in the high court of judicature for …...6 period of seven days may be reduced by the proper...

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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


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


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


(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



(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


Constitution of India and beyond the legislative


(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


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


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



(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


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. [email protected]

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




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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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




M/S. SHAN MOHAMMAD

PETITIONER.

Versus


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


2. That the annexed documents Annexure 1 to 3 are true and

correct photo copies of their respective original.

DEPONENT

VERIFICATION




concealed and no part of it is false. “SO HELP ME GOD”.

DEPONENT

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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,


NEW DELHI

2. THE CHAIRMAN

GST COUNCIL


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.


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36



D.B. CIVIL MISC. STAY APPLICATION NO. /2018

IN


M/S. SHAN MOHAMMAD

PETITIONER.

Versus


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


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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VERIFICATION




concealed and no part of it is false. "SO HELP ME GOD".

DEPONENT

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M/S. SHAN MOHAMMAD

PETITIONER.

Versus


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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M/S. SHAN MOHAMMAD

PETITIONER.

Versus


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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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,


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