Facts of the Case

M/S. Ravi Trading Company challenged a detention order dated 05.12.2022 in Form GST MOV-6 under Section 129(1) of the CGST and KGST Acts read with Section 20 of the IGST Act, a confiscation order dated 09.01.2023 in Form GST MOV-11 under Section 130, and an appellate order dated 04.07.2023 dismissing its statutory appeal under Section 107(11) of the KGST Act. The petitioner approached the Karnataka High Court because the GST Appellate Tribunal, though notified, had not yet commenced functioning, leaving no forum to pursue the second appeal.

Issues Involved

  1. Whether a taxpayer unable to approach the GST Appellate Tribunal, due to its non-constitution, is entitled to interim protection from recovery.
  2. Whether payment of 20% of the disputed demand entitles the petitioner to the stay contemplated under Section 112(9) of the KGST Act.

Petitioner's Arguments

  • The petitioner was constrained to approach the High Court only because the GST Tribunal had not commenced working, leaving no functional forum for the second appeal against the detention, confiscation and appellate orders.
  • Having already deposited 20% of the differential demand pursuant to the Court's interim order, the petitioner was entitled to the statutory stay on recovery of the balance under Section 112(9) of the KGST Act.

Respondent's Arguments

  • No specific opposition was recorded to extending the benefit of Section 112(9), the dispute largely turning on the non-availability of the Appellate Tribunal rather than the merits of detention or confiscation.

Court Order / Findings

  • The Court noted that the petitioner, during pendency, had deposited 20% of the differential demand as required under Section 112(8)(a) of the KGST Act.
  • The Court held the petitioner entitled to the benefit of Section 112(9) of the KGST Act, deeming the recovery proceedings for the balance amount stayed, until 60 days after the GST Appellate Tribunal commences functioning, extending the limitation period for filing the second appeal correspondingly.
  • The Court clarified that failure to file the appeal within 60 days of the Tribunal's commencement would forfeit the benefit of the stay, keeping all contentions open.

Important Clarification

  • Pending constitution of the GST Appellate Tribunal, taxpayers who deposit 20% of the disputed demand are entitled to a deemed stay on recovery of the balance under Section 112(9) of the GST Act, without needing to file the second appeal immediately.
  • Such interim protection automatically lapses if the taxpayer fails to file the second appeal within 60 days of the Tribunal actually commencing functioning.

Sections Involved

  • Section 129, CGST/KGST Act, 2017 – detention and seizure of goods and conveyances in transit.
  • Section 130, CGST/KGST Act, 2017 – confiscation of goods or conveyances and levy of penalty.
  • Section 112(8) and 112(9), KGST Act, 2017 – pre-deposit for second appeal and consequential stay on recovery of the balance demand.

Decision – In Favour of

Decided in favour of the assessee. Recovery of the balance demand was stayed pending constitution of the GST Appellate Tribunal, subject to timely filing of the second appeal thereafter.

Case Details

Court: High Court of Karnataka, Dharwad Bench
Case No.: Writ Petition No. 104421 of 2023 (T-RES)
Coram: Hon'ble Mr. Justice Suraj Govindaraj
Date of Order: 23.09.2025

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.