Interim Release Of Goods Can Be Ordered Pending Adjudication Of Notice U/S 130 GST Act In Lieu Of Fine: Kerala High Court

The Kerala High Court has held that interim release of goods can be ordered pending adjudication of notice under section 130 GST Act in lieu of fine.The Bench of Justice Murali Purushothaman observed that “….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…..” The assessee/petitioner is engaged in the wholesale trade of gold, precious metals and ornaments made therefrom to various jewellery shops in different States. In order to transport the sample ornaments for approval of dealers, the assessee 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. The jewellery was seized from the assessee's Marketing Executive. The assessee submitted that 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 assessee referred to Rule 140(1) of the GST Rules, 2017 and contended that the seized goods have to be released on a provisional basis upon execution of a bond and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable. The department submitted that Section 130 does not contemplate provisional release of goods which are proposed to be confiscated and the department has no authority 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. The bench opined that “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 and hold possession of the goods confiscated.” High Court observed that the provisional release does not in fact result in loss of absolute custody by the Department over the goods seized, as the Department will still have constructive custody. The object of the provision is only to secure the value of the goods that are liable for confiscation and not to confiscate the goods as such. In view of the above, the bench directed the department to release the goods seized to the assessee pending adjudication of show cause notice. Case Title: Shish Jewels Private Limited v. The Intelligence OfficerCitation: 2025 LiveLaw (Ker) 32 Case Number: WP(C) NO. 40450 OF 2023 Counsel for Petitioner/ Assessee: K. Sreekumar, Aji V. Dev, Alan Priyadarshi Dev, S. Sajeevan, Ammu Charles Counsel for Respondent/ Department: Mohammed Rafiq Click Here To Read/Download The Order

Interim Release Of Goods Can Be Ordered Pending Adjudication Of Notice U/S 130 GST Act In Lieu Of Fine: Kerala High Court

Mehak Dhiman

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