130 of
Rajasthan Goods & Services Tax Act, 2017 (hereinafter
referred to as the impugned Acts).
The conveyance bearing No. HR 55P 6196 was intercepted by
the respondent No. 5 on 11.07.2018 at Sahajahapur Toll
Naka. The petitioner is the Driver of aforesaid vehicle. On
interception of the aforesaid vehicle, the respondent No. 4
found certain discrepancies and for the alleged discrepancies
during movement the goods were detained under Sub Section
1 of Section 129 of the CGST Act and order of detention was
issued.
According to Sub Section 1 of Section129 of the impugned act
goods can be released on payment of tax and penalty. Under
clause (a) of sub section 1 provides payment of applicable tax
and penalty equal to 100 percent of the tax payable on such
goods and in case exempted goods payment of amount equal
to 2% of the value of goods or 25000.00 Rs. whichever is less
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40
where owner of the goods comes forward for payment of such
tax and penalty. Under clause (b) of sub section 1 provided
payment of the applicable tax and penalty equal to 50% of the
value of goods reduced by the tax amount paid thereon and
in case of exempted goods, on payment of amount equal to
5% of the value of goods or Rs. 25000.00 whichever is less,
where owner of goods does not come forward for payment of
such tax and penalty. Under clause (c) conveyance would be
released upon furnishing a security equivalent to the amount
payment under clause (a) or clause (b).
The respondent No. 5 passed order / notice in Form GST
MOV - 07 whereby the amount of tax and penalty was
calculated and the petitioner was directed to appear on
22.07.2018.
The respondent No. 5 passed order of demand of tax and
penalty in Form GST MOV- 09 on 23.07.2018 wherein it has
been mentioned that in response to the notice MOV- 07, the
owner of the goods Sh. Shan Mohammad has come forward
and made the payment of tax and penalty as proposed, thus
the applicable tax and penalty proposed are confirmed. It is
submitted that the respondent No. 5 mentioned above
statement as incorrect as the petitioner never came forward
for payment of tax and penalty as proposed.
The respondent No. 5 issued notice in Form GST MOV-10 for
confiscation of goods for conveyance and levy of penalty
under section 130 of the RGST Act r/w. relevant provisions of
CGST Act. In the notice it has been mentioned that neither
the owner of the goods nor the person incharge of the
conveyance came forward to make the payment of applicable
tax and penalty within the time allowed in the order and as
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41
such the respondent No. 5 proposed to confiscate the above
goods and conveyance.
According to the provisions of Section 129, where any goods
while they were in transit in contravention of the provisions
of the Act or the rules, all such goods and conveyance used
as a means of transport for carrying the said goods and
documents relating to such goods and conveyance shall be
liable to detention of seizure. Release of such goods and
conveyance is provided as when owner of goods comes
forward for payment of tax and penalty, on payment of
applicable tax and penalty equal to 100% of the tax payable
on such goods and where the owner of the goods does not
come forward for payment of such tax and penalty, on
payment of the applicable tax and penalty equal to 50% of the
value of goods reduced by the tax amount paid thereon.
Further the detention or seizure of goods and conveyance can
also be released upon furnishing a security equivalent to the
amount payable under clause (a) or clause (b) of section 129.
Thus the provision has been made in the manner that
whenever the goods and conveyance in transit is detained by
the authority, its release could only be on payment of tax and
penalty as provided in Sub Section (a) or Sub Section (b) as
the case may be and in Sub Section (c) release could be made
on furnishing security equivalent to the amount payable
under clause (a) or clause (b). The provisions do not contain
anything which provides that in case the person shows that
he is bonafide or that the seizure or detention was not
warranted, then also there is no provision to release the
goods and conveyance which is detained or seized in transit,
without payment of tax and penalty as provided in the
section. The provisions of Section 129 do not conform to
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42
established principles of natural justice as they do not
provide an opportunity to the Taxpayer to defend his case
and prove his innocence. Thus the provision appears to be
ultra vires to the Constitution of India and beyond the
legislative competence of the Parliament.
Hence this writ petition,
COUNSEL FOR THE PETITIONER
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