Petition dismissed; officer validly invoked Section 129(3) CGST Act for assessment and penalty; appeal permitted within one month.

HC dismissed the petition, holding the officer who invoked Section 129(3) CGST Act had jurisdiction to assess goods and specify penalty; petitioner failed to show otherwise and had not cooperated in proceedings. The court ruled the petitioner must exhaust the statutory remedy of appeal before the appellate authority, granted liberty to file the appeal within one month from receipt of the order, and directed the appellate authority to decide the memorandum of appeal within three months of receipt.

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ISSUES PRESENTED AND CONSIDERED

1. Whether the petitioner was required to exhaust the statutory remedy of appeal before the appellate authority against an order passed under Section 129(3) of the CGST Act, 2017.

2. Whether the proper officer exercising powers under Section 129(3) has jurisdiction to determine/assess the value of goods in transit for the purpose of specifying the penalty payable.

3. Whether the procedure mandated by Section 129 (notice, opportunity of hearing, timing of order) was complied with and whether the impugned order suffered from jurisdictional or procedural infirmity making it amenable to writ relief.

4. Whether the methodology adopted by the proper officer (best-judgement valuation using online price lists and physical verification) to determine market value and compute tax/penalty was legally permissible.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Requirement to exhaust statutory appeal remedy

Legal framework: Section 129(3) empowers the proper officer to issue a notice within seven days of detention/seizure specifying penalty payable and to pass an order within seven days from service of such notice; the CGST statutory scheme provides appellate remedies against orders passed by tax authorities.

Precedent Treatment: No specific precedents are cited or relied upon in the judgment.

Interpretation and reasoning: The Court notes that the statutory scheme contemplates an appeal remedy and that the petitioner has not demonstrated any exceptional circumstance that would render invocation of the appellate remedy futile or inadequate. The impugned order was passed in terms of Section 129(3) and directions for payment were given; the Court emphasises the availability and primacy of the appellate route in the tax code.

Ratio vs. Obiter: Ratio - the necessity to invoke the appellate remedy prior to seeking writ relief in absence of special circumstances.

Conclusion: The petitioner is required to avail the statutory appeal; writ petition disposed of with liberty to file appeal within one month and appellate authority directed to decide the memorandum of appeal within a reasonable period (three months) - final disposal on this point.

Issue 2 - Jurisdiction of proper officer under Section 129(3) to evaluate value of goods

Legal framework: Section 129 deals with detention, seizure and release of goods in transit and prescribes penalties (clause (a) and (b) of subsection (1)); subsection (3) requires the proper officer to specify the penalty payable and pass an order after notice; subsection (4) requires opportunity of being heard before determination of penalty under subsection (3).

Precedent Treatment: None cited in the judgment; Court decides on statutory text and scheme.

Interpretation and reasoning: The Court interprets "specifying the penalty payable" under Section 129(3) as inherently requiring the proper officer to evaluate the value of goods, drawing on corroborative material (invoices, e-way bill, other evidence) to arrive at taxable value and hence tax payable which is the base for penalty calculation. The petitioner's contention that the officer has no power to evaluate value is rejected as untenable because valuation is necessary to compute the tax and the corresponding penalty under the section.

Ratio vs. Obiter: Ratio - proper officer under Section 129(3) does have authority/duty to evaluate/assess the value of detained goods for the purpose of specifying penalty, using available corroborative material and best judgment when necessary.

Conclusion: The contention that the officer lacked jurisdiction to evaluate value under Section 129(3) is rejected.

Issue 3 - Compliance with procedural mandates of Section 129 (notice, hearing, timing)

Legal framework: Section 129 mandates issuing a notice within seven days of detention/seizure specifying penalty and passing an order within seven days from service of such notice; subsection (4) affirms that no penalty shall be determined without giving opportunity of being heard.

Precedent Treatment: No authorities relied upon; analysis based on statutory requirements and record.

Interpretation and reasoning: The Court examines the record and finds that FORM GST MOV-07 (notice) was issued and served on the person in charge, affording an opportunity to show cause and make payment. The officer thereafter passed an order (MOV-09) within the statutory timeframe. The Court further notes attempts by the department to seek corroboration from the purported owner and the absence of adequate responses from supplier/claimant, which supports the officer's action. The Court treats the procedural steps taken (notice, consideration of objections, order) as consonant with Section 129.

Ratio vs. Obiter: Ratio - where statutory notice is served and opportunity to respond is afforded but the person claiming ownership fails to cooperate or provide required corroboration, the proper officer may proceed to pass the order within the time prescribed by Section 129(3).

Conclusion: Procedural compliance with Section 129(3)/(4) is, prima facie, established; no jurisdictional/procedural lapse found warranting quashing at this stage.

Issue 4 - Legality of valuation methodology (best judgement based on online price lists and physical verification)

Legal framework: Valuation for GST purposes generally requires determining taxable value of goods supported by invoices/evidence; Section 129 permits the proper officer to specify penalty based on tax payable calculated from taxable value - where declared value appears suspect, the officer may use corroborative material and best judgement.

Precedent Treatment: No precedent cited; the judgment evaluates the impugned valuation on record.

Interpretation and reasoning: The proper officer found discrepancies: (a) mismatch between e-way bill declared loading point and vehicle movement (Fastag/RFID), (b) mobile contacts non-functional, (c) significant undervaluation in invoice (Rs.130/kg) compared to market rates (samples from IndiaMART and published prices including a cooperative benchmark). The officer used an average of four listed wholesale prices from an online portal to determine a "best judgement" market price (Rs.358/kg), adjusted for excess quantity found on verification, and computed the differential taxable value, tax evasion amount and penalty (2x tax where owner came forward). The Court accepts that where declared value is evidently undervalued and the claimant fails to substantiate, the officer's use of market price samples and best-judgement valuation for the purpose of specifying penalty is permissible prima facie. The Court also records the officer's reasoned computation showing calculation steps and justification based on evidence/physical verification.

Ratio vs. Obiter: Ratio - use of best-judgement valuation supported by contemporaneous corroborative data (market price lists, physical verification, e-way/vehicle movement discrepancies) is a permissible method for a proper officer to determine taxable value under Section 129(3) when declared value is doubtful and the claimant does not provide adequate evidence.

Conclusion: The valuation methodology employed is not shown to be legally impermissible on the face of the record; petitioner's attack on valuation lacks merit at this stage.

Ancillary findings relevant across issues

Interpretation and reasoning: The proper officer recorded prima facie findings of a syndicate of firms involved in illicit transportation/tax evasion (non-functional contact numbers, mismatch of loading point in e-way bill and Fastag/RFID data, undervaluation of goods). The owner who claimed goods did not adequately respond to specific departmental queries (purchase/sale details), and an authorization mail was received but claimant failed to furnish corroborative documents. These factual findings underpin the officer's exercise of power under Section 129 and the valuation chosen.

Ratio vs. Obiter: Obiter as to the factual characterization of a syndicate, but material to justify proceeding under Section 129; the Court treats such findings as supportive of the officer's action pending appellate review.

Conclusion: Prima facie factual findings support the order; they do not preclude appellate scrutiny but weigh against grant of interim writ relief.

Final Disposition (Court's Conclusion on Reliefs)

The writ petition is disposed of on the ground that the petitioner must pursue the statutory appeal remedy. Liberty is granted to file the appeal within one month; the appellate authority is requested to decide the memorandum of appeal within three months from receipt. No interference with the impugned Section 129(3) order is made by the Court in these writ proceedings.

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