IMPORTANT POINT
The court established that confiscation under Section 130 requires prior action under Section 129, and adherence to natural justice is essential in such proceedings.

ORDER :

(per Hon’ble Sri Justice R.Raghunandan Rao)

Both these Writ Petitions arise, essentially, out of the same set of facts and raise similar questions of fact and law. In such circumstances, both these Writ Petitions are disposed of by way of this Common Order.

2. Heard Sri V. Bhaskar Reddy, learned Senior Counsel appearing on behalf of Sri V. Siddharth Reddy, learned counsel for the petitioner and the learned Government Pleader for Commercial Tax.

3. The petitioners herein are dealers of scrap iron and were transporting scrap iron for sale to a dealer in Telangana State. The vehicles in which this scrap iron was being transported was stopped for verification and inspection on 27.04.2024 by the Deputy Assistant Commissioner (ST)-2, Office of the Regional Vigilance & Enforcement Department, Kadapa. He is arrayed as the 1st respondent in both the Writ Petitions.

4. After verifying the documents available with the driver of the conveyance, the 1st respondent issued a notice in Form GST MOV-10, under Section 130 of the Central Goods and Service Tax Act, 2017 [for the short “the CGST, Act”], on 01.05.2024 calling upon the petitioners to showcause why the goods under transport and as well as the vehicle in which the goods have been transported should not be confiscated. These notices were served on the driver of the vehicle.

5. Thereafter, the petitioners have filed their objections dated 08.05.2024, setting out the grounds why the proposed action should be dropped. After receipt of these objections, the 1st respondent passed orders, in both cases, dated 25.05.2024, confiscating the goods as well as the vehicle under Section 130 of the CGST, Act, Section 130 of the State Goods and Services Act /Section 21 of the Union Territory Goods and Service Tax, Act and under Section 20 of the Integrated Goods and Service Tax Act, 2017. The petitioners were also informed that the above said goods and conveyance could be released on payment of the penalty and fine set out in the said orders.

6. Aggrieved by these two orders, the petitioners have approached this Court by way of the present Writ Petitions.

7. Sri V. Bhaskar Reddy, learned Senior Counsel appearing on behalf of Sri V. Siddharth Reddy, learned counsel for the petitioner in the matter, would submit that the proceedings, including the orders of confiscation dated 25.05.2024, are invalid and without jurisdiction. He would submit that in the event of any goods being transported in contravention of the provisions of the CGST Act, the authorities can at best initiate action, for detention and seizure, under Section 129 of the CGST, Act and only in the event of such action culminating in an order of seizure and detention and subsequent failure of the dealer to pay the amounts demanded under the said order of detention can the authorities initiate action under Section 130 of the CGST Act. He would submit that in the present case the 1st respondent, without invoking the provisions of Section 129 of the CGST Act had straight away issued notices under Section 130 of the CGST Act, which is impermissible and is not in accordance with the scheme of the Act. He relies upon Circular No. 41/15/2018-GST, dated 13.04.2018 issued by Central Board of Indirect Taxes and Customs.

8. He would contend that even assuming that there is a possibility of invoking Section 130 of the CGST Act directly, such invocation would require formation of a Prima face satisfaction that there has been transport of goods with an intention to evade tax. A perusal of the show-cause notice does not reveal any such formation of satisfaction and consequently, notices under Section 130 of the CGST, Act could not have been issued directly. He would submit that the order of confiscation, dated 25.05.2024, in both the cases, contain reasons which were not available in the show-cause notices and the petitioners were not given an opportunity to answer such findings in as much as they were never put to the petitioners.

9. The Notices were only