Law on Service of Notice and Confiscation Order under CGST Act, 2017

Law on Service of Notice and Confiscation Order under CGST Act, 2017

Introduction

CGST Act, 2017 has recently concluded 8 years. A recent decision has answered some crucial issue associated with CGST Act, 2017

In case of Mathai M.V. v. Senior Enforcement Officer [2025] GCtR 1307 (Kerala), a detention order under S.130 of CGST Act, 2017 was passed by the authorities affecting vehicle of the petitioner. Petitioner had challenged those Orders.

The case dealt with Service of notice prior to confiscation and service of confiscation order under the CGST Act, 2017.

The Petitioner has placed on record a notice to show cause dated 5 November 2024 issued under Section 130 of the CGST Act, 2017, which is addressed to M/s. Petroliv Petroleums, calling upon it to show cause why the goods and the conveyance should not be confiscated. There was no clarity in the counter affidavit filed by Tax Department as to the action for confiscation of the vehicle taken under Section 130 of the Act of 2017.

Legal Principles

Section 130 of the CGST Act, 2017 provides for the confiscation of goods or conveyances and the levy of penalty.  Under Section 130(4), no order of confiscation of goods or conveyance shall be issued without giving the person an opportunity of being heard. That is so because the owner of the conveyance under Section 130(1)(v) has an opportunity to prove that the conveyance was used without his knowledge and connivance, or that of his agent or the person in charge of the conveyance. For giving this opportunity, notice has to be served on the owner. The manner of serving notice under the Act of 2017 is provided under Section 169.

Findings

In this case, the Petitioner admittedly is the owner of the vehicle (conveyance). The statute prescribes the mode of notice. The notice stated to have been sent to the Petitioner/owner through WhatsApp is not a mode of service contemplated under Section 169 of the Act of 2017. While such a practice was permitted during the COVID-19 pandemic, it no longer constitutes a valid mode of issuing notice under the provisions of the Act of 2017, and there is no debate regarding the same. It was held that the notice served on the Petitioner before holding that the proceedings under Section 130 are concluded against the Petitioner is not placed on record. It was held that there is a serious lacuna in the procedure adopted by the Tax Department as far as confiscation of the Petitioner’s vehicle is concerned.