GST confiscation was found disproportionate where an unregistered godown was later regularised and the goods remained available.

In a GST confiscation dispute, the Madras HC noted that goods were stored in a godown not shown as an additional place of business at the time of inspection, but the registration was later amended and the goods remained available. On those facts, confiscation of the stock, redemption fine, and the resulting tax demand were found disproportionate. The Court treated the lapse as one of delayed or improper registration and compliance, for which a general penalty was the more appropriate consequence, with consequential redetermination only for goods already sold.

---

---

Issues: Whether confiscation of the goods, levy of redemption fine and consequential tax and penalties were sustainable when the stock was kept in a premises not registered as an additional place of business, but the premises was later regularised and the goods remained available.

Analysis: The seized goods were found in a godown that had not been shown as an additional place of business in the GST registration at the time of inspection. The Court noted, however, that the petitioner later obtained amendment of registration and the goods were still available. On those facts, the Court found that the extreme consequence of confiscation with redemption fine and the demand raised on the seized stock was not justified. The Court took the view that the default, at best, called for a general penalty for delayed or improper registration and compliance, rather than confiscation of the stock itself.

Conclusion: Confiscation, redemption fine and tax demand on the seized stock were set aside to that extent, and the petitioner was held liable only to a general penalty and consequential redetermination for goods already sold.

Ratio Decidendi: Where stock is stored in an unregistered additional place of business but the premises is later regularised and the goods are available, confiscation and redemption fine are disproportionate and the default is better met by a general penalty.

---