Facts of the Case

The petitioner, Venkateshwara Traders, a Karnataka-based proprietorship trading in arecanut, issued a tax invoice for 250 bags (17,500 kg) of non-edible arecanuts valued at Rs.18,20,000, supplied to M/s. Aryan Traders, Delhi, transported via a vehicle intercepted in Rajasthan. Proceedings under Section 130 of the CGST Act culminated in an order dated 08.07.2025 confirming the proposal in Form GST MOV-10, imposing penalty of Rs.2,31,875, a fine of Rs.46,37,500, and a further penalty of Rs.2,31,875, along with an equivalent fine in lieu of confiscation of the conveyance, passed in Form GST MOV-11. Three connected writ petitions involving the same petitioner and similar facts were disposed of by a common order.

Issues Involved

  1. Whether the invocation of Section 130 of the CGST Act (confiscation) for the arecanut consignment was justified.
  2. Whether the perishable, high-value goods and the vehicle ought to be released pending final adjudication of the fraud allegations.

Petitioner's Arguments

  • The provisions of Section 130 of the CGST Act could not have been invoked on the facts, and the goods, being perishable arecanuts, ought to be released, with the order dated 08.07.2025 in Form GST MOV-11 set aside.

Respondent's Arguments

  • Summons had been issued to the petitioner, but despite service, no personal appearance was made; a written reply was filed and considered before passing the orders.
  • The State contended that the Court ought not to exercise its extraordinary writ jurisdiction where the record reflected that the petitioner, through a web of sham firms and bogus transactions, had persistently defrauded the State exchequer.

Court Order / Findings

  • The Division Bench, comprising the Acting Chief Justice and Justice Sangeeta Sharma, noted that arecanuts fall within the definition of perishable goods and that the dispute needed to be examined on factual aspects by the competent authority.
  • The Court directed that upon furnishing a bank guarantee or solvency security equivalent to the invoice value, the goods be released to the petitioner, expressly clarifying that release of the goods would in no manner affect the merits of the demand, which was to be examined independently by the authorities after considering the replies and documents of both sides, within three months.
  • The security was required to be furnished within fifteen days for release of the goods to be effected.

Important Clarification

  • Where perishable goods are detained/confiscated under Section 130 of the CGST Act amid serious allegations of sham firms and bogus transactions, courts will typically order provisional release on furnishing a bank guarantee or solvency security equivalent to the invoice value, without foreclosing the department's right to independently adjudicate the underlying fraud allegations on merits.

Sections Involved

  • Section 130, Central Goods and Services Tax Act, 2017 — confiscation of goods or conveyances and levy of penalty.
  • Form GST MOV-10 and MOV-11, CGST Rules, 2017 — notice and order for confiscation of goods/conveyance.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee — provisional release of goods ordered on furnishing security, with the merits of the fraud allegations left open for independent adjudication.

Case Details

Court: High Court of Judicature for Rajasthan, Bench at Jaipur
Case No.: D.B. Civil Writ Petition No. 12413/2025 (with connected D.B.C.W.P. Nos. 12596/2025 and 12598/2025)
Neutral Citation: 2025:RJ-JP:50836-DB
Coram: Hon'ble the Acting Chief Justice Mr. Sanjeev Prakash Sharma and Hon'ble Mrs. Justice Sangeeta Sharma
Date of Order: 16.12.2025

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