2025 (6) TMI 997 - HC - GST

Delayed Fine Payment Allows Goods Release Under GST Section 130, Balancing Regulatory Flexibility with Taxpayer Rights

NIKHIL AYYAPPAN Versus STATE OF KERALA, ENFORCEMENT OFFICER, JOINT COMMISSIONER (APPEALS), KERALA STATE GOODS AND SERVICES TAX DEPARTMENT, GOODS AND SERVICE TAX

HC analyzed the release of confiscated goods under Section 130 of GST Act. Despite expiry of initial three-month period, Court allowed petitioner ... Confiscation u/s 130 of the GST Act - propriety in release of goods already confiscated u/s 130 of the GST Act, pending consideration of the appeal - HELD THAT:- As the goods are not reportedly sold, there are no reason to deny the opportunity to the petitioner to avail the option of getting the goods released, by making the payment of fine in lieu of the confiscation as mentioned in Ext.P8 order. Such an exercise would not cause any prejudice to the State as well. This writ petition is disposed of, directing the 2nd respondent to release the goods which are the subject matter of Ext.P8 order, upon the petitioner paying the fine in lieu of confiscation. The payment shall be done within an outer limit of one month, and upon making the payment, the goods shall be released immediately. The core legal question considered by the Court is whether it is proper to order the release of goods already confiscated under Section 130 of the GST Act pending the consideration of an appeal against the confiscation order.The issue arises from the petitioner's challenge to a confiscation order under Section 130 of the GST Act, which imposed fines in lieu of confiscation and provided an option to release the goods upon payment of such fines within a stipulated period. The petitioner had filed an appeal against the confiscation order and sought a writ of certiorari to quash a notice threatening auction of the vehicle and goods, as well as a writ of mandamus for release of the vehicle and goods pending appeal.Regarding the relevant legal framework, Section 130 of the CGST Act governs the confiscation of goods and conveyances involved in the commission of an offence under the Act. Subsection (2) authorizes confiscation where an offence is established, while Subsection (7) provides a limited period-three months-to the person concerned to pay a fine in lieu of confiscation and thereby secure release of the goods. The statutory scheme does not contemplate release of confiscated goods outside the conditions prescribed in Section 130(2) or 130(7).The Court's interpretation focused on the statutory language and intent of Section 130. It acknowledged that the petitioner had already been granted the option to pay a fine in lieu of confiscation within three months, but that period had expired. However, the Court noted that the goods had not yet been sold or otherwise disposed of. This fact was pivotal in the Court's reasoning, as the State had not suffered prejudice by allowing the petitioner an additional opportunity to pay the fine and reclaim the goods.In applying the law to the facts, the Court balanced the petitioner's right to avail the statutory remedy against the State's interest in enforcing the GST provisions. The Court reasoned that permitting the petitioner to pay the fine within a further limited period would not undermine the statutory scheme or cause prejudice. The Court thus exercised its discretion to direct release of the goods upon payment of the fine within one month.The competing arguments involved the petitioner's plea for immediate release pending appeal, which was not directly supported by the statute, versus the respondent's reliance on the statutory scheme restricting release to the prescribed procedure and timeline. The Court found that the statutory provisions did not expressly bar granting an extension where the goods remained unsold, and thus the petitioner's interest warranted accommodation.The Court concluded that the goods subject to confiscation under Section 130 shall be released upon payment of the fine in lieu of confiscation within an outer limit of one month from the date of the order. This direction was given notwithstanding the expiry of the initial three-month period, on the ground that no prejudice would be caused to the State and the goods had not been sold.Significant holdings include the Court's statement that 'as the goods are not reportedly sold, I do not find any reason to deny the opportunity to the petitioner to avail the option of getting the goods released, by making the payment of fine in lieu of the confiscation as mentioned in Ext.P8 order. Such an exercise would not cause any prejudice to the State as well.' This encapsulates the core principle that the statutory option to pay fine in lieu of confiscation may be extended in appropriate circumstances where the goods remain available and the State's interests are not compromised.The Court's final determination was to dispose of the writ petition with a direction to the second respondent to release the confiscated goods upon payment of the fine within one month, thereby granting relief to the petitioner while respecting the statutory framework governing confiscation and release under the GST Act.