Facts of the Case

  • The petitioner, M/s Shine Jewellery, is a partnership firm duly registered under the Goods and Services Tax Act, 2017, with its principal place of business located in Thrissur, Kerala.
  • On July 19, 2021, the petitioner issued a valid Delivery Challan (No. DC/7) for transporting 609.040 grams of new gold ornaments via a two-wheeler (Registration No. KL 08 BA 4847) through their staff member, Shri Joju P.C., intended for selection purposes at Thodupuzha.
  • During transit on the same day, the consignment was intercepted and detained by the Assistant State Tax Officer (Intelligence), Squad No. II, Idukki at Thodupuzha. The department issued detention and statement forms under GST MOV-01, GST MOV-02, GST MOV-04, and GST MOV-06 pursuant to Section 129(1) of the GST Act.
  • Simultaneously, the State Tax Officer (Intelligence) issued a confiscation notice under Section 130(1)(v) of the GST Act in the name of the petitioner's staff member.
  • The petitioner submitted detailed replies, furnished GSTR-1 and GSTR-3B filings, produced books of accounts under summons, and submitted a clarification letter from a prospective dealer (M/s Cherkottu Fashion Jewellery) confirming the selection-purpose nature of the transit.
  • Despite these submissions and placing reliance on procedural circulars (Circular No. 41/15/2018-GST and Circular No. 128/47/2019-GST) along with statutory amendments under the Finance Act, 2021, the respondent authority passed the final order (Ext.P10) confirming the proposal for confiscation and demanding tax, penalty, cess, and fine.
  • Aggrieved by the final confiscation order, the petitioner approached the High Court of Kerala via a Writ Petition, while concurrently filing a parallel statutory appeal before the Joint Commissioner (Appeals).

Issues Involved

  1. Whether the writ petition challenging the final confiscation order issued under Section 129 read with Section 130 of the CGST/SGST Act, 2017, should be entertained by the High Court when a statutory first appeal is already pending before the competent departmental authority.
  2. Whether the interception, detention, and subsequent absolute confiscation of gold ornaments carried under a valid delivery challan for selection purposes conform to the statutory procedures prescribed under the CGST/SGST Act, 2017.

Petitioner’s Arguments

  • The petitioner contended that the final order confirming the proposal for confiscation (Ext.P10) is entirely illegal, arbitrary, and issued completely without jurisdiction.
  • It was argued that the goods were accompanied by legitimate, verifiable documentation (Delivery Challan) in full compliance with the law governing goods moved for selection purposes, thereby negating any intent to evade tax.
  • The petitioner underscored that the authorities failed to properly appreciate the books of accounts, statutory returns, and supporting affidavits submitted during the adjudication and summons proceedings.
  • The petitioner highlighted that while the constitutional writ remedy was sought to challenge the jurisdictional validity of the order, they had also proactively safeguarded their rights by filing a statutory appeal before the Joint Commissioner (Appeals), Ernakulam, which was reportedly slated for transmission to Thrissur for administrative reasons.

Respondent’s Arguments

  • The State Tax Department, represented by the Government Pleader, maintained that the physical interception and subsequent actions under Section 129 and Section 130 were executed in accordance with the statutory framework governing the transit of taxable goods.
  • It was implicitly argued that since the petitioner had already invoked the alternative statutory remedy by filing a first appeal before the Joint Commissioner (Appeals), the High Court should not concurrently adjudicate the merits of the case under Article 226 of the Constitution of India.

Court Order & Findings

  • The Hon'ble High Court of Kerala, presided over by Mr. Justice Gopinath P., observed that the petitioner had already approached the departmental First Appellate Authority by filing a statutory appeal against the impugned confiscation order.
  • Taking cognizance of the pending alternative statutory remedy, the High Court determined that it was appropriate to dispose of the writ petition without directly interfering with the merits of the impugned order at this stage.
  • The Court explicitly directed the First Appellate Authority to consider, adjudicate, and pass final orders on the appeal filed by the petitioner against the confiscation order within a strict timeline of one month from the date of receipt of a certified copy of the judgment.
  • The Court further ordered that the petitioner must be afforded a fair opportunity of being heard prior to the disposal of the appeal.
  • Administratively, the Court directed that if the appeal filed before the Joint Commissioner (Appeals), Ernakulam needs to be transmitted to the Joint Commissioner (Appeals), Thrissur for proper consideration, the transfer must be completed expeditiously to facilitate final orders within the specified one-month timeframe.

Important Clarification

  • Exhaustion of Alternative Remedy: The judgment reinforces the established judicial principle that when an assessee invokes a parallel, statutory appellate remedy provided under the GST framework, the High Court will generally decline to exercise its extraordinary writ jurisdiction on the merits, opting instead to mandate an expedited, time-bound resolution through the designated appellate channels.

Section Involved

  • Section 129 of the Central Goods and Services Tax / State Goods and Services Tax Act, 2017 (Detention, seizure, and release of goods and conveyances in transit).
  • Section 130 of the Central Goods and Services Tax / State Goods and Services Tax Act, 2017 (Confiscation of goods or conveyances and levy of penalty).

Link to download the order - https://mytaxexpert.co.in/uploads/1783152688_817compressed.pdf

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