Facts of the Case

The appellant, M/S Quadri and Company, a proprietary concern engaged in the supply of areca nut, had a consignment intercepted in transit by the Assistant Commissioner of Commercial Taxes (Enforcement). On physical verification, a valuation report from CAMPCO indicated the goods were undervalued, and the conveyance and goods were detained under Section 129 of the GST Act. Before those proceedings concluded, a confiscation notice and order under Section 130 were issued. An appeal filed under Section 107 was dismissed, and the appellant challenged the resultant orders, and connected interim orders, through six writ petitions. On 25.09.2023 the Single Judge granted interim release of the goods subject to conditions requiring a 20% deposit, a bond, and security by way of immovable property of over Rs.46 lakh, drawing on a Division Bench precedent in a related matter. This order (later modified on 10.10.2023 only as to the time for compliance) was challenged in six connected writ appeals as being onerous.

Issues Involved

  1. Whether the conditions imposed by the Single Judge for interim release of goods confiscated under Section 130 proceedings were unduly onerous and required modification.
  2. Whether the revenue, having not appealed the interim release order, could contend that release itself was impermissible or that stricter conditions ought to have been imposed.
  3. What conditions should govern interim release of goods pending final adjudication of confiscation proceedings under Section 130.

Petitioner's Arguments

  • Proceedings initiated under Section 129 could not be abandoned midway and substituted with confiscation proceedings under Section 130.
  • The conditions imposed for release, in particular security linked to the full CAMPCO-assessed value of the goods, were onerous and excessive.
  • Any condition for release should be restricted to the tax and penalty involved and should not be linked to the disputed valuation of the goods.

Respondent's Arguments

  • There was a clear intention to evade tax, as the consignment was not accompanied by an e-way bill.
  • Relying on State of Uttar Pradesh v. Kay Pan Fragrance and Others (2020) 5 SCC 811, the Single Judge ought not to have permitted release of confiscated goods except strictly under Rule 140 of the GST Rules, requiring a bank guarantee for the entire value of the goods.

Court Order/Findings

  • The revenue, not having itself challenged the interim order dated 25.09.2023 permitting release of goods, could not now contend in the appellant's own appeal that release should not have been granted at all, or that the conditions should have been stricter — a party cannot be placed worse off through an appeal it did not file.
  • The validity of the Section 130 confiscation order, and the correctness of the CAMPCO valuation itself, remained pending adjudication before the Single Judge, and observations in the appeal were confined strictly to the interim conditions.
  • The interim order was modified: the appellants were directed to (a) make good a 25% deposit as applicable in the underlying appeal proceedings (adjustable against sums already deposited), (b) secure tax and penalty by bank guarantee, (c) furnish bank guarantee for the invoice value of the goods, (d) furnish a personal bond for the differential between the invoice value and the CAMPCO valuation, and (e) file a personal affidavit recording compliance — all within four weeks, failing which contempt proceedings would follow.
  • The Court clarified that its observations were confined to the peculiar facts of the appeals and were not to be treated as precedent, with all contentions of the parties on the merits of the confiscation proceedings kept open.

Important Clarification

  • A revenue authority that has not independently appealed an interim order permitting release of goods cannot, in the taxpayer's own appeal against the conditions of that order, seek a result that leaves the taxpayer worse off than under the unappealed order.
  • At the interim stage, conditions for release of goods under confiscation proceedings can be calibrated between the taxpayer's invoice value and the department's own valuation, without requiring security for the entirety of the disputed valuation, pending final adjudication under Section 130.

Sections Involved

  • Section 129, Central Goods and Services Tax Act, 2017 – Detention, seizure and release of goods and conveyances in transit.
  • Section 130, Central Goods and Services Tax Act, 2017 – Confiscation of goods or conveyances and levy of penalty.
  • Section 107, Central Goods and Services Tax Act, 2017 – Appeals to the Appellate Authority.
  • Rule 140, Central Goods and Services Tax Rules, 2017 – Bond and security for provisional release of seized goods.

Decision – In Favour of

The outcome is best described as disposed of with directions, partly in favour of the Assessee. The appeals were not allowed outright, nor were the Single Judge's conditions sustained as they stood — the Court modified them, easing some demands made by the Revenue while retaining meaningful security requirements, and expressly left the merits of the underlying confiscation proceedings open for adjudication.

Related Case Laws

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

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: Writ Appeal No. 100629 of 2023 (T-RES) with connected WA Nos. 100630, 100633, 100634, 100635, 100636 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Mr Justice S. Sunil Dutt Yadav and Hon'ble Mr Justice Vijaykumar A. Patil
  • Decision Date: 19.12.2023
  • Disposal Nature: Appeals disposed of - interim order of release of confiscated goods modified with revised conditions

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