2021 (9) TMI 862 - HC - GST

Release of confiscated goods - pending conclusion of delayed confiscation proceedings - whether pending conclusion of delayed confiscation proceedings in terms of Sec.130 of CGST Act, 2017, the subject goods can be released to the apparent owner thereof on his depositing the amount that may become payable by him in terms of demand notice, of course subject to outcome of the said proceedings? - HELD THAT -The first second Proviso of section 130(2) of CGST Act provide for levy of fine penalty which the owner of the goods has to pay for seeking redemption; the third Proviso gives similar right to the owner of the conveyance/transport vehicle; thus, the confiscation is in the nature of mala prohibita as contradistinguished from mala in se; in other words, the confiscation of the goods and the conveyances does not render them res extra commercium or res nullius; even after confiscation order is passed, thus, it is open to the owner to seek redemption of the confiscated goods/conveyance. This writ petition is allowed in part - a Writ of Mandamus is issued to the respondent to release the goods and the conveyance in detention immediately to the petitioner after ascertaining his prima facie ownership and on his depositing the total amount comprised in Sec.130 Notice dated 13.08.2021 in GST MOV 10, subject to outcome of the confiscation proceedings; petitioner shall not put forth any grounds of equity by virtue of this order and the release of subject goods and the conveyance.

Summary

Issues:
Release of goods pending confiscation proceedings under Sec.130 of CGST Act, 2017.

Analysis:
The High Court of Karnataka considered a case involving the detention of goods and a vehicle under the CGST Act, 2017. The main issue was whether the goods could be released to the apparent owner pending the conclusion of delayed confiscation proceedings in accordance with Sec.130 of the Act. The petitioner, a registered dealer, had his goods seized after being intercepted while transporting pan masala and chewing tobacco. Despite the physical verification of goods being delayed, the detention order was issued without providing a notice for release. The petitioner sought release due to the perishable nature of the goods.

The respondents, represented by the learned AGA, opposed the Writ Petition, alleging illegal transport activities and initiating confiscatory proceedings under Sec.130 based on collected information. The court, after hearing arguments from both sides, granted limited indulgence in the matter. It highlighted the provisions of Sec.129 and Sec.130 of the Act, emphasizing the option for redemption of confiscated goods and conveyances by paying a fine. The court acknowledged the owner's right to seek redemption even after confiscation and stressed that the goods do not become res extra commercium or res nullius post-confiscation.

Furthermore, the court supported the petitioner's request for release based on a circular issued by the Central Board of Indirect Taxes and Customs. The circular outlined a short timeframe for concluding inspection proceedings and provided for the release of goods upon payment of tax and penalty. Citing clauses from the circular, the court allowed the writ petition in part, mandating the immediate release of goods and conveyance to the petitioner upon depositing the total amount mentioned in the Sec.130 notice, subject to the outcome of the confiscation proceedings. The court prohibited the petitioner from raising equity grounds due to the order and the subsequent release of goods and conveyance. All contentions were kept open, and costs were made easy.

This judgment clarifies the legal provisions regarding the release of goods pending confiscation proceedings under the CGST Act, emphasizing the owner's right to seek redemption and the procedural requirements for release based on relevant circulars and statutory provisions.