Facts of the Case

The petitioner, M/s. Bhima Enterprises, had its goods seized by the second respondent on 16.08.2023 through an order in Form GST INS-02, on the ground that excess stock was found available with the petitioner over and above the recorded stock. The petitioner had already paid the applicable tax and penalty in respect of the seizure, and submitted representations dated 18.08.2023 and 14.09.2023 seeking release of the goods, but the respondents did not lift the prohibitory order.

Issues Involved

  1. Whether the respondents were justified in continuing to withhold release of the seized goods despite the petitioner having already paid the applicable tax and penalty.

Petitioner's Arguments

  • Having already paid the entire tax and penalty demanded on the excess stock found, the petitioner was entitled to release of the seized goods under Section 67(6) of the CGST Act, without any further requirement of bond or security.
  • The respondents were not acting on the petitioner's representations dated 18.08.2023 and 14.09.2023 seeking release within a reasonable time.

Respondent's Arguments

  • No specific opposition to the factual position on payment of tax and penalty is recorded in the order; the seizure was maintained pending consideration of the petitioner's representations.

Court Order / Findings

  • The Court noted that under Section 67(6), goods seized may be released provisionally upon execution of a bond and furnishing of security, or on payment of the applicable tax, interest and penalty.
  • Since the petitioner had already paid the entire tax and penalty, the Court held that it was not necessary to execute any bond or furnish security, and directed the respondents to release the seized goods within a period of two days from the date of receipt of a copy of the order.

Important Clarification

Once an assessee has paid the applicable tax and penalty in respect of goods seized under the GST Act, the department cannot insist on additional execution of a bond or furnishing of security as a precondition for release under Section 67(6); such payment by itself entitles the assessee to release of the goods.

Sections Involved

  • Section 67(6), CGST Act, 2017 — provides for provisional release of seized goods upon execution of bond and security, or on payment of applicable tax, interest and penalty.
  • Form GST INS-02 — the order of seizure issued to the petitioner.

Decision – In Favour of

In favour of the Assessee — release of the seized goods was directed within two days, without requiring any bond or security.

Case Details

  • Court: Madurai Bench of Madras High Court
  • Case Number: W.P.(MD) No.23502 of 2023
  • CNR / Citation: W.P.(MD) No.23502 of 2023
  • Coram: Hon'ble Mrs. Justice S. Srimathy
  • Date of Order: 26 September 2023

Link to Download the Order

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