Provisional Release of Seized Gold Jewellery Permitted under Section 67(6) Pending Section 130 Adjudication

Case Title: Shish Jewels Pvt. Ltd. v. Intelligence Officer, SGST Department & Others
Court: High Court of Kerala at Ernakulam
Petition Nos.: WP(C) Nos. 40450 & 18326 of 2023
Date of Judgement: 06 January 2025
Category: Confiscation & Provisional Release of Goods under GST
Relevant Sections: Sections 67(2), 67(6), 130 of the CGST/SGST Act, 2017; Rule 140(1) CGST Rules, 2017

Facts of the Case

1. The petitioner, Shish Jewels Pvt. Ltd., engaged in wholesale trade of gold and diamond jewellery, transported sample ornaments to Kerala under valid delivery challans issued under Rule 55(1)(c) (Para 2–3).

2. During a search at M/s Dubai Gold and Diamonds, Malappuram, officials seized jewellery belonging to the petitioner (approx. 607.39g and 3188.27g) along with that of the dealer under Section 67 GST Act (Para 3).

3. The seizure was challenged in WP(C) 18326/2023, but the Court initially refused interim release, permitting the Department to proceed under Section 130 (Para 3).

4. Subsequently, a show cause notice under Section 130 was issued on 20.06.2023, followed by petitioner’s request for provisional release, which was rejected on the ground that Section 130 does not provide for provisional release (Para 4–5).

5. The petitioner argued that goods seized under Section 67(2) are mandatorily releasable under Section 67(6) upon execution of bond/security, irrespective of initiation of confiscation proceedings (Para 5, 12–13).

Questions in Consideration

1. Whether goods seized under Section 67 can be provisionally released under Section 67(6) even after initiation of confiscation proceedings under Section 130? (Para 12)

2. Whether rejection of provisional release (Ext.P8) was legally sustainable? (Para 15)

Observation of Court

1. The Court relied on its earlier decision in Golden Traders v. ASTO (2022 KER 36959) and State Tax Officer v. Balakrishnan [2022 (1) KLT 83], holding that Section 130 does not prohibit interim release of goods pending adjudication (Para 12–13).

2. It also referred to Dhanlaxmi Metals v. State of Gujarat (2022), where provisional release was held mandatory under Section 67(6), since the legislative intent is not to keep goods idle until exhaustion of appellate remedies (Para 13–14).

3. The Court clarified that release of goods does not prejudice revenue, as the Department retains constructive custody and can impose fine in lieu of confiscation or recall goods under Section 130(6) (Para 14).

4. Hence, the rejection in Ext.P8 was unsustainable, as Section 130 read with Section 67(6) permits provisional release (Para 15).

Judgement of the Court

1. Ext.P8 rejection letter was quashed.

2. The 1st Respondent (Intelligence Officer) was directed to release the seized jewellery provisionally pending adjudication of Section 130 notice, subject to:

   • Deposit of ₹2,93,71,666/- (fine and penalty quantified in SCN) and

   • Execution of bond for the value of goods. (Para 42)

3. Court declined to interfere with the show cause notice (Ext.P5), leaving adjudication open (Para 42–43).

Between Fine Lines (Simple Outcome in 5 Points)

1. Goods seized under Section 67 can be provisionally released even if Section 130 proceedings are initiated.

2. Rejection of release on the ground that Section 130 bars it is incorrect.

3. Revenue interests are protected through bonds, deposits, and statutory power to confiscate later.

4. Court allowed release of jewellery on deposit of quantified penalty/fine and bond execution.

5. Adjudication of confiscation notice will proceed separately.

Summary of Referred Cases

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