Release of goods denied under Section 129(1)(a) upheld as ownership was disputed; petitioner permitted to prove ownership before appellate authority with right to cross-examine supplier

Case Title: Sandip Kumar Pandey & Anr. v. Assistant Commissioner of State Tax, Bureau of Investigation (South Bengal), Asansole Unit & Ors.
Court: Calcutta High Court
Petition No.: WPA 9544 of 2025
Judgment Date: 07.05.2025
Category: Detention and Release of Goods – Section 129(1)(a)/(b) – Ownership dispute
Relevant Sections: Section 129(1)(a), Section 129(1)(b), Section 129(3) of the CGST/WBGST Act 2017

Facts (Paras 2 – 6)

The petitioner, a registered taxpayer under CGST/WBGST, carried on business as Shyam Enterprises from New Delhi. He purchased clothing items from Ghosh Enterprises of Kolkata through a tax invoice (20 July 2024) and e-way bill (21 July 2024). The goods were intercepted at Asansole during transit, and the detaining authority issued an order under Section 129(3) in the name of the vehicle’s driver.

The petitioner sought release of goods under Section 129(1)(a) claiming ownership. However, the authority rejected this plea, holding that Ghosh Enterprises disclaimed having issued the invoice or holding GST registration. Release was therefore allowed only under Section 129(1)(b) on payment of penalty equal to 50 % of the value of goods. The petitioner paid under protest, arguing that the officer lacked jurisdiction to decide invoice validity and that the CBDT Circular dated 31 December 2018 mandated acceptance of invoices as ownership proof.

Questions before the Court

Whether the detaining authority was justified in rejecting release under Section 129(1)(a) by doubting invoice validity, and whether the petitioner should be recognized as owner of the goods when the consignor denied the transaction.

Observations (Paras 9 – 13)

The Court noted that ordinarily a tax invoice suffices to prove ownership, and the Circular of 31 December 2018 supports this. However, here the purported supplier categorically denied the transaction and existence of registration. Therefore, the invoice itself stood on shaky ground and could not be treated as conclusive ownership proof.

The Court distinguished Surojit Das v. Deputy Commissioner of State Tax (MAT 279/2023), where provisional release was allowed because the supplier had not denied the invoice. Since the ownership in the present case was in serious dispute, the authority rightly declined release under Section 129(1)(a).

Yet, as the officer relied on the statement of Siddhartha Ghosh (purported supplier) without giving the petitioner a chance to cross-examine him, principles of natural justice required that opportunity be given at the appellate stage.

Judgment (Para 13–14)

The Court upheld the officer’s decision to deny release under Section 129(1)(a) but safeguarded the petitioner’s rights. It directed that:

• If the petitioner files an appeal under Section 129(3) within 4 weeks, the appeal must be decided on merits within 16 weeks.

• The appellate authority shall provide an opportunity to cross-examine Siddhartha Ghosh and allow the petitioner to establish ownership.

• Manual filing of appeal is permitted, and officers must assist in doing so.

The writ petition was disposed of accordingly.

Summary of Cases Referred

Between Fine Lines

This ruling clarifies that while an invoice generally evidences ownership for release under Section 129(1)(a), if the supplier denies issuing it, authorities may reject such release. However, natural-justice safeguards must follow—particularly the right to cross-examine the supplier and to establish ownership in appeal. Businesses transporting goods should ensure supplier authenticity and active GST registration before movement to avoid detention.

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