Section 129/130 of the CGST Act, 2017 – Goods in Transit —- The Petitioner challenged the detention of the goods and vehicle. The petitioner preferred Appeal against the order of detention, passed under Section 130 of the Act, which was also rejected. The counsel for the petitioner challenged confiscation of the goods under Section 130 of the Act. The counsel for the Revenue contended that the person transporting the goods did not possess any Eway bill nor had an E-way bill been generated, therefore, the proper officer possessed the power not only to detain but also to confiscate. The court observed that the power to detain under Section 129 cannot be converted to a proceeding under Section 130 of the Act since both these provisions operate independently of each other. The intent behind conferring power to detain the goods under Section 129 is fundamentally to ensure that the applicable tax and penalty is recovered whereas the intent behind confiscation under Section 130 is to divest the owner of the goods itself and also impose liability of payment of the applicable tax and penalty. The goods were intercepted while in transit and the proper officer passed an order of detention on 28.09.2021 (MOV-6) and on the passing of this order, the owner of the goods or the owner of the conveyance secured a right under Section 129 to get the goods released. However, the proper officer, thereafter proceeded to issue a notice of confiscation (MOV-10). Thus, the proper officer basically nullified the statutory right of the owner of the goods or the non-owner to get the goods released on compliance with the conditions specified in Section 129(1) (a) to (c), which would render the entire confiscatory proceedings illegal. The power of confiscation being the ultimate and the most extreme punishment can only be invoked in extraordinary circumstances. The entire procedure adopted from converting the detention proceedings into a confiscatory proceeding, leading to the order of confiscation is wholly illegal. The Appellate Authority has mechanically accepted the reasoning of the order of the proper officer.

Held that:- The Hon’ble High Court quashed the impugned orders and directed that since the confiscated goods are already sold in a public auction, the respondents to pay the petitioners, the sale proceeds of the auction after deducting the penalty, within a period of four weeks. The proper officer shall also release the conveyance, if it is not already released.