SUB GST p4.4

CONFISCATION OF GOODS AND CONVEYANCE AND LEVY OF PENALTY

20 May 2020

Meaning of Confiscation

The term ‘confiscate’ has not been defined under the Goods and Services Tax (GST) Act. However, the dictionary meaning of the word ‘confiscate’ is to expropriate private property for public use without compensating the owner, to appropriate (private property) to the public treasury by way of penalty, to deprive of property as forfeited to the State.

Under the Goods and Services Tax (GST) Act, goods can be confiscated in certain circumstances as provided in section 130 of the CGST Act, 2017.

Circumstances under which Goods be Confiscated and Penalty Be Levied

As per section 130 of the CGST Act, 2017, the goods are liable for confiscation and any person shall be liable to a penalty in the following cases:

• On supply or receipt of goods in contravention of provisions of the Act or rules leading to evasion of tax. 

• On not accounting for any goods which are liable to pay tax under the Act. 

• On supply of goods liable for taxation under the Act, without having applied for registration. 

• Contravention of any of the provisions of the Act or rules with an intention to evade payment of tax. 

• Uses any conveyance or means of transport for carriage of goods in contravention of provisions of this Act or rules made thereunder, unless the owner proves that it was used without his knowledge or connivance.

All such goods or conveyances shall be liable for confiscation and a person shall be liable for penalty under section 122 of the Act.

Fine and Penalty 

Following actions can be considered by the proper officer: 

• The proper officer shall give an option to pay a fine as determined by the officer, in lieu of confiscation to the owner. 

• Where any fine in lieu of confiscated goods is imposed, the fine shall not be more than the market value of goods. 

• The aggregate of fine and penalty shall not be less than the amount of penalty leviable under section 129(1) of the CGST Act, 2017. 

• In case of hired conveyance, the owner of conveyance shall be given an option to pay fine equal to the tax payable on goods in lieu of confiscation of conveyance.

Section 130(3) provides that where any fine instead of confiscation is imposed, the owner of such goods or conveyance shall, in addition, be liable to any tax, penalty, and charges payable in respect of such goods or conveyance.

Dealing with confiscated goods and rights of the owner of confiscated goods

• The owner of the goods will be served with show-cause notice and will be given an opportunity of being heard before confiscation is ordered or any penalty is levied. 

• The title of confiscated goods vest in the Appropriate Government 

• The proper officer will take possession of the confiscated goods and every officer of police shall assist him in doing so. 

• In case a proper officer is satisfied that the goods or conveyance are not required in any other proceedings and after giving reasonable time not exceeding 3 months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the amount with the government.

The requirement of giving an option to the persons to redeem the goods after confiscation: 

The Owner or the person-in-charge of the goods liable to confiscation is to be given the option for fine not exceeding the market price of confiscated goods instead of confiscation. This fine shall be in addition to the tax and other charges payable in respect of such goods.

Confiscation of a conveyance carrying goods without the cover of prescribed documents:

Conveyance carrying goods without the cover of any documents or declaration shall be liable to confiscation. However, if the owner of the conveyance proves that the goods were being transported without the cover of the required documents/declarations without his knowledge or connivance or the knowledge or connivance of his agent then the conveyance shall not be liable to confiscation.