Sheetal Jain VS State of Kerala

In this case, the petitioner argued that the authority was legally required to grant a 14-day period to pay the tax and penalty under Section 129(6) of the GST Act. The petitioner’s counsel claimed that the respondent authority unjustly applied Section 130 of the GST Act to impose a hefty tax and penalty, as well as to confiscate goods, without any substantial basis for assuming that the petitioner intended to evade tax.

The petitioner explained that the seized goods were merely samples meant to be shown to wholesalers for business purposes. The petitioner further asserted that the contested order (Ext.P5) failed to specify which provisions of the GST Act were allegedly violated.

The petitioner’s counsel requested that the petition be admitted with an interim stay, arguing that the prima facie case against the petitioner was unsubstantiated.

On the other hand, the Government Pleader representing the respondent department argued against the petition, stating that Sections 129 and 130 of the GST Act pertain to entirely different aspects. The Pleader emphasized that while mens rea (intention or knowledge of wrongdoing) is crucial for actions under Section 130, actions under Section 129 are based purely on contraventions of the Act, regardless of intent.

The central contention is that the petitioner’s right to a 14-day period for payment as per Section 129(6) was overlooked, and the severe measures under Section 130 were improperly applied without evidence of tax evasion intent, thereby necessitating judicial intervention and an interim stay.

In this case, the petitioner argued that the respondent authority was required by law to grant a 14-day period to pay the tax and penalty, as mandated by Section 129(6) of the GST Act. The petitioner contended that the respondent authority incorrectly applied Section 130 of the GST Act, which is reserved for situations involving intentional tax evasion, and claimed that the seized goods were only samples for business solicitation, not intended for sale or tax evasion. The petitioner emphasized that the impugned order (Ext.P5) did not specify which provisions of the GST Act were allegedly violated, thus making the petition eligible for admission with an interim stay.

The learned Government Pleader for the respondent countered by clarifying the distinct functions of Sections 129 and 130 of the GST Act. Section 129 pertains to instances where goods in transit are found to contravene the Act or its rules, warranting detention and assessment of tax and penalties. In contrast, Section 130 addresses intentional tax evasion, necessitating mens rea, or a guilty mind. The Government Pleader argued that the petition lacked merit since Section 129 was appropriately applied based on the irregularities observed in the transport of goods.

Upon reviewing the submissions and materials, the court acknowledged the delineation between Sections 129 and 130 of the GST Act. Section 129 empowers authorities to detain or seize goods and impose penalties if there is a contravention during transit. Conversely, Section 130 is applicable when there is intentional evasion of taxes, involving misuse or unaccounted goods. The court noted the petitioner’s claim that the seized items were only samples and the lack of specific contraventions cited in the impugned order, making a case for admitting the petition and considering an interim stay.

In conclusion, while the petitioner sought relief on the grounds that the respondent authority misapplied the law and failed to provide clear contravention details, the respondent maintained that the appropriate sections were applied based on observed irregularities. The court acknowledged the necessity to differentiate the application of Sections 129 and 130, underscoring the requirement for a clear basis in the respondent’s actions and the petitioner’s right to a fair hearing.

The case at hand revolves around the application of Sections 129 and 130 of the GST Act, 2017, concerning the detention, seizure, and subsequent actions against individuals found to be in contravention of GST laws. The petitioner argues that they were entitled to a 14-day period to pay taxes and penalties as per Section 129(6) of the GST Act, but the respondent authority invoked Section 130, alleging an attempt to evade tax without prima facie evidence.

The petitioner’s counsel contends that the seized articles were merely samples intended for business purposes, and the impugned order fails to specify the provisions of the GST Act contravened by the petitioner. Hence, they seek admission of the petition with interim stay.

In opposition, the government pleader argues that Sections 129 and 130 operate differently: while Section 129 deals with contraventions during goods transit without requiring mens rea, Section 130 necessitates mens rea for actions intending to evade tax.

The court examines the provisions of both sections, clarifying that Section 129 applies when goods are transported in contravention of GST laws during transit, while Section 130 deals with intentional tax evasion. It emphasizes that mens rea, or intention to avoid tax payment, is crucial for invoking Section 130.

Reviewing the facts, the court notes that the notice under Section 130 indicates unauthorized transport of gold ornaments without proper tax documentation. The authority letters found lacked legal backing. Consequently, the respondent authority concluded that the gold jewelry was being supplied in violation of GST laws.

In summary, the court distinguishes between Sections 129 and 130 of the GST Act, emphasizing the necessity of mens rea for invoking the latter. Based on the evidence presented, it appears that the respondent authority reasonably invoked Section 130 due to the lack of proper documentation and authorization for the transported goods, indicating a potential attempt to evade tax.

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