Vinod Chandran, J:
1. Whether in the case of a transport, wherein obviously there is no tax liability on the goods, there could be a detention and seizure effected under Section 129 of the Central Goods and Services Tax Act, 2017 [for brevity 'CGST Act'] and Kerala State Goods and Services Tax Act, 2017 [for brevity 'SGST Act'] and a release ordered as provided under sub-section (1) or order passed under sub-section (3) of Section 129, is the question raised in the appeal. We need to first briefly look at the facts of both these appeals filed by the State.
2. The writ petitioner in W.A.No.371/2018 is engaged in the establishment of infrastructure for cellular telephone Companies, meaning the erection and activation of towers and other infrastructure for effective services of the mobile companies. The petitioner for the purpose of such installation had imported from other States, batteries, which were stored in its go-downs at Ernakulam. These were to be installed in two sites at Gandhinagar at Kadavanthara and at Ambalappuzha. The vehicle in which the transport was made was detained. On examination of the documents, it was found that the goods were accompanied with a delivery chalan as provided under Rule 55 of the Kerala Goods and Services Tax Rules, 2017. However, the declaration as required under Rule 138 being KER-I, was not seen uploaded or the print out accompanied with the goods. The detaining officer issued a notice at Ext.P3 detaining the goods against which the writ petitioner was before this Court. In the other appeal the writ petitioner, dealer in surgical gloves, sent the goods for quality appraisal on job-works and was transporting the same to their business premises for further sale; when the vehicle was detained.
3. The learned Single Judge looked into the provisions defining taxable person and taxable supply as also Section 7 detailing the scope of supply to find that when a taxable person transports goods procured by them for own use to the site, where the goods are to be consumed, the transaction is not for consideration and would not even fall within the scope of Schedule I. Schedule I enumerates those activities, though made without consideration, which fall within the scope of supply. The delivery chalan which accompanied the goods had not been disputed and hence the transaction even according to the detaining officer would not fall within the scope of a taxable supply, was the finding. In such circumstances, the goods can be said to have been detained only for the infraction, insofar as a declaration under Rule 138 (KER-I) having not been uploaded and accompanied with the transport.
4. Section 129 which was invoked by the authorities was specifically looked into as also Section 130 and it was found so:
'A combined reading of Sections 129 and 130, especially the provision contained in sub section (6) of Section 129 indicates that the detention of the goods is contemplated under the statutes only when it is suspected that the goods are liable to confiscation. This aspect is seen clarified by the Central Board of Excise and Customs in the FAQs published by them on 31.3.2017 also. Section 130 dealing with the confiscation of goods indicates beyond doubt that the confiscation of goods is contemplated under the statutes only when a taxable supply is made otherwise than in accordance with the provisions contained in the statutes and the Rules made there under with th
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e intent to evade payment of tax. If that be so, mere infraction of the procedural Rules like Rules 55 and 138 of the State GST Rules cannot result in detention of goods, though they may result in imposition of penalty. In other words, detention of goods merely for infraction of the procedural Rules in transactions which do not amount to taxable supply, is without jurisdiction.'
As a consequence of the aforesaid finding, the goods were directed to be released unconditionally; finding the action under Section 129 to be without jurisdiction. The aforesaid decision challenged in W.A.No.371 of 2018 was followed in the judgment impugned in W.A. 699 of 2018.
5. The learned Senior Government Pleader assails the decision specifically pointing out the scheme of the goods and service tax enactment and the rules framed thereunder; which encompasses both the sale of goods and supply of services bringing in a total regime change insofar as; the former value added tax & general sales tax regime applicable to sale of goods alone. The check posts as provided in the earlier regime have been done away with and hence the stringent provisions also intended at deterrence of any attempt of evasion. The provisions of the Goods and Services Tax Act and the Rules framed there under have to be treated with the rigor it intends as against any violation; without reference to any mens rea, contumacious conduct or even a suspicion of attempt to evade tax. Section 129 is pointed out specifically to indicate that it is a non obstante clause which provides for detention and seizure in the case of any contravention of the provisions of the Act and the Rules. The release of goods so detained can be effected only on satisfying the conditions either at (a), (b) or (c) of Section 129(1). Sub-section (3) of Section 129 is the provision enabling adjudication; which again refers to subclause (a) to (c) of sub-section (1). Taxability or otherwise is inconsequential, argues the learned Senior Government Pleader, especially pointing out that even in the case of exempted goods, the contravention of the Act and the Rules would entail penalty equal to 2% of the value of goods or 25,000/- rupees which ever is less in the case in which the transporter or the owner of the goods voluntarily comes forward for release of the goods. In the case of no such voluntary action having been taken, the goods would be released only on payment of an amount equal to 50% of the value of goods or 25,000/- rupees whichever is less; under sub-clause (b).
6. There is also provision for release of the goods upon furnishing security equivalent to the amount payable under clause (a) or clause (b) of Section 129(1). Sub-section (3) provides for an adjudication, wherein a notice is issued specifying the tax and penalty payable and thereafter passing an order for payment of such tax and penalty under clause (a), clause (b) or clause (c). There can be release of the goods only on the tax and penalty being paid voluntarily under clause (a) or on the detainee satisfying the tax and penalty as levied under sub-section (3) of Section 129. The fact that the transport of goods was in pursuance of a transaction which is not taxable is irrelevant and inconsequential, according to the learned Senior Government Pleader. When exempted goods are also subject to a levy of tax and penalty, on a transport in contravention of the Act or Rules, the taxability fades into oblivion and the tax and penalty leviable would be in accordance with and by reference to the goods and the rate of tax as per the statute. Hence, the impugned judgment has to be set aside, is the strong compelling argument.
7. The learned Senior Government Pleader relies on the decision in Guljag Industries v. CTO [(2007) 7 SCC 269] and Asst. CTO v.Bajaj Electricals Ltd. [(2009) 1 SCC 308] to further buttress his contention that taxability is of no consequence, since what is imposed under Section 129 is a civil liability for contravention of the Act and Rules. The evasion if any attempted, is not relevant as per the statute, for detention or imposition of penalty under Section 129. The judgments of two Division Benches of this Court, reported in CTO v. Madhu M.B. [(2017) 105 VST 244 (Ker.)] and in W.A.No.509 of 2018 dated 28.02.2018, are also pressed into service to contend that at least at the stage of detention it cannot be looked into whether there is any taxability or not and there should be security furnished, for the tax and penalty that can be imposed under Section 129(1)(a) or (b), to effect release of the goods. Necessarily for release, sub-clause (c) of Section 129(1) will have to be employed as provided in the statute.
8. The learned Counsel for the two respondents, however, points out that Section 129 specifically speaks of penalty as relatable to the tax applicable equal to 100% of the tax payable on such goods. This would necessarily indicate that there can be no penalty imposed under Section 129 if the transaction itself is proved to be one having no tax liability. It is pointed out that in the earlier regime of tax on sale of goods there was a specific provision insofar as providing a penalty to the extent of twice the tax evaded if such evasion could be computed and in all other cases where computation is not possible, penalty to the maximum extent of Rs.10,000/-. The earlier enactments specifically provided for a penalty, wherein the tax evasion could not be computed, which is not available in the scheme under Section 129. Though there is a general penalty applicable under Section 125, the officer detaining the goods under Section 129 would not have the power to impose such penalty. Hence on detention and notice issued even for a technical breach there would be an imposition of tax and penalty as provided under clause (a) or (b). The adjudication as provided under sub-section (3) is a mirage in the context of the liability being automatic.
9. The respondents seek to sustain the judgment of the learned Single Judge specifically pointing out that their transactions, one being of consignment to ones own site and the other of re-transmission after job work, are not taxable transactions. It is emphasized that the words employed in Section 129(1)(a) are 'applicable tax and penalty equal to one hundred per cent of the tax payable'. Hence, only if there is a liability to tax, could there be a detention and a subsequent order being passed for payment of tax and penalty under Section 129. It is pointed out that the learned Single Judge has found that there is no dispute raised by the detaining officer as to the delivery chalan which accompanied the transport. A delivery chalan is prepared in triplicate; which issued forms are serially maintained with the assessee. The original of the delivery challan is for the consignee, the duplicate accompanies the transport and the triplicate is retained by the consignor/assessee for production along with the returns before the AO. Delivery chalan, as seen from Rule 55, is in lieu of a tax invoice and is only with respect to transactions where the transaction of transport of goods is not taxable. The detaining officer having not raised any suspicion against the delivery chalan, it is very evident that even the Department admits that the