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TMI Blog2025 (1) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... elease of goods pending adjudication of Ext.P9 notice. As a result, it is directed that pending adjudication of Ext.P9 notice, the goods and conveyance detained in terms of Expt.P9 order shall be released to the petitioner on the petitioner depositing a sum of Rs. 1,00,000/- (Rupees One Lakh Only) and furnishing a simple bond for the balance amount.' This Court, in Golden Traders [ 2022 (8) TMI 147 - KERALA HIGH COURT ], has categorically held that there is no provision in Section 130 of the GST Act which prohibits the interim release of goods seized pending adjudication of show cause notice under Section 130. Section 130(7), therefore, provides an option to pay fine in lieu of confiscation even after the adjudication. The intention of the legislature is that the interest of the revenue is protected. The adjudication can be proceeded even if the goods are released pending adjudication. Even if confiscation is ordered, there is an option to the owner of the goods to pay fine in lieu of confiscation. Further, after the owner of the goods avails the option but refuse to make payment in lieu of confiscation, Section 130(6) permits the proper officer to withdraw the order of release ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory certifying the purity of the precious stones. Only upon receipt of the laboratory certificate, the petitioner proceeds to sell the approved diamond gold jewellery along with the certificate and tax invoice. In order to transport the sample ornaments for approval of dealers, the petitioner issues delivery challans in the name of its Marketing Executives in accordance with Rule 55 (1) (c) of the Central/State Goods and Services Tax Rules, 2017 (GST Rules, 2017). 3. While so, the petitioner issued Exts. P2 and P2(a) delivery challans dated 25.05.2023 respectively for 1044.074 and 3287.716 grams of net weight diamond gold jewellery in the name of Mr. Anson Andachan, one of the petitioner s Marketing Executives, to exhibit and solicit orders from the dealers in Kerala. Ext. P3 is the copy of the authorization dated 08.07.2022 given to Mr. Anson Andachan to market the goods on behalf of the petitioner. The petitioner states that, pursuant to the aforesaid authorization, Mr. Anson Andachan approached the 2nd respondent, M/s. Dubai Gold and Diamonds, Malappuram, on 26.05.2023 to exhibit the diamond gold jewellery mentioned in the delivery challans. However, at that time, the 4th resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P7 letters to the 1st respondent requesting for release of the goods seized, along with duly executed bond for the value of the goods and a challan evidencing payment of the amount equivalent to the penalty quantified in the show cause notice in lieu of bank guarantee. The 1st respondent, by Ext. P8 communication dated 13.07.2023, rejected the request stating that Section 130 of the SGST Act does not provide for provisional release of goods seized. The petitioner states that Ext.P8 was issued without providing the petitioner an opportunity of being heard. Challenging Exts. P5 and Ext. P8, W.P (C) No. 40450 of 2023 is preferred. 5. The petitioner states that Section 130 proceedings are yet to be finalized by the 1st respondent and the petitioner has been cooperating with the proceedings. It is contended that, in the meantime, the Department has no authority to retain the seized goods in its custody without any valid reason and as per Section 67 (6) of the GST Act, the seized goods shall be released, on a provisional basis, upon execution of a bond and furnishing of a security. The petitioner refers to Rule 140(1) of the GST Rules, 2017 and contends that the seized goods have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to release the goods pending adjudication and until the culmination of adjudication, the party from whom the goods were seized cannot claim release of such goods and that legal proceedings cannot be whittled down on grounds of expediency. Accordingly, it is contended that the petitioner has no legal right to claim provisional release of the goods pending adjudication under Section 130. It is further stated that the petitioner has participated in the adjudication and availed its right to cross examine on 12.01.2024 and personal hearing was held on 08.02.2024 and objection was filed on 09.02.2024 and what remains is to pass final orders in the matter and therefore, provisional release of the goods at the final stage of the proceedings would serve no purpose in law. 8. Heard Sri. K. Srikumar, the learned Senior Counsel for the petitioner and Sri. Mohammed Rafiq, the learned Special Government Pleader (Taxes). 9. Sri. Srikumar relies on the judgment of this Court in Golden Traders v. Assistant State Tax Officer [(2022) 142 taxmann.com268 (Kerala) : (neutral citation No. 2022 KER 36959) and contends that Section 130 of the GST Act does not prohibit interim release of goods which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia v. Lexus Exports (P) Ltd. [(1997) 10 SCC 232], Sri. Rafiq would contend that the proceedings of confiscation are proceedings in rem and until the culmination of the adjudication, the party from whom the goods were seized cannot claim release of such goods and that legal proceedings cannot be whittled down on grounds of expediency. Sri. Rafiq also submits that the decision in Balakrishnan (supra) cannot be relied upon since the writ appeal arising from the said case has been subsequently withdrawn leaving open the contentions of the parties. 11. Section 67 of the Central Goods and Services Tax Act, 2017 deals with the power of the proper officer to inspect, search and seizure. Section 67 (6) provides that the goods seized under sub-Section (2) shall be released, on provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable as the case may be. Section 130 of the GST Act reads as follows: S. 130. Confiscation of goods or conveyances and levy of penalty.- (1) [Where] any person- (i) supplies or receives any goods in contravention of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government. 12. The primary contention of the petitioner is that the petitioner is entitled to provisional release of the goods under Section 67 (6) of the GST Act pending adjudication of the notice under Section 130. The question as to whether interim release of goods can be ordered pending adjudication of notice under Section 130 of the GST Act came up for consideration before this Court in Golden Traders (supra). Distinguishing the judgment of the Hon'ble Supreme Court in Lexus Exports (supra) and referring to the decision in Balakrishnan (supra), this Court held as follows: 6. However, the question remains as to whether the petitioner is entitled to the interim release of the goods pending adjudication of the notice under section 130 of the CGST Act. Though the learned special Government Pleader has referred to the judgment of the Supreme Court in Lexus Export (P) Ltd. (Supra), I am of the view that the said precedent has no application in deciding a matter arising under section 130 of the CGST Act. That case dealt with the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edural formalities. If the fine in lieu of confiscation is paid at the initial stage, no prejudice would be caused to the revenue also, since by virtue of section 130 (7) even after adjudication, an option to pay fine in lieu of confiscation is to be offered peremptorily. Thus, in view of the above deliberations, I am of the firm view that section 130 (2) of the Act applies before the order of confiscation is issued. 28. The decision relied upon by the learned Senior Government Pleader rendered by the Karnataka High Court in M/s. Meghdoot Logistics case, according to me, can be distinguished. Though the said decision observes in paragraph 21 that there is no provision for a provisional release of the seized goods under section 130 of the Act, this Court is of the considered view that the question of release under section 130 (2) of the Act never arose for consideration in that case and the observations were only obiter dicta of the Court. The aforesaid decision arose on an issue under section 129 of the Act and in the process of distinction, a passing reference alone was made to section 130. In such a view of the matter, I am not persuaded to follow the said judgment. 29. In the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for confiscation, can be decided at the time of final disposal of the writ petition. I am, therefore, of the view that the petitioner is entitled to an order directing the release of goods pending adjudication of Ext.P9 notice. As a result, it is directed that pending adjudication of Ext.P9 notice, the goods and conveyance detained in terms of Expt.P9 order shall be released to the petitioner on the petitioner depositing a sum of Rs. 1,00,000/- (Rupees One Lakh Only) and furnishing a simple bond for the balance amount. 13. This Court, in Golden Traders (supra), has categorically held that there is no provision in Section 130 of the GST Act which prohibits the interim release of goods seized pending adjudication of show cause notice under Section 130. The said judgment has become final. In Dhanlaxmi Metals (supra), while considering the question whether the authorities under the GST Act have power for provisional release of goods, the High Court of Gujarat held as follows: 36. In view of above, once the goods are to be treated as seized under section 67(2) of the GST Act, the same would be liable to be provisionally released under section 67 (6) of the GST Act by the GST author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty and fine in lieu of confiscation of the conveyance by the petitioners within a period of three weeks from the date of receipt of a copy of this order. 14. As rightly held by the High Court of Gujarat, the intention of the legislature cannot be to keep the goods and conveyance unused till the final adjudication exhausting the hierarchy of remedies. Further, as per Section 130 (2) of the GST Act, whenever confiscation of any goods or conveyance is authorised by the Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit. Section 130(7) provides that the proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under the Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government. Section 130(7), therefore, provides an option to pay fine in lieu of confiscation even after the adjudication. The intention of the legislature is that the interest of the revenue is protected. The adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X
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