GST goods-in-transit detention and s.129 penalties challenged; writ rejected for s.107 appeal, conditional release on payment and bank guarantee

A writ petition challenging detention and penalty under s.129(1)(a) and s.129(1)(b) of the WBGST/CGST Acts was held not maintainable due to availability of a statutory appeal under s.107. Applying the settled exceptions to the alternate-remedy rule, the HC held the dispute did not disclose "no notice no hearing" or lack of jurisdiction; the alleged denial of personal hearing was fact-intensive and the record showed non-appearance, warranting appellate adjudication rather than writ scrutiny, and the CBIC circular could not preclude action where genuineness of the transaction was doubtful. The petition was disposed of with liberty to appeal, and interim release of goods/conveyance was directed on payment of s.129(1)(a) penalty and furnishing bank guarantee for the s.129(1)(b) balance.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the writ court should exercise jurisdiction despite a statutory appellate remedy, where alleged denial of personal hearing and other contested factual issues arise from a detention/penalty order under the said Act of 2017.

(ii) Whether the petitioner was entitled to immediate release of detained goods and conveyance by treating the petitioner as "owner" under the CBIC circular dated December 31, 2018, in circumstances where the transaction and supporting documents were doubted by the GST authority.

(iii) What interim/balancing directions should govern release of perishable goods pending appeal, having regard to penalties determined under Section 129(1)(a) and Section 129(1)(b) of the said Act of 2017.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Maintainability of writ petition in presence of statutory appeal; alleged breach of natural justice

Legal framework: The Court noted the settled position that an alternative remedy does not bar writ jurisdiction where the case falls within recognised exceptions, including violation of principles of natural justice or lack of jurisdiction.

Interpretation and reasoning: The Court found that the dispute on "personal hearing" was fact-sensitive: the petitioner's case was not that no hearing notice was served, but that despite appearing, the authority did not hear him; the impugned order, however, recorded non-appearance. The Court held such a contested issue could not be effectively resolved on affidavit evidence in writ proceedings and required a deeper factual probe more suitably undertaken by the appellate authority. The Court also observed that the impugned order contained multiple factual findings (including discrepancy in weight and doubts about supplier genuineness), and the writ court should be slow to reappreciate such factual issues when a full-fledged appellate remedy is available.

Conclusions: The Court declined to interfere under Article 226, holding the case did not clearly fall within the exceptions warranting writ intervention at this stage and directing the petitioner to pursue the statutory appeal under Section 107.

Issue (ii): Applicability of CBIC circular deeming consignor/consignee as owner for release under Section 129

Legal framework: The Court considered the CBIC circular dated December 31, 2018, and the principle that such circulars are binding on departmental officers, but must operate within the statutory framework and be applied in appropriate factual situations.

Interpretation and reasoning: The Court held that the circular could not be applied as a matter of course where the very transaction and documents were under serious doubt. The Court relied on the impugned order's findings that there was excess quantity on weighment compared to the invoice and that the procurement/supplier genuineness required verification, with an expressed suspicion of tax evasion and dubious documentation. On that basis, the Court reasoned that the circular is meant to apply when invoices/e-way bills are "in order" and the consignment/transaction is not clouded by doubts; it cannot be used as a "shield" to avoid scrutiny in cases involving undisclosed transactions or dubious invoices/bills.

Conclusions: The Court refused to direct release solely on the footing that the petitioner's name appeared on the invoice/e-way bill, holding the circular inapplicable where the transaction and documents were questioned by the authority on recorded grounds.

Issue (iii): Conditional release of perishable goods and conveyance pending appeal

Interpretation and reasoning: While refusing writ interference on merits, the Court accepted that the goods were asserted to be perishable with limited shelf life and therefore considered a balancing order appropriate. The Court fashioned a conditional release mechanism to protect revenue interests while preventing deterioration of goods.

Conclusions: The Court directed that goods and conveyance be released within two days if the petitioner pays the penalty determined under Section 129(1)(a) and furnishes security for the balance amount determined under Section 129(1)(b) in the form of a bank guarantee. The Court further directed that if an appeal is filed within one week, it should be decided within four weeks without unnecessary adjournments to the petitioner, and directed the authorities to provide GST ID and password to enable filing of the appeal. All merits were left open for decision by the appellate authority.

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