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Section 129 of CGST Act, 2017 — Goods in Transit — Imposition of penalty on two grounds; viz. for the violation found of IGST having not been paid for the inter-state sales as also for non-production of the goods, when the same was directed under Rule 140(2).
Held that—We notice from Section 129 that the confiscation proceedings under Section 130 would be possible only if the dealer fails to pay the applicable tax and penalty imposed by an order under Section 129(3). Confiscation is hence a coercive measure to ensure payment of the tax and penalty levied on a delinquent dealer; who otherwise is at threat of losing the goods itself. Confiscation is not an automatic consequence ensuing from detention and an order passed under Section 129(3), of there being a contravention of the provisions of the Act or rules made thereunder. We would not look at other situations, wherein confiscation is mandated, which is not relevant for the purpose of detention simplicitor under Section 129. When such applicable tax and penalty is not paid, there could be proceedings initiated under Section 130, which would lead to confiscation of the goods itself. This provision is applicable only, in the event of failure on the part of the dealer to pay the applicable tax and penalty. In the present case, the dealer was allowed release of the goods by furnishing bank guarantee for the tax and penalty. The dealer has also furnished a security equivalent to the value of the goods. There is, hence, no question of the applicable tax and penalty being not paid, since at any time the bank guarantee could be enforced.
We also make it clear that the non-production of goods as noticed in the order is not a ground for imposition of penalty. — Noushad Allakkat Vs. The State Tax Officer (WC) , State GST Department, Manjeri, The Asst. Tax Officer, Squad No. Vii, State GST Department, Palakkad, State Tax Officer, Squad No. VII, State GST Department, Palakkad, State of Kerala, Represented By Its Secretary, Taxes Department, Thiruvananthapuram And The Manager, Malappuram  6 TAXLOK.COM 54 (Ker)