Karnataka High Court orders GST authorities to sell seized hazardous goods under Section 129(6)

GST Authorities Must Act on Seized Hazardous Goods: No Room for Further Delay

In a decisive ruling, the High Court of Karnataka at Bengaluru has directed Goods and Services Tax authorities to proceed with the sale of seized hazardous goods—bulk bitumen—under Section 129(6) of the CGST Act after issuing due notice, if the owner does not appeal. Justice B M Shyam Prasad disposed of a writ petition from M/s. TPJ Carriers, a transporter, holding that the authorities have a statutory obligation to act promptly when seized goods are inflammable and hazardous.

Background: Interception, Penalty, and a Two-and-Half-Month Wait

The petitioner, TPJ Carriers, owned a 14-wheeler tanker (KL-40/S-7040) hired by M/s. SVP Petro Products to transport bulk bitumen. State GST authorities intercepted the vehicle and passed an order under Section 129(3) imposing a penalty of ₹23,86,590. As the transporter and owner of the conveyance, TPJ Carriers was entitled to release of the vehicle upon paying the lesser amount prescribed under the first proviso to Section 129(6)—₹1,00,000—which it promptly deposited.

Despite this, the authorities took no steps to sell the seized goods for nearly two and a half months. The Department argued it was waiting for the appeal period to expire. The Court, however, found this reasoning insufficient given the nature of the goods.

The Legal Framework: Section 129(6) and Its Provisos

The Court examined the relevant provision:

Where the person transporting any goods or the owner of the goods fails to pay the amount of penalty... within fifteen days from the date of receipt of the copy of the order... the goods or conveyance so detained or seized shall be liable to be sold or disposed of...

The first proviso allows release of the conveyance on payment by the transporter of either the penalty or ₹1,00,000, whichever is less. The second proviso empowers authorities to reduce the fifteen-day period where goods are perishable, hazardous, or likely to depreciate in value.

High Court's Analysis: Hazardous Nature Triggers Urgent Action

Justice Shyam Prasad observed that the seized bulk bitumen is "undoubtedly inflammable and therefore hazardous." The Court rejected the Department's argument that it could wait for the appeal period, noting that the statute enjoins authorities to act even within fifteen days and to bring goods to sale earlier when they are hazardous or perishable.

Key Observations from the Judgment

"The goods seized should have been brought to sale if the consignor has not paid the penalty within fifteen days from the date of receipt of such order."

"In the present case, the seized goods is undoubtedly inflammable and therefore hazardous. This is in addition to the damage that could be to the conveyance."

The Court held that the authorities must act under the proviso to Section 129(6) for sale of seized goods after taking out due notice. If the owner does not avail the appellate remedy despite publication of the sale notice, the authorities must proceed with the sale. A copy of the notice must also be served on the owner to ensure fair process.

The Court's Final Direction: Sale Within Five Weeks

The High Court disposed of the petition, directing the GST authorities to " bring the goods to sale issuing public notice of sale causing notice thereof to the owner at the earliest and in any event within five weeks from today." This ruling reinforces that the GST regime demands proactive enforcement , especially when goods pose safety risks or depreciate rapidly. Transporters and owners alike can take note that authorities cannot indefinitely hold seized hazardous cargo without taking statutory steps to dispose of it.