Writ Petition Dismissed: No Confiscation Challenge When Goods Not Physically Available

Case Name: M/s. Viraj Steel & Energy Private Ltd. v. Joint Commissioner of State Tax (Appeal), Sambalpur and Others
Court Name: High Court of Orissa, Cuttack
Petition No.: W.P.(C) No. 9367 of 2025
Date of Judgment: 15th May 2025
Relevant Sections: Sections 67, 107, 122, 130 of OGST Act, 2017
Category of Dispute: Confiscation and Redemption Fine under GST

Facts of the Case [¶1–¶2.4]

• A search was conducted on 22nd March 2023 at petitioner’s factory, revealing unaccounted shortage of 341.360 MT of MS Billet worth ₹1.53 crore. [¶2]

• Petitioner admitted stock discrepancies and agreed to pay the penalty and fine in lieu of confiscation under Section 130 read with Section 122. [¶2.1]

• Demand order dated 29th March 2023 was issued imposing a penalty of ₹27,65,016 and redemption fine of ₹79,87,824, which was paid by the petitioner. [¶2.2]

• An appeal under Section 107 was filed on 7th February 2025—almost two years later—which was dismissed as time-barred. [¶2.3]

• Petitioner challenged both the appellate rejection and the original show cause notice/demand order via writ petition, claiming confiscation is invalid without physical goods. [¶2.4]

Questions in Consideration [¶4, ¶6]

1. Can goods be confiscated and redemption fine imposed under Section 130 when the goods are not physically available?

2. Whether writ jurisdiction under Article 226 is maintainable after expiry of statutory appellate limitation?

Observation of Court [¶6–¶19]

• The Court distinguished between lack of jurisdiction and erroneous exercise of jurisdiction. In this case, the officer had jurisdiction under Sections 67, 122, and 130. [¶9]

• Admitted payment of redemption fine and penalty was made without protest. Hence, petitioner cannot approbate and reprobate. [¶18]

• Petitioner failed to avail statutory remedies within limitation and sought to indirectly challenge confiscation through writ jurisdiction. [¶17]

• The Court relied on Weston Components and Finesse Creation cases to uphold confiscation where goods are released on bond; however, here, no such bond was executed. [¶14]

• Held: absence of physical goods doesn’t bar imposition of redemption fine if statutory powers exist and procedural compliance is evident. [¶10]

• Earlier Division Bench judgment in Shri D. Murali Mohan Patnaik followed for judicial consistency. [¶19]

Judgment of the Court [¶20–¶21]

• Writ petition dismissed. Court held there was no palpable lack of jurisdiction and no protest made during payment.

• Petitioner was not entitled to invoke Article 226 after delay in statutory appeal.

Between Fine Lines:

• If you pay GST penalties without protest, you can’t later claim coercion in a writ.

• Redemption fine can be levied even if goods are unavailable, if supported by statutory authority.

• Courts differentiate between jurisdictional defect and procedural irregularity—only the former justifies writ.

• Delay in appeal bars subsequent writ challenges unless gross violation of rights is proved.

• A clear admission of liability weakens retrospective legal challenges.

Summary of Referred Cases

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