Date of Judgement:
15th February 2022
Coram/judge:
Hon'ble Mr.Justice Ajay Tewari
Hon'ble Mr.Justice Pankaj Jain
Parties to the Case:
Petitioner - Vijay Mamgain
Respondents- The State of Haryana &ors.
Subject
The given petition was filed by the petitioner challenging the respondent’s action of not releasing the petitioner’s vehicle even when he had paid his part of the fine levied for the violation of the said law.
Legal Provisions
- Section 129 of the central goods and services act (CGST) Act, 2017- which deals with detention, seizure and release of goods and conveyances (vehicles) in transit. Once seized, sub-section 1 lays down conditions for release of such goods and conveyances in transit.
- Section 130 of CGST Act, 2017 –it deals with Confiscation of goods or conveyances and levy of penalty. It is a more stringent provision evoked in case the penalties levied by proper officer in the notice pursuant to section 129 and rules thereunder are ignored.
Overview
- The petitioner contended that the provisions of section 130 of the act, makes it clear that the owner of the goods and the owner of the vehicle are two separate entities and the liability of one cannot be imposed upon the other.
- In the order made by the proper officer, penalty and tax was levied against the goods but since the same was not paid within 14 days proceedings under Section 130 of the Act were initiated. At that stage also the owner of the goods did not come forward to pay the tax and penalty in view of the confiscation.
- The owner of the vehicle(the petitioner) went and paid the fine imposed on the vehicle but the vehicle was not released by the authorities.
- The learned council for the state submitted that in light of section 129, the vehicle as well as the goods can only be released from detention on the payment of the applicable tax and penalty. And the subsequent evocation of section 130 should not affect this procedure.
- Further it was contended that there was no justifiability for the assertion that the owners of the goods and conveyance were two separate entities as section 130 of the Act makes it is clear that whoever wants the goods or the vehicle to be released has to pay the tax, penalty and fine imposed for all the things and in her view, proviso would not affect this basic provision.
Issue
Whether the vehicle used for transport, detained by the proper officer, can be released on payment of the fine imposed on the vehicle without payment of fine imposed on goods being transported?
Judgement Analysis
- In M/S Shiv Enterprises Vs. State of Punjab and ors, this court had held that a trader or businessman cannot be accused of having intention to evade payment of tax for act or omission on part of someone not immediately linked to his activity. Even if a one wants to be prudent, there is no system in place from where he can check as to whether his predecessors in supply chain have paid relevant taxes or not.
- The honourable court relied on the fundamental legal principle embedded in legal maxim "LEX NON COGIT AD IMPOSSIBILIA". It states that the law does not compel a person to do that which he cannot possibly perform. Once he/she cannot be compelled to do something not possible, definitely one cannot be penalized for not doing so.
- The Court has held that the principle of vicarious liability cannot be extended indefinitely. So, to force the owner of the vehicle to pay the tax and penalty on the goods would mean that he would be imposed with the vicarious liability of any fraud/evasion by the owner of the goods despite the proviso enacted to Sub-Section 2 of Section 130.
- Hence, the arguments put forward by the learned council for the state were rejected as it would prejudicially affect the rights of conveyance owner. The authorities were directed to release the vehicle. Whereas the goods would be confiscated and disposed of as per the procedure of law.
Conclusion
The honourable court in the present petition cleared the ambiguity around the liability arising from detention, seizure and release of goods and conveyances in transit (section 129) and their confiscation thereof (section 130). The court construed the provision in question in the best possible way, giving effect to it as a whole along with the effect of proviso argued in the given petition. The court also adjudicated upon the application of principle of vicarious liability under the given circumstances of the case.
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