Detention of goods upheld as disputed facts on transporter’s denial warranted factual inquiry, not writ adjudication

Case Reference:
M/s Royal Steel v. State of Karnataka & Anr., High Court of Karnataka, Bengaluru
Writ Petition No. 14265 of 2025 (T-RES)
Date of Judgment: 17 July 2025
Relevant Section: Section 129(1), CGST/SGST Act, 2017
Category: Detention of Goods and Vehicle

Facts (Paras 2–4)

The petitioner, M/s Royal Steel, a proprietary concern engaged in trading metal scrap, transported 11,910 kg of MS scrap to M/s A One Ispat Pvt. Ltd. under a valid tax invoice and e-way bill dated 20.04.2025. The consignment was intercepted by the Enforcement Wing of the Commercial Tax Department on 21.04.2025, and a detention order under Section 129(1) was issued despite the petitioner producing all relevant documents (Form MOV-01, MOV-02, MOV-04). The department alleged discrepancies in documentation and detained the vehicle bearing registration no. KA-50-B-5819, prompting the petitioner to seek release of goods and quashing of the detention order.

Questions for Determination (Para 1 & 4)

1. Whether detention of goods and vehicle under Section 129(1) was valid when all statutory documents were furnished and verified.

2. Whether the Court should exercise writ jurisdiction despite disputed factual aspects surrounding the transporter’s identity and authenticity of the consignment.

Observations (Paras 5–8)

The Court noted the statement of the alleged transporter, M/s Royal World, who categorically denied any engagement with the petitioner or issuance of the lorry receipt (LR) mentioned in the invoice. This contradiction cast doubt on the authenticity of the documents. The Court observed that if the transporter denies involvement, it becomes necessary to investigate who actually transported the goods, from whose custody they were seized, and whether taxes were appropriately paid.

Since these questions involved disputed factual elements requiring verification and evidence, the Court held that such issues cannot be adjudicated in writ jurisdiction under Article 226 of the Constitution. Instead, they fall within the scope of the statutory appellate mechanism under Section 107 of the KGST Act.

Judgment (Para 9)

The Court dismissed the writ petition, holding that the matter required factual inquiry inappropriate for writ proceedings. Liberty was reserved for the petitioner to file an appeal before the competent Appellate Authority.

The Court also directed that original records be returned to the State’s counsel.

Between Fine Lines

This ruling reaffirms that when conflicting statements or disputed facts exist—particularly concerning transporter authenticity or invoice genuineness—courts will not intervene directly through writ jurisdiction. Taxpayers must instead exhaust appellate remedies under Section 107, where evidentiary scrutiny is permissible. Routine detention cases involving documentary disputes are thus better resolved through the statutory channel rather than writ petitions.

Summary of Cited/Relevant Cases

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