2 5. STATE TAX OFFICER, ANTI EVASION-I, BHIWADI, DIVISION- ALWAR RAJASTHAN RESPONDENTS. IN THE MATTER OF PROTECTION, REMEDY, REDRESS UNDER ARTICLE 226

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1 1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR D.B. CIVIL WRIT PETITION NO. /2018 SHAN MOHAMMAD S/O. FAUJDAR VILLAGE POST- PURE, AMIYA, TILOI, RAEBARELI (U.P.) PETITIONER. Versus 1. UNION OF INDIA THROUGH SECRETARY, FINANCE DEPARTMENT, GOVERNMENT OF INDIA, NEW DELHI 2. THE CHAIRMAN GST COUNCIL GOVERNMENT OF INDIA, NEW DELHI 3 THE STATE OF RAJASTHAN THROUGH FINANCE SECRETARY, GOVERNMENT OF RAJASTHAN, SECRETARIATE, JAIPUR. 4. COMMISSIONER CENTRAL GOODS AND SERVICE TAX, JAIPUR

2 2 5. STATE TAX OFFICER, ANTI EVASION-I, BHIWADI, DIVISION- ALWAR RAJASTHAN RESPONDENTS. IN THE MATTER OF PROTECTION, REMEDY, REDRESS UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA IN THE NATURE OF WRIT OF MANDAMUS, CERTIORARI, PROHIBITION QUO- WARRANTO OR ANY OTHER LIKE WRIT, DIRECTION EX-DEBITO JUSTICE IN THE MATTER OF ARTICLE 14, 19, 21, 265, 286, 300A, 301, OF THE CONSTITUTION OF INDIA, 1950; IN THE MATTER OF THE CENTRAL GOODS AND SERVICE TAX ACT, 2017 r.w. CENTRAL GOODS AND SERVICES TAX RULES, 2017 AND RAJASTHAN GOODS & SERVICES TAX ACT, 2017 r.w. RAJASTHAN GOODS & SERVICES TAX RULES, 2017

3 3 IN THE MATTER OF CONSTITUTIONAL VALIDITY & VIRES OF SECTION 129 OF THE CENTRAL GOODS & SERVICES TAX ACT, 2017 AND SECTION 129 OF RAJASTHAN GOODS AND SERVICE TAX ACT, 2017 To The Hon'ble Chief Justice And his Companion Judges of the High Court of Judicature for Rajasthan At Jaipur Bench, Jaipur. MAY IT PLEASE YOUR LORDSHIPS, under: - The Humble petitioners most respectfully submit as 1. That the petitioner is the driver of the vehicle No. HR 55P-6196 and is filing this writ petition challenging the levy under the provisions of the GST Act of tax, interest and penalty by virtue of invoking of the provisions of Section 129, 130 of the Central Goods and Services Tax Act (hereinafter referred as CGST Act ). The petitioner is citizen of India and is competent to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India of this Hon ble Court. 2. That by means of this writ petition, the petitioner seek to challenge the constitutional validity of Section 129

4 4 and 130 of Central Goods & Services Tax Act, 2017 and Section 129 and 130 of Rajasthan Goods & Services Tax Act, 2017 (hereinafter referred to as the impugned Acts). Section 129 and 130 of the impugned acts is reproduced as under: Detention, seizure and release of goods and conveyances in transit (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;

5 5 (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in subsection (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130: Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said

6 6 period of seven days may be reduced by the proper officer (1) Notwithstanding anything contained in this Act, if any person (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122. (2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon: Provided further that the

7 7 aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under subsection (1) of section 129: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. (3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government

8 8 Brief Facts are as under:- 3. That the conveyance bearing No. HR 55P 6196 was intercepted by the respondent No. 5 on at Sahajahapur Toll Naka. The petitioner is the Driver of aforesaid vehicle. On interception of the aforesaid vehicle, the respondent No. 4 found certain discrepancies and for the alleged discrepancies during movement the goods were detained under Sub Section 1 of Section 129 of the CGST Act and order of detention was issued. 4. That according to Sub Section 1 of Section129 of the impugned act goods can be released on payment of tax and penalty. Under clause (a) of sub section 1 provides payment of applicable tax and penalty equal to 100 percent of the tax payable on such goods and in case exempted goods payment of amount equal to 2% of the value of goods or Rs. whichever is less where owner of the goods comes forward for payment of such tax and penalty. Under clause (b) of sub section 1 provided payment of the applicable tax and penalty equal to 50% of the value of goods reduced by the tax amount paid thereon and in case of exempted goods, on payment of amount equal to 5% of the value of goods or Rs whichever is less, where owner of goods does not come forward for payment of such tax and penalty. Under clause (c) conveyance would be released upon furnishing a security equivalent to the amount payment under clause (a) or clause (b).

9 9 5. That the respondent No. 5 passed order / notice in Form GST MOV - 07 whereby the amount of tax and penalty was calculated and the petitioner was directed to appear on Copy of order / notice Form GST MOV- 07 is enclosed and marked as Annexure That the respondent No. 5 passed order of demand of tax and penalty in Form GST MOV- 09 on wherein it has been mentioned that in response to the notice MOV- 07, the owner of the goods Sh. Shan Mohammad has come forward and made the payment of tax and penalty as proposed, thus the applicable tax and penalty proposed are confirmed. Copy of order dated Form GST MOV- 09 is enclosed and marked as Annexure-2. It is submitted that the respondent No. 5 mentioned above statement as incorrect as the petitioner never came forward for payment of tax and penalty as proposed. 7. That the respondent No. 5 issued notice in Form GST MOV-10 for confiscation of goods for conveyance and levy of penalty under section 130 of the RGST Act r/w. relevant provisions of CGST Act. In the notice it has been mentioned that neither the owner of the goods nor the person incharge of the conveyance came forward to make the payment of applicable tax and penalty within the time allowed in the order and as such the respondent No. 5 proposed to confiscate the above goods and conveyance. Copy of notice Form GST MOV-10 is enclosed and marked as Annexure That according to the provisions of Section 129, where any goods while they were in transit in

10 10 contravention of the provisions of the Act or the rules, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention of seizure. Release of such goods and conveyance is provided as when owner of goods comes forward for payment of tax and penalty, on payment of applicable tax and penalty equal to 100% of the tax payable on such goods and where the owner of the goods does not come forward for payment of such tax and penalty, on payment of the applicable tax and penalty equal to 50% of the value of goods reduced by the tax amount paid thereon. Further the detention or seizure of goods and conveyance can also be released upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) of section 129. Thus the provision has been made in the manner that whenever the goods and conveyance in transit is detained by the authority, its release could only be on payment of tax and penalty as provided in Sub Section (a) or Sub Section (b) as the case may be and in Sub Section (c) release could be made on furnishing security equivalent to the amount payable under clause (a) or clause (b). The provisions do not contain anything which provides that in case the person shows that he is bonafide or that the seizure or detention was not warranted, then also there is no provision to release the goods and conveyance which is detained or seized in transit, without payment of tax and penalty as provided in the section. The

11 11 provisions of Section 129 do not conform to established principles of natural justice as they do not provide an opportunity to the Taxpayer to defend his case and prove his innocence. Thus the provision appears to be ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. 9. That the provisions of Section 129 are framed in the manner that once the goods and conveyance is seized in transit, its release could only be after payment of penalty. The penalty as provided in section 129 is very harsh and there is no rationality and is disproportionate. Further the payment as provided in section 129 for release of goods has been made in the name of applicable tax even if the tax has already been paid. There is no distinction provided between tax paid and tax not paid. Therefore, also the provisions of section 129 are ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. 10. That even though the goods intercepted during transit were duty paid and valid Invoice pertaining to the said purchase was produced at the time when the documents were asked for by the concerned officer, the taxpayer was asked to deposit the Tax again on the same goods. The same was never the intention of the legislature. When only due to a technical mistake E-way bill could not be produced at the time of checking, it could not be concluded that the Tax on such goods is not paid even when an Invoice showing the payment of tax is produced. Therefore, it cannot

12 12 be the case that the Tax is to be paid twice on the same goods. The tax already paid on the goods is not being taken into consideration by the officer passing an order under Section 129. This is an absurd situation leading to double taxation. Such provision is against the legislative intention and is liable to declared unconstitutional. 11. That it is also pertinent to mention here that the proviso to sub section 1 of section 129 provides that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. There is no provision mentioned that the owner of the goods may also be served with notice. It is submitted that the goods is transported by means of transport and the person transporting the goods is often driver of the vehicle and not the owner of the goods. Therefore, the provisions of section 129 in view of the facts that the notice of detention or seizure is not provided to the owner of the goods, is arbitrary and contrary to the interest of the owner of the goods and thus it is apparently ultra vires to the Constitution of India as it violates the principle of nature justice. 12. That the provisions of Section 129 of the CGST Act, 2017 are framed in the manner that everything appears to be pre-determined and there is no room for flexibility or any exception as may arise in the facts and circumstances of a particular case. Once the goods and conveyance is detained or seized in transit, immediately the process of penalty starts. The seized goods could only be released by making

13 13 payment of applicable tax and penalty under clause (a) or clause (b) of sub section 1. Thereafter the procedure provided is that if the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub section 1 within 7 days, then further proceeding is initiated in accordance of section 130. Section130 is regarding confiscation of goods or conveyance and levy of penalty. Under section 130 the penalty shall be equal to be value of the goods. Thus the provisions of section 129 are framed in the manner that the time given as 7 days is too less for applying principles of nature justice as no opportunity of hearing is provided to the owner of goods. Thus the provisions of section 129 ultra vires to the Constitution of India are beyond the legislative competence of the parliament. 13. That it is also submitted that under section 129, there is no provision for issue of notice to the owner of the goods as soon as the goods are detained or seized. The word used in the section is any person transporting any goods. Under sub-section (6), first time owner of the goods is mentioned and that too that in case he fails to pay the amount of tax and penalty as provided in sub-section (1) within 7 days of such detention or seizure, further proceeding is initiated under section 130. Thus from the language of the provisions of section 129 it appears that prior to imposition of penalty, there is no provision for giving notice to the owner of the goods, who is the most affected party as the goods contained in the conveyance belongs to owner of the goods. Thus not

14 14 containing any provision for giving notice to owner of the goods offends Article 14 of the Constitution of India and also offends the principles of natural justice. Thus the provisions of section 129 are ultra vires to the Constitution of India. 14. That for computation of tax and penalty as provided in section 129, the respondent No. 5 made valuation of the goods whereas no such procedure is provided in Section 129 as to making valuation of the goods. Further the respondent No. 5 made valuation without any basis as to how he assessed the value of goods. 15. That the respondent No. 5 has valued the goods detained without providing any rationale behind coming to such conclusion and has imposed such tax and penalty. No procedure whatsoever is prescribed under Section 129 of the CGST Act, 2017 or RGST Act, 2017 or IGST Act, 2017 as to how the valuation of the goods is to be done. It bestows upon the respondent No. 5 incorrigible powers to decide the value of goods and impose the Tax and Penalty according to their whims and fancies. 16. That in the scheme of Goods and Service Tax Act, tax is levied under CGST and State GST. In case of interstate trade IGST is applicable. In the instant case the goods which was detained was transported in course of interstate trade and thus provisions of neither CGST nor RGST are applicable. Section 129 and 130 of the CGST Act and RGST Act cannot be made applicable in case of interest trade. 17. That since in the instant case the goods were transported in course of inter-state trade and thus

15 15 tax and penalty cannot be imposed under section 129 of the CGST Act and RGST Act. In case of interstate trade provisions of IGST are applicable. The respondent No. 5 applied provisions of Section 129 of the CGST Act and RGST Act on the erroneous approach and without having jurisdiction and authority of law to apply the provisions of CGST Act and RGST Act. 18. That the penalty as prescribed under section 129 is very excessive which could be understand by taking example where taxable goods worth Rs. 10,00, %) were seized u/s Amount payable for release of goods would be determined in the following manner: Section Amount to be paid 129(1)(a): Where person comes Tax i.e. Rs. 1,80, forward to pay tax and penalty Penalty of 100% of tax i.e. 1,80, = Rs. 3,60, (1)(b): Where person does Tax i.e. Rs. 1,80, not come forward to pay tax and penalty Penalty of 50% of value of goods i.e. 5,00, = Rs. 6,80, (1)(c) Upon furnishing security of the amount payable under clause (a) or (b) If such amount prescribed is not paid within 7 days of seizure then proceedings of confiscation u/s. 130 shall be initiated. 19. That it is also submitted that under section 129(1) of the CGST Act, the payment of tax and penalty is provided

16 16 for release of goods from detention which is amount of applicable tax and penalty equal to 100% of the tax payable under section 129(1)(a) and the penalty is 50% of the value of goods under section 129(1)(b) of the Act. A bare perusal of these provisions it appears that full penalty on entire applicable Tax is made applicable both under CGST Act and also under the State GST Act and thus these provisions appear to be unreasonable, arbitrary and contrary to the spirit of Constitution of India as full penalty on entire applicable Tax once provided under one Act it cannot be imposed in the name of other Act for the same act. It is submitted that full penalty once imposed under the provisions of CGST Act it cannot be imposed under the provisions of RGST Act for the same transaction. Section 129 provides penalty under both the act and thus the provisions of Section 129 are apparently ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. 20. That under Section 129(6) of the CGST Act the provisions are made in the manner that the person transporting any goods or the owner of goods fails to pay the amount of tax and penalty as provided in sub section (1) within 7 days of such detention or seizure, further proceedings shall be initiated in accordance with section 130. Accorded to section 130 of the CGST Act the authority makes confiscation of goods or conveyance and then levies penalty. The penalty provided in the said section is not specified as there is no basis specified in order to determine such penalty. It is proposed to be imposed in the manner that fine levyable shall not

17 17 exceed the market value of the goods confiscated. Further it is provided that the aggregate of final penalty levyable shall not be less than the amount of penalty levyable under sub section (1) of section 129. Thus the provisions of section130 are made in the manner that it left open to the authority to levy penalty upto the amount equal to the market value of the goods confiscated. Thus the provisions of section 130 are apparently very harsh and the penalty provided is grossly disproportionate to the alleged act. Thus such provisions offend the basic scheme of the Constitution of India which is a welfare state. 21. That section 129 and 130 of the CGST Act both are arbitrary, unreasonable and ultra vires to the Constitution of India for this reason also that under section 129(1) payment of tax and penalty is provided for release of goods and conveyance which is detained. Further in section 129 the procedure is provided in different steps and finally under section 129(6) it is provided that if payment of tax and penalty as provided in section 129(1) is not paid within 7 days, proceeding are liable to be initiated according to section 130. Thus such provision apparently offends the basic structure of the Constitution and it is apparently arbitrary as once payment of applicable tax and penalty is applied, the proper procedure is only to make recovery of such applicable tax and penalty whereas according to section 129(6), if amount is not paid proceeding of section 130 is automatically made applicable and under section 139 the goods is confiscated and then there is provision of levy of penalty which could be equal to the market value

18 18 of the goods confiscated. Thus apparently the provision section 129 and 130 is ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. 22. Because Section 130 of the Central Goods & Services Tax Act, 2017 is prima facie ultra vires the constitution and is against the spirit of the new Indirect Tax law. Such harsh proceedings of confiscation are attracted without affording a reasonable opportunity to the Taxpayer to defend the allegations. Penalty in such a case is arbitrary and highly detrimental to the interest of the Taxpayer. The Penalty imposed is equivalent to the value of goods in transit which makes it a draconian provision liable to struck down in its entirety. 23. That according to scheme of section 129 and 130 the proceedings of section 130 are automatically applicable in case of non-payment of the amount of tax and penalty as provided under section 129. It is submitted that section 129 provides certain procedure wherein amount of applicable tax and penalty is provided and if such applicable tax and penalty is not paid then the procedure which could be applied by the authority is only to make recovery of such tax and penalty whereas according to section 129 and 130 of the CGST Act if tax and penalty is not paid under section 129 then automatically proceedings of section 130 is initiated. Thus the provisions of section 129 and 130 gives power and authority to the State to recover undue amount from the assesseee and such practice amounts to undue enrichment by the State which is offensive of the provisions of the Constitution of India.

19 That in case the Taxpayer comes forward to deposit the amount as demanded in the Order passed under Section 129(3) the respondent No. 5 is requiring the Taxpayer to pay the tax and penalty amount by applying for a new Temporary Registration under GST and then depositing the said amount of Tax and Penalty as a new and separate Taxpayer. When a Taxpayer is already registered under GST and possesses a GSTIN he cannot be required to register again under GST as a separate Taxpayer and pay the Tax and Penalty. The facility of registering temporarily is available only in the case where the unregistered Transporter pays the Tax and Penalty. It creates an absurd situation where a person who is registered under GST is required to obtain temporary registration only to pay Penalty under Section 129. In such cases where the owner of the goods is the recipient and he is required to pay tax and penalty, he cannot even take Input Tax Credit of the tax so paid on purchase as a separate legal entity is created only for the payment of Tax and Penalty. Another aspect of it would be, that if the recipient being the owner of goods pays tax on goods on which tax has already been paid by the Seller it would lead to double taxation and it would be against the spirit of the legislature and is ultra vires the Constitution of India. 25. That prima-facie the impugned Section 129 and 130 of the CGST Act / RGST Act 2017 is ultra vires to the Constitution of India and beyond the Legislature competence of the State legislature. The petitioner assails the validity of provision of the Act on following amongst other grounds:

20 20 GROUNDS TO THE WRIT PETITION (a) Because the impugned Section 129 of the CGST / RGST Act, 2017 is ultra vires to the Constitution of India and beyond the Legislative competence of the State legislature and thus is liable to be held unconstitutional and ultra vires to the Constitution of India. The impugned section 129 is drafted in a manner where everything is pre-determined and from a bare reading of the provisions it appears that the provisions do not contain anything which covers the possibility that in case the person shows bonafides and he satisfies the authority that detention or seizure of the goods is not warranted then also there is no provision to release the goods without imposition of tax and penalty. Thus the provisions are contrary to the provisions of the Constitution of India. The Notice issued to the person transporting the goods is with a pre-determined mind that there is contravention of the provisions of the Act and only on the basis of preliminary inspection of the vehicle the liability is ascertained without offering a fair opportunity to the person transporting the goods or the owner of the goods to present their case. The order of detention is also issued on the same day of interception which shows the prejudiced mindset of the respondent No. 5 against the Assessee. Further the penalty provided is excessive and there is no rationality in imposing such high penalty even if it is established that there is no evasion of tax and the detention or seizure of the goods and conveyance is detained in transit on some technical reason. Thus the provision of section 129 are drafted in the manner which causes undue enrichment to the

21 21 (b) (c) state at the cost of the taxpayers and thus it offends the provisions of Constitution of India and thus ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. Because the provisions of Section 129 of CGST Act are framed in the manner that everything is pre-determined and once the goods detained or seized, there is no provision for releasing the same without imposing penalty. Further in sub section (1) and (2), it is provided that detention or seizure of the goods shall be released on payment of applicable tax, even if it is established that tax is already paid. Thus on seizure of the goods, payment of tax as provided appears to be unreasonable as there is no clause that in case the tax is already paid, the tax shall not be payable again. It appears that the legislature has framed the provisions in the manner that once the conveyance in transit containing goods is seized then automatically penalty is attached even if bonafide is shown and even if it is established that there is no evasion of tax and there is no loss to the public exchequer. Thus the provisions of section 129 of the CGST Act are ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. Because the provisions of section 129 of the CGST Act has been made in the manner that whenever the goods and conveyance in transit is detained by the authority, its release could only be on payment of tax and penalty as provided in Sub Section (a) or Sub Section (b) as the case may be and in Sub Section (c) release could be made on furnishing security equivalent to the amount payable under clause (a) or clause (b). The provisions do

22 22 (d) (e) not contain anything which suggest for providing that in case the person shows his bonafide or that the seizure or detention was not warranted, then the goods may be released. There is no provision to release the goods and conveyance which is detained or seized in transit, without payment of tax and penalty as provided in the section. Thus the provision appears to be ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. Because the provisions of Section 129 are framed in the manner that once the goods and conveyance is seized in transit, its release could only be after payment of penalty. The penalty as provided in section 129 is very harsh and disproportionate. Further the payment as provided in section 129 for release of goods has been made in the name of applicable tax even if the tax has already been paid. There is no distinction provided between tax paid and tax not paid. Therefore, also the provisions of section 129 are ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. Because it is also pertinent to mention here that the proviso of sub section 1 of section 129 provides that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. There is no provision mentioned that the owner of the goods may also be served with notice. It is submitted that the goods is transported by means of transport and the person transporting the goods is often driver of the vehicle and not the owner of the goods. Therefore, the provisions of

23 23 section 129 in view of the facts that the notice of detention or seizure is not provided to the owner of the goods, is arbitrary and contrary to the interest of the owner of the goods and thus it is apparently ultra vires to the Constitution of India as it violates the principle of nature justice. (f) Because the provisions of Section 129 of the CGST Act, 2017 are framed in the manner that everything appears to be pre-determined and there is no room for flexibility or any exception as may arise in the facts and circumstances of a particular case. Once the goods and conveyance is detained or seized in transit, immediately the process of imposing penalty starts. The seized goods could only be released by making payment of applicable tax and penalty under clause (a) or clause (b) of sub section 1. Thereafter the procedure provided is that if the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub section 1 within 7 days, then further proceeding is initiated in accordance of section 130. Section 130 is regarding confiscation of goods or conveyance and levy of penalty. Under section 130 the penalty shall be equal to the value of the goods. Thus the provisions of section 129 are framed in the manner that the time given as 7 days is too less for applying principles of nature justice as no opportunity of hearing is provided to the owner of goods. Thus the provisions of section 129 ultra vires to the Constitution of India and beyond the legislative competence of the parliament. (g) Because it is also submitted that under section 129, there is no provision for issuing notice to the owner of

24 24 (h) (i) the goods as soon as the goods are detained or seized. The word used in the section is any person transporting any goods. Under sub section 6, first time owner of the goods is mentioned and that too in case he fails to pay the amount of tax and penalty as provided in sub section 1 within 7 days of such detention or seizure, further proceeding is initiated under section 130. Thus from the language the provisions of section 129 it appears that prior to imposition of penalty, there is no provision for giving notice to the owner of the goods, who is the most affected party as the goods contained in the conveyance belongs to owner of the goods. Thus not containing any provision for giving notice to owner of the goods offends Article 14 of the Constitution of India and also offends the principles of natural justice. Thus the provisions of section 129 are ultra vires to the Constitution of India. Because since in the instant case the goods were transported in course of inter-state trade and thus tax and penalty cannot be imposed under section 129 of the CGST Act and RGST Act. In case of inter-state trade provisions of IGST are applicable. The respondent No. 5 applied provisions of Section 129 of the CGST Act and RGST Act on the erroneous approach and without having jurisdiction and authority of law to apply the provisions of CGST Act and RGST Act. Because it is also submitted that under section 129(1) of the CGST Act, the payment of tax and penalty is provided for release of goods from detention which is amount of applicable tax and penalty equal to 100% of the tax payable under section 129(1)(a) and the penalty

25 25 (j) is 50% of the value of goods under section 129(1)(b) of the Act. A bare perusal of these provisions it appears that full penalty is made applicable both under CGST Act and also under the State GST Act and thus these provisions are appears to be unreasonable, arbitrary and contrary to the spirit of Constitution of India as penalty once provided under one Act it cannot be imposed in the name of other Act for the same act. It is submitted that penalty once imposed under the provisions of CGST Act it cannot be imposed under the provisions of RGST Act for the same transaction. Section 129 provides penalty under both the act and thus the provisions of Section 129 are apparently ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. Because under section 129(6) of the CGST Act the provisions are made in the manner that the person transporting any goods or the owner of goods fails to pay the amount of tax and penalty as provided in sub section (1) within 7 days of such detention or seizure, further proceedings shall be initiated in accordance with section 130. Accorded to section 130 of the CGST Act the authority makes confiscation of goods or conveyance and then levy penalty. The penalty provided in section is not specified and only it is made in the manner that fine levyable shall not exceed the market value of the goods confiscated. Further it is provided that the aggregate of final penalty levyable shall not be less than the amount of penalty levyable under sub section (1) of section 129. Thus the provisions of section 130 are made in the manner that it leave open to the authority to levy

26 26 (k) (l) penalty upto equal the amount of market value of the goods confiscated. Thus the provisions of section 130 are apparently very harsh and the penalty provided is grossly disproportionate to the alleged act. Thus such provisions offends the basic scheme of the Constitution of India in the welfare state. Because section 129 and 130 of the CGST Act both are arbitrary, unreasonable and ultra vires to the Constitution of India for this reason also that under section 129(1) payment of tax and penalty is provided for release of goods and conveyance which is detained. Further in section 129 procedure is provided in different steps and finally under section 129(6) it is provided that if payment of tax and penalty as provided in section 129(1) is not paid within 7 days, proceeding are liable to be initiated according to section 130. Thus such provision apparently offends the basic structure of the Constitution and it is apparently arbitrary as once payment of applicable tax and penalty is applied, the proper procedure is only to make recovery of such applicable tax and penalty whereas according to section 129(6), if amount is not paid proceeding of section 130 is automatically made applicable and under section 130 the goods is confiscated and then there is provision of levy of penalty which could be equal to the market value of the goods confiscated. Thus apparently the provision section 129 and 130 is ultra vires to the Constitution of India and beyond the legislative competence of the Parliament. Because Section 130 of the Central Goods & Services Tax Act, 2017 is prima facie ultra vires the constitution

27 27 and is against the spirit of the new Indirect Tax law. Such harsh proceedings of confiscation are attracted without affording a reasonable opportunity to the Taxpayer to defend the allegations. Penalty in such a case is arbitrary and highly detrimental to the interest of the Taxpayer. The Penalty imposed is equivalent to the value of goods in transit which makes it a draconian provision liable to struck down in its entirety. The Form GST MOV-1 to Form GST MOV-11 under which the entire proceedings of detention, confiscation under Section 129 and Section 130 are conducted do not have any legal tenability as the said Forms are not notified under the CGST Rules, 2017 and all the proceedings conducted under it are against the spirit of the Act. (m) Because according to scheme of section 129 and 130, the proceedings of section 130 automatically apply in case of non-payment of the amount of tax and penalty as provided under section 129. It is submitted that section 129 provides certain procedure wherein amount of applicable tax and penalty is provided and if such applicable tax and penalty is not paid then the procedure which could be applied by the authority is only make recovery of such tax and penalty whereas according to section 129 and 130 of the CGST Act if tax and penalty is not paid under section 129 then automatically proceeding of section 130 is initiated. Thus the provisions of section 129 and 130 gives power and authority to the State to recover undue amount from the assesseee and such practice amount to undue enrichment by the State which is offensive of the provisions of the Constitution of India.

28 28 (n) Because other submission would be stated at the time of arguments. 24 That the petitioner has no other alternative and efficacious remedy except to approach this Hon ble High Court under its extra ordinary jurisdiction under Article 226 of the Constitution of India as vires of impugned act has been challenged. 25 That the petitioner has not filed any petition on the same grounds before the Hon ble Supreme Court or before this Hon ble Court. PRAYER In view of the above, it is humbly prayed that by an appropriate writ, order or direction, the Hon'ble Court may please: - i. Declare the impugned Section 129 of the CGST Act, 2017 and Section 129 of the RGST Act, 2017 as illegal, ultra vires and beyond the Legislature competence of the respondent State. ii. Declare the impugned Section 130 of the CGST Act, 2017 and Section 130 of the RGST Act, 2017 as illegal, ultra vires and beyond the Legislature competence of the respondent State. iii. Quash / Set aside GST MOV - 07 dated Annexure-1, order dated Form GST MOV- 09 Annexure-2, notice Form GST MOV-10 Annexure-3. iv. Restrain the respondents to proceed further in regard to notice issued to the petitioner in Form GST MOV 10

29 29 v. Any other appropriate writ, order or direction which may be considered just and proper in the facts and circumstances of the case may kindly also be issued in favour the petitioner. HUMBLE PETITIONER Notes: THROUGH COUNSEL (PANKAJ GHIYA / MEENAL GHIYA / PAWAN SHARMA / PRIYAMVADA JOSHI) ADVOCATES 10, Ganesh Colony, Bhairav Path, JLN Marg, Jaipur, En. No. R/532/1999 Mob pankaj.ghiya@hotmail.com 1. That no such writ petition has been filed prior to this. 2. This has been typed in my office by my personal typist. 3. That P.F. Notices and extra set will be submitted in time. 4. That since pie papers are not readily available it is typed on stout papers. 5. That this is D.B. writ petition as the vires of the Act have been challenged. 6. That this matter pertains to Jaipur Bench of Hon ble Rajasthan High Court. COUNSEL FOR THE PETITIONER

30 30 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR D.B. CIVIL WRIT PETITION NO. /2018 M/S. SHAN MOHAMMAD UNION OF INDIA & OTHERS Versus PETITIONER. RESPONDENTS. AFFIDAVIT IN SUPPORT OF THE WRIT PETITION. I Shan Mohammad S/o Sh. Faujdar Aged 26 years, vllage-post- Pure, Amiya, Tiloi, Raebareli (U.P.) do hereby make oath and state as under :- 1. That I am the petitioner in the above mentioned case and as such am fully conversant with the facts and circumstances of the case. 2. That the annexed writ petition has been drafted by my Counsel under my instructions and I have understood the contents of same. 3. That the contents of annexed writ petition para No. 1 to 25 and sub-paras (a) to (n) are true and correct to the best of my knowledge and the legal submissions made therein are believed to be true and correct on the basis of legal advice tendered to me by the counsels. DEPONENT

31 31 VERIFICATION I, the above named deponent do hereby verify that the contents of aforesaid affidavit para 1 to 3 are true and correct to my personal knowledge. Nothing material has been concealed and no part of it is false. "SO HELP ME GOD". DEPONENT

32 32 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR D.B. CIVIL WRIT PETITION NO. /2018 M/S. SHAN MOHAMMAD PETITIONER. Versus UNION OF INDIA & OTHERS RESPONDENTS AFFIDAVIT IN SUPPORT OF THE DOCUMENTS I Shan Mohammad S/o Sh. Faujdar Aged 26 years, r/o. Village Post- Pure, Amiya, Tiloi, Raebareli (U.P.) do hereby make oath and state as under :- 1. That I am the petitioner in the above mentioned case and as such am fully conversant with the facts and circumstances of the case. 2. That the annexed documents Annexure 1 to 3 are true and correct photo copies of their respective original. VERIFICATION DEPONENT I, the above named deponent do hereby verify that the contents of aforesaid affidavit para 1 to 2 are true and correct to my personal knowledge. Nothing material has been concealed and no part of it is false. SO HELP ME GOD. DEPONENT

33 33 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR DB CIVIL MISC. STAY APPLICATION NO. /2018 IN D.B. CIVIL WRIT PETITION NO. /2018 SHAN MOHAMMAD S/O. FAUJDAR VILLAGE POST- PURE, AMIYA, TILOI, RAEBARELI (U.P.) PETITIONER. Versus 1. UNION OF INDIA THROUGH SECRETARY, FINANCE DEPARTMENT, GOVERNMENT OF INDIA, NEW DELHI 2. THE CHAIRMAN GST COUNCIL GOVERNMENT OF INDIA, NEW DELHI 3 THE STATE OF RAJASTHAN THROUGH FINANCE SECRETARY, GOVERNMENT OF RAJASTHAN, SECRETARIATE, JAIPUR. 4. COMMISSIONER CENTRAL GOODS AND SERVICE TAX, JAIPUR

34 34 5. STATE TAX OFFICER, ANTI EVASION-I, BHIWADI, DIVISION- ALWAR RAJASTHAN RESPONDENTS. STAY APPLICATION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA. To The Hon'ble Chief Justice And his Companion Judges of the High Court of Judicature for Rajasthan At Jaipur Bench, Jaipur. MAY IT PLEASE YOUR LORDSHIPS, The Humble petitioners most respectfully submit as under: - 1. That the petitioner has filed above mentioned writ petition before this Hon ble Court. The petitioner has every hope of success and the writ petition is based on sound legal grounds which are taken in the writ petition. Grounds of writ petition may kindly treated part of this stay application also. 2. That the goods and conveyance has been seized and after proceedings in view of Section 129 of the CGST Act and RGST Act, the authority has now issued notice for confiscation of the goods and proposed

35 35 penalty under section 130 of the CGST / RGST Act which is equal to the amount of value of goods. 3. That if the goods is not released provisionally the petitioner will suffer irreparable injury. Balance of convenience is in favour of the petitioner. It is therefore most respectfully prayed that Your Lordships may graciously be pleased to accept this stay application and be further pleased to direct the respondents to release the goods and conveyance provisionally by taking a reasons security during the pendency of Writ petition. Any other appropriate writ, order or direction, which may be considered just and proper in the facts and circumstances of the case may kindly, also be issued in favour the petitioner. HUMBLE PETITIONER Notes: THROUGH COUNSEL (PANKAJ GHIYA/MEENAL GHIYA PAWAN SHARMA / PRIYAMVADA JOSHI) ADVOCATES 1. That no such stay application has been filed prior to this. 2. This has been typed in my office by my personal typist. 3. That P.F. Notices and extra set will be submitted in time. 4. That since pie papers are not readily available it is typed on stout papers. COUNSEL FOR THE PETITIONER

36 36 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR D.B. CIVIL MISC. STAY APPLICATION NO. /2018 IN D.B. CIVIL WRIT PETITION NO. /2018 M/S. SHAN MOHAMMAD UNION OF INDIA & OTHERS Versus PETITIONER. RESPONDENTS. AFFIDAVIT IN SUPPORT OF STAY APPLICATION I Shan Mohammad S/o Sh. Faujdar Aged 26 years, r/o. Village Post- Pure, Amiya, Tiloi, Raebareli (U.P.) do hereby make oath and state as under :- 1. That I am the petitioner in the above mentioned case and as such am fully conversant with the facts and circumstances of the case. 2. That the annexed stay application has been drafted by my Counsel under my instructions and I have understood the contents of same. 3. That the contents of annexed stay application para No. 1 to 3 are true and correct to my knowledge and on the basis of legal advice tendered to me by the counsels. DEPONENT

37 37 VERIFICATION I, the above named deponent do hereby verify that the contents of aforesaid affidavit para 1 to 3 are true and correct to my personal knowledge. Nothing material has been concealed and no part of it is false. "SO HELP ME GOD". DEPONENT

38 38 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR D.B. CIVIL WRIT PETITION NO. /2018 M/S. SHAN MOHAMMAD UNION OF INDIA & OTHERS Versus PETITIONER. RESPONDENTS INDEX S.No. Particulars Page No. 1. Writ Petition 2. Affidavit in support of Writ Petition 3. Stay Application 4. Affidavit in support of stay application 5. Annexure /Documents Annexure-1 Copy of order / notice Form GST MOV- 07 Annexure-2 Copy of order dated Form GST MOV- 09 Annexure-3 Copy of notice Form GST MOV Affidavit in support of documents Counsel for the Petitioner

39 39 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH, JAIPUR D.B. CIVIL WRIT PETITION NO. /2018 M/S. SHAN MOHAMMAD UNION OF INDIA & OTHERS Versus SYNOPSIS PETITIONER. RESPONDENTS By means of this writ petition, the petitioner seek to challenge the constitutional validity of Section 129 and 130 of Central Goods & Services Tax Act, 2017 and Section 129 and 130 of Rajasthan Goods & Services Tax Act, 2017 (hereinafter referred to as the impugned Acts). The conveyance bearing No. HR 55P 6196 was intercepted by the respondent No. 5 on at Sahajahapur Toll Naka. The petitioner is the Driver of aforesaid vehicle. On interception of the aforesaid vehicle, the respondent No. 4 found certain discrepancies and for the alleged discrepancies during movement the goods were detained under Sub Section 1 of Section 129 of the CGST Act and order of detention was issued. According to Sub Section 1 of Section129 of the impugned act goods can be released on payment of tax and penalty. Under clause (a) of sub section 1 provides payment of applicable tax and penalty equal to 100 percent of the tax payable on such goods and in case exempted goods payment of amount equal to 2% of the value of goods or Rs. whichever is less

40 40 where owner of the goods comes forward for payment of such tax and penalty. Under clause (b) of sub section 1 provided payment of the applicable tax and penalty equal to 50% of the value of goods reduced by the tax amount paid thereon and in case of exempted goods, on payment of amount equal to 5% of the value of goods or Rs whichever is less, where owner of goods does not come forward for payment of such tax and penalty. Under clause (c) conveyance would be released upon furnishing a security equivalent to the amount payment under clause (a) or clause (b). The respondent No. 5 passed order / notice in Form GST MOV - 07 whereby the amount of tax and penalty was calculated and the petitioner was directed to appear on The respondent No. 5 passed order of demand of tax and penalty in Form GST MOV- 09 on wherein it has been mentioned that in response to the notice MOV- 07, the owner of the goods Sh. Shan Mohammad has come forward and made the payment of tax and penalty as proposed, thus the applicable tax and penalty proposed are confirmed. It is submitted that the respondent No. 5 mentioned above statement as incorrect as the petitioner never came forward for payment of tax and penalty as proposed. The respondent No. 5 issued notice in Form GST MOV-10 for confiscation of goods for conveyance and levy of penalty under section 130 of the RGST Act r/w. relevant provisions of CGST Act. In the notice it has been mentioned that neither the owner of the goods nor the person incharge of the conveyance came forward to make the payment of applicable tax and penalty within the time allowed in the order and as