Provisional release of goods pending confiscation is not authorized under Section 130 of the CGST Act; legal authority for property deprivation must follow specific statutory provisions.

JUDGMENT :

ZIYAD RAHMAN A.A., J.

The short question that arises for consideration in this Writ Petition, is with regard to the powers conferred upon the authorities under the Central Goods and Services Tax /Kerala State Goods and Services Tax, Act, 2017 (CGST and KSGST) to hold/retain the goods in transit, during the proceedings of confiscation under section 130 of the CGST Act. Incidentally, another question that arises in this case is whether Section 130 (2) enables the authority concerned, to release the goods as a provisional measure, pending the adjudication proceedings, by accepting the fine in lieu of the confiscation proposed in the notice issued in Form MOV-10.

2. The facts which led to the filing of this Writ Petition are as follows:

2.1. The petitioner is a registered taxpayer under the provisions of CGST Act and deals with scrap materials. As part of the business, the petitioner undertook the delivery of certain goods on 25.11.2025, vide invoice No. AM./010/2025-26 dated 24.11.2025 and E-way Bill No.5619 1335 5668 dated 24.11.2025, for transporting copper scrap. Exhibits P1 and P2 are the invoice and e-way bills referred to above, respectively. The goods were being transported in a vehicle bearing registration KA-01-AM-0216.

2.2. During such transit, the 2nd respondent detained the goods and ordered for physical verification of the vehicle on the ground that genuineness of the goods in transit requires scrutiny. Exhibit P3 is the Form MOV-1 issued by the 2^nd respondent on 4.12.2025 and Exhibit P4 is the Form MOV-2 issued by the 2^nd respondent on the same day. Exhibit P5 is the Form MOV-4 dated 27.11.2025. According to the petitioner, the goods were being transported with all necessary documents to be accompanied, and there was no irregularity in such transit.

2.3. Thereafter, the petitioner was issued with Ext.P7 notice proposing confiscation of the goods and conveyance in Form GST MOV-10 on 3.12.2025. In Ext.P7, several discrepancies are alleged against the petitioner and a fine of Rs.18,92,053/- was proposed in lieu of the confiscation of the goods, apart from the penalty payable. The petitioner submitted Ext.P10 reply to Ext.P7, where the non- compliance of the mandatory procedure to be followed, while detaining the goods and initiating proceedings for confiscation, were highlighted. The petitioner also sought permission to cross-examine the witnesses and the release of the vehicle as a provisional measure, after making the payment of the fine proposed in Ext.P7 in lieu of the confiscation. Exhibit P12 is the challan form DRC03 evidencing the payment of the entire amount proposed as fine.

2.4. According to the petitioner, the release of the goods, pending adjudication of the confiscation, is permissible under section 130(2) of the CGST Act, in the light of the principles laid down by this Court in the Sales Tax Officer v. Y. Balakrishnan (RP No.630/2021 dated 29.11.2021), a copy of which is produced as Ext.P15. The petitioner also challenges the authority of the respondents to retain the said vehicle in their possession, pending finalisation of the confiscation proceedings. The Writ Petition was filed in such circumstances seeking the following reliefs:

“i) Issue a writ of mandamus or any other appropriate writ, order or direction quashing the Exhibit P7 MOV-10 show cause notice dated 03.12.2025 issued proposing confiscation under section 130, and/or all consequential proceedings thereto, as illegal, arbitrary, without jurisdiction and vitiated by violation of mandatory procedure and principles of natural justice;

ii)