Facts of the Case

Petitioner No.1, TN Navarathna Thanga Maligai LLP, a Coimbatore-based jewellery business, and its Sales Manager and Sales Executive (petitioners 2 and 3), challenged a show-cause notice dated 27.04.2022 issued under Section 130 of the CGST Act and KSGST Act for confiscation of gold jewellery weighing 429.280 grams carried by petitioners 2 and 3, of which valid documents covered only 166.820 grams. The gold was seized following interception, and statements were recorded from the second petitioner. By an interim order dated 15.06.2022, the Court had already restricted the confiscation notice to the 262.46 grams lacking documentation and directed release of the 166.820 grams covered by valid documents, which was complied with.

Issues Involved

  1. Whether the Section 130 confiscation notice — as opposed to a Section 129 detention notice — was the appropriate provision to invoke on the facts.
  2. Whether the writ petition, filed only against a show-cause notice with no final order yet passed, warranted interference at this stage.

Petitioner's Arguments

  • The notice ought to have been issued, if at all, under Section 129 (detention for verification) rather than the more drastic Section 130 (confiscation), given the facts of the interception.
  • Sought quashing of the Section 130 confiscation notice in its entirety.

Respondent's Arguments

  • The gold in question (262.46 grams) was found without valid accompanying documentation, justifying invocation of Section 130 and the confiscation proceedings via FORM GST MOV-10.

Court Order / Findings

  • The Court held that whether the notice should have been issued under Section 129 or Section 130 was a question to be decided by the second respondent himself after considering the entire issue, since only a show-cause notice, not a final order, was under challenge.
  • The petitioners were directed to file a reply to the notice within 15 days, following which they were to be given a hearing and the second respondent was to pass appropriate orders after considering the reply.
  • The writ petition was disposed of with this liberty and direction; no ruling was made on the correctness of invoking Section 130 or on the merits of the confiscation.

Important Clarification

  • A challenge to a show-cause notice of confiscation under Section 130 of the CGST Act, filed before any final adjudication, will ordinarily not be entertained on merits — including on the threshold question of whether Section 129 or Section 130 was the appropriate provision — and the taxpayer will be relegated to filing a reply and obtaining a reasoned order from the proper officer in the first instance.

Sections Involved

  • Section 130, CGST Act 2017 / KSGST Act 2017 — confiscation of goods/conveyances and levy of penalty.
  • Section 129, CGST Act 2017 — detention and seizure of goods and conveyances in transit (contrasted provision).
  • FORM GST MOV-01, MOV-02, MOV-04, MOV-10 — statutory forms for interception, verification and confiscation notice.

Decision – In Favour of

Disposed of with directions; a largely neutral, procedural outcome — no interference with the Section 130 notice, petitioners directed to respond and obtain a reasoned adjudication order, with the question of the correct provision (Section 129 vs Section 130) left open for the proper officer to decide.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No.16134 of 2022
  • CNR: Not available
  • Coram: Justice Dinesh Kumar Singh
  • Decision Date: 29-11-2023
  • Disposal Nature: Disposed of

Link to Download the Order

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