Goods and vehicle detained under order of confiscation shall be released if owner come forward to pay the liability amount.

Case Title: Shel Singh Purohit v. Commercial Taxes Officer

Court: High Court of Karnataka

Petition No.: Writ Petition No. 14645 of 2021 (T-RES)

Category of Dispute: Confiscation and Release of Goods

Date of Judgement: August 25, 2021

Relevant Sections: Section 129 & 130 of the CGST Act, 2017

Relevant Circular: CBIC Circular No. 41/15/2018-GST dated 13.04.2018

Facts of the Case

1. The petitioner, a GST-registered dealer, was transporting pan masala and scented chewing tobacco when his vehicle was intercepted and seized on 26.03.2021 at Bidadi Industrial Area, Karnataka. [Para 2(a)]
2. Physical verification was conducted only on 03.07.2021, and detention order was issued on the same day in Form GST MOV-06. No notice in Form GST MOV-07 followed. [Para 2(b)]
3. The petitioner sought release of goods citing their perishable nature via a letter on 12.07.2021. No response was received, leading to the present writ petition. [Para 2(b)]
4. The department, meanwhile, initiated proceedings under Section 130 by issuing Form GST MOV-10 on 13.08.2021, based on evidence including CCTV footage and mobile call records. [Para 3]

Question(s) in Consideration

Whether goods detained under pending confiscation proceedings u/s 130 of the CGST Act can be released to the owner upon deposit of the amount indicated in the demand notice, subject to the final outcome of such proceedings. [Para 1]

Observations of the Court

1. Section 130(2) allows redemption of confiscated goods and vehicle upon payment of fine as determined by the officer; thus, confiscation does not render goods unusable or irredeemable. [Para 4(a)]
2. Redemption is a statutory right, and payment of tax and penalty allows release even before final adjudication of confiscation. Confiscation is mala prohibita, not mala in se. [Para 4(b)]
3. CBIC Circular No. 41/15/2018-GST prescribes that goods may be released upon payment and supports limited detention periods. Clauses (h) and (l) reinforce the petitioner’s case for release. [Para 4(c)]

Judgement of the Court

The Court partially allowed the writ petition. A Writ of Mandamus was issued directing the respondent to release the goods and vehicle after verifying the petitioner’s ownership and upon his deposit of the full amount stated in the GST MOV-10 notice dated 13.08.2021. This release is without prejudice to the outcome of ongoing confiscation proceedings. [Final Paragraph]

Between Fine Lines

• Goods and vehicles under confiscation proceedings can be released on deposit of tax and penalty.
• Confiscation is not automatic forfeiture; redemption is a statutory right.
• Delay in issuing proper notices weakens the department’s procedural compliance.
• CBIC Circulars carry significant weight in interpreting enforcement protocols.
• Court relief does not affect substantive proceedings under Section 130.

Summary of Referred Cases