Section 130 of the CGST Act provides for the confiscation of goods and conveyances and the imposition of penalty. It is a penal provision meant for serious misconduct involving tax evasion or deliberate contravention. The provision operates in a distinct field from Section 129 and can be invoked only where there is clear intent to evade tax.
This article explains the grounds for confiscation under Section 130 and the remedies available.
Grounds for Confiscation
Section 130(1) sets out five situations where goods or conveyances become liable to confiscation:
- Goods supplied or transported without invoice or with false invoice.
- Goods supplied or transported without declaration or with false declaration.
- Goods supplied or transported in contravention of the Act with intent to evade tax.
- Goods supplied or transported without e-way bill or with invalid e-way bill.
- Conveyances used for transporting goods liable to confiscation.
The Mens Rea Requirement
The Kerala High Court has held that Section 130 can be invoked only where there is clear intent to evade tax. The provision requires mens rea — a guilty mind. Without evidence of intent, confiscation is not sustainable.
Conveyance Owner’s Defence
Section 130(1)(v) provides that a conveyance can be confiscated if the owner fails to prove that the conveyance was used without their knowledge or connivance, or that of their agent. To avoid confiscation, the conveyance owner must establish:
- The vehicle was used without their knowledge.
- The owner did not connive in the contravention.
- The owner exercised reasonable diligence in preventing the contravention.
Remedies
- Provisional release: Goods and conveyances can be released on payment of a fine under Section 130(2). The Kerala High Court has held that provisional release is not available once confiscation proceedings are initiated.
- Appeal: The confiscation order can be appealed under Section 107.
- Writ petition: In cases of jurisdictional error or violation of natural justice, a writ petition can be filed.
- Release during appeal: The Kerala High Court has held that goods confiscated under Section 130 can be released during the pendency of appeal if they have not been auctioned.
Conclusion
Confiscation under Section 130 requires clear intent to evade tax. The provision is serious and its consequences severe. Taxpayers and transporters must ensure compliance with invoice, declaration, and e-way bill requirements to avoid confiscation.
At Anuj Desai & Associates, we provide expert representation services for confiscation proceedings. Our team can help you challenge improper confiscation and secure release of goods.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.