Third-party goods cannot be confiscated merely because they were seized during inspection of another person's premises.

Gold jewellery shown by delivery challans and issue vouchers to belong to third-party petitioners could not be kept under continued seizure or treated as liable to confiscation in proceedings against a hallmarking dealer under the State Goods and Services Tax Act, 2017. The HC held that Section 130 applies only where goods are supplied or received in contravention of the Act with intent to evade tax, and that third-party goods cannot be confiscated merely because they were found during inspection of another person's premises. The seizure was valid only to the limited extent necessary to complete enquiry into the hallmarker's own tax and penalty liability, after which the jewellery had to be released.

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Issues: Whether gold jewellery belonging to the petitioners and seized from the premises of a hallmarking dealer could be continued under seizure or made liable to confiscation in proceedings initiated against the hallmarker under the State Goods and Services Tax Act, 2017.

Analysis: The seizure was upheld only to the limited extent that it enabled the authorities to investigate and determine the hallmarker's own tax and penalty liability arising from the inspection of his premises. The gold ornaments were shown by delivery challans and issue vouchers to belong to the petitioners, who were not proceeded against under the Act. Since confiscation under Section 130 is attracted only where goods are supplied or received in contravention of the Act with intent to evade tax, goods admittedly belonging to third parties could not be confiscated in proceedings against the hallmarker. The authorities were therefore not justified in retaining the petitioners' jewellery beyond what was necessary for completion of the enquiry.

Conclusion: The continued seizure and proposed confiscation of the petitioners' gold jewellery were unsustainable, and the jewellery was directed to be released to the petitioners after completion of the proceedings within the time fixed, with the seizure and prohibition orders quashed to that extent.

Final Conclusion: The petitioners obtained relief against retention of their jewellery, while the Department was permitted only a limited period to complete the proceedings against the hallmarker.

Ratio Decidendi: Goods belonging to a third party cannot be confiscated in proceedings against another person under the State Goods and Services Tax Act, 2017 merely because they were seized during an inspection of that person's premises.

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