Confiscation Proceedings Upheld: Writ Dismissed Against Section 130 GST Notice

Case Title: Mukti Gold Private Limited vs. State Tax Officer
Court: Madras High Court
Petition No.: W.P.No.23047 of 2024
Category: Confiscation of Goods
Date of Judgement: 27.01.2025
Relevant Sections: Section 130, 129 of CGST Act & TNGST Act; Rule 55 and 138(4) of CGST Rules
Bench: Hon’ble Mr. Justice Krishnan Ramasamy

Facts of the Case [Paras 2 to 2.13]

• Petitioner, Mukti Gold Pvt. Ltd., transported gold jewellery (approx. 11.84 kg, ₹8.37 crore) from Mumbai to Tamil Nadu for exhibition and display to resellers through its Agent in Coimbatore. [Para 2.2]

• The goods were moved under delivery challans without e-way bills, citing exemption under Rule 138(4) and compliance with Rule 55. [Para 2.6]

• On 26.07.2024, the vehicle was intercepted by police near Panruti; gold was seized, and a statement was recorded. [Para 2.5]

• A confiscation notice under Section 130 was issued on 02.08.2024 on suspicion of attempted tax evasion. [Para 2.9]

• Petitioner claimed there was no sale/supply, only display, and thus no tax evasion occurred. [Para 2.10]

Questions in Consideration [Paras 4, 20]

• Whether the confiscation notice under Section 130 is sustainable in the absence of any actual supply/sale?

• Whether the non-obstante clause of Section 129 overrides Section 130 of the CGST/TNGST Act?

• Whether sufficient prima facie material existed for invoking Section 130?

Observation of the Court [Paras 6 to 24]

• Court affirmed that Rule 138(4) allows exemption from e-way bills for non-supply movement, but noted inconsistencies. [Para 6]

• Route deviation and lack of receiver’s acknowledgment created suspicion. [Para 9–10]

• No proof of delivery to agent, nor any customer situated at Panruti. [Para 10]

• Delivery challans lacked item-level descriptions and supporting documents. [Para 12]

• Evidence suggested deliberate removal of incriminating documents and CCTV data from business premises. [Paras 15–17]

• Non-obstante clause in Section 129 does not override Section 130 for confiscation proceedings. Both sections operate independently. [Para 20]

• Cited Gujarat High Court cases (Synergy Fertichem, Anant Jignesh Shah) found not applicable due to presence of strong prima facie evidence in present case. [Paras 21–22]

Judgement of the Court [Paras 24–25]

• The Court refused to quash the confiscation notice, holding that a prima facie case had been made by the authorities.

• Directed the petitioner to file a reply within 15 days and allowed the respondent to decide on the matter independently after giving a personal hearing.

• Writ petition dismissed with liberty to reply to the notice under Section 130.

Between Fine Lines (Simplified Summary)

• Goods were seized during transport under a delivery challan without e-way bill.

• Authorities suspected misuse of display exemption for actual sales.

• Court found sufficient prima facie evidence to justify the confiscation notice.

• Petitioner was granted an opportunity to reply and explain their position.

• Writ petition dismissed, but natural justice preserved by allowing representation.

Summary of Referred Cases

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