Section 130 deals with circumstances under which goods can be confiscated and penalty can be levied.

Section 130(1)

[1][Where] 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 u/s 122.

Question & Answer

Provisions of this clause shall apply where all the following conditions are satisfied

(a) Person supplies or receive any goods (not services)

(b) Such supply or receipts of goods is in contravention of any of the provisions of this Act or rules made thereunder; and

 (c) Such supply or receipts of goods is with intent to evade payment of tax.

If any of above condition is not satisfied, this clause shall not be applicable.

This section applies to both i.e. supplier of goods and recipient of goods.

This clause shall not be applicable if no tax is involved. i.e exempt goods.

This clause shall apply to

the supplier of goods if supply is taxable under forward charges;

the recipient of goods if supply is taxable under reverse charges.

who does not account for any goods

This clause shall apply to person who is liable for registration u/s 22 or 24 but supplies goods without applying for registration.

This clause shall not apply to person who is not liable for registration u/s 22 or 24 and he supplies goods without applying for registration.

Scope of this clause is very wide as it shall apply where any person contravenes any of the provisions of GST laws with intent to evade payment of tax.

Any person committing any offence falling under clause (i) to (v) as discussed above then

(a) all such goods or conveyances shall be liable to confiscation and

(b) the person shall be liable to penalty u/s 122 i.e. higher of following amount

(i) Rs.10,000; or

(ii) an amount equivalent to the tax evaded or the tax not deducted u/s 51 or short deducted or deducted but not paid to the Government or tax not collected u/s 52 or short collected or collected but not paid to the Government or ITC availed of or passed on or distributed irregularly, or the refund claimed fraudulently,

Section 130(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:

The adjudicating officer shall provide an opportunity to the owner of goods to pay fine to avoid confiscation.

Aforesaid sub-section uses the word 'shall' i.e. the adjudicating officer is mandatorily required to give such option.

1^st Proviso to Section 130(2)

Such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon.

Example

A person supplied clothes having Market Value of Rs. 1,00,000 in contravention of provisions of this act which are subject to tax @12% under this Act.

Maximum fine that shall not exceed

MV of goods – 12% GST = Rs.1,00,000 – Rs,12,000 = Rs.88,000.

2^nd Proviso to Section 130(2)

the aggregate of such fine and penalty leviable shall not be less than the [2][penalty equal to 100% of the tax payable on such goods]

Question & Answer

3^rd Proviso to Section 130(2)

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][Section 130(3) ***]

Where any fine in lieu of confiscation of goods or conveyance is imposed u/ss (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.

Section 130(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.

Before confiscation of any goods or conveyance and/or imposition of penalty, a reasonable opportunity of being heard must be given

Section 130(5)

Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.

Section 130(6)

The PO 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.

Section 130(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 3 months to pay fine in lieu of confiscation,

dispose of such goods or conveyance and

deposit the sale proceeds thereof with the Government.

Rule 142(1)

The proper officer shall serve FORM GST DRC-01 along with the notice issued u/s 130.

Rule 142(4)

Reply to any notice issued under any section whose summary has been uploaded in FORM GST DRC-01 usr (1) shall be furnished in FORM GST DRC-06.

Rule 142(5)

A summary of the order issued u/s 130 shall be uploaded in FORM GST DRC-07, specifying therein the amount of ^[4][tax, interest and penalty payable by the person concerned].

Rule 142(6)

The order referred to in sub-rule (5) shall be treated as the notice for recovery

Rule 142(7)

Where a rectification of the order has been passed u/s 161 or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in FORM GST DRC-08.]