Procedural allegations alone cannot open the writ route in a GST confiscation dispute

A Jurisdictional Objection Must Be Established, Not Merely Raised

Confiscation under GST law can seriously affect a business. Goods and vehicles may be confiscated, penalties and fines may become payable, and deliveries or other commercial commitments may be interrupted. Therefore, it is necessary to examine whether the officer had the legal authority to act and whether the taxpayer had a fair opportunity to defend its case. However, the seriousness of the consequences alone does not justify approaching the writ court instead of filing the statutory appeal. Merely calling an order "without jurisdiction" or alleging denial of natural justice is insufficient. The taxpayer must identify the specific defect and, through the applicable law and supporting records, show why it warrants direct judicial intervention.

This distinction was examined in M/s. Shreeji Steel Versus State Tax Officer (1), Kutch Mobile Squad. - 2026 (10) TMI 384 - GUJARAT HIGH COURT. The Gujarat High Court at Ahmedabad, comprising Hon'ble Mr Justice A.S. Supehia and Hon'ble Ms Justice Vaibhavi D. Nanavati, decided R/Special Civil Application No. 10249 of 2026. The taxpayer challenged fresh confiscation proceedings initiated after an earlier remand. It alleged that the officer lacked the authorisation required under Rule 138B of the CGST Rules, 2017, that the same officer had issued the notice and adjudicated the matter, and that the Department had not supplied the documents it relied upon. The question was whether these objections were established on the record and justified bypassing the appeal available under Section 107. Raising an objection on jurisdiction or fairness differed from demonstrating an actual defect in the proceedings.

The dispute concerned cast-iron waste and scrap purchased from M/s A.S. Construction, Gandhidham, against an invoice dated 12.02.2025, for direct delivery to M/s A.K. Tools Industries. The vehicle was intercepted on 13.02.2025, followed by verification, detention and confiscation proceedings. The earlier notices and orders were subsequently set aside, and the matter was sent back for reconsideration. Thereafter, the authorities issued a fresh notice dated 15.01.2026 and a confiscation order dated 02.03.2026. Setting aside the earlier proceedings did not automatically invalidate these later proceedings. The fresh notice, documents supplied, opportunity of hearing and final order had to be examined separately to determine whether the alleged defects remained or had been addressed.

An Officer Must Be Duly Authorised to Verify a Conveyance

Rule 138B of the CGST Rules, 2017 specifies who may stop a vehicle carrying goods and verify its documents and conveyance. Under sub-rule (1), the Commissioner, or an officer empowered by him, may authorise the proper officer to intercept the vehicle and check its e-way bill, whether the movement is inter-State or intra-State. Sub-rule (3) similarly requires physical verification by a duly authorised proper officer. Where another officer receives specific information about tax evasion involving a particular vehicle, the proviso permits that officer to undertake physical verification after obtaining the necessary approval. Information about possible evasion does not, by itself, authorise every officer to inspect the vehicle. The approval required by the Rule must still be obtained.

The petitioner relied upon HUKAM CHAND SHYAM LAL Versus UNION OF INDIA AND ORS. - 1975 (12) TMI 168 - Supreme Court, which supports a straightforward principle: when the law specifies who may exercise a power and how it must be exercised, those requirements must be followed. Administrative convenience or suspicion of wrongdoing cannot replace legal authority. For example, an officer may receive credible information that a truck is carrying goods under false documents. That information provides a reason to investigate, but the officer must nevertheless act within the authorisation or approval framework prescribed by Rule 138B of the CGST Rules, 2017. The strength of the suspicion cannot cure the absence of the required authority.

In the present case under consideration, examination of the record established that the Commissioner had authorised the officer who physically verified the conveyance. The objection therefore failed because the required authorisation existed, not because authorisation was unnecessary. However, permission to intercept and verify a vehicle must not be confused with unlimited authority to take every subsequent action under the GST law. Verification, detention and confiscation involve different statutory powers, and the officer exercising each power must be competent to do so under the applicable provisions and authorisation orders. The earlier judgment discussed in this case also examined the competent authority for confiscation. Thus, lawful verification does not dispense with the separate legal requirements governing any later detention or confiscation.

Fresh Proceedings Require Disclosure and a Fair Opportunity to Reply

When an earlier order is set aside and the matter is remanded for reconsideration, the authority must conduct fresh proceedings in accordance with the judicial directions. In M/s. Panchhi Traders Through Its Authorized Signatory Narendra Danabhai Daki & Raj Enterprises Versus State Of Gujarat Through Deputy Commissioner (Enforcement) & Anr. - 2025 (12) TMI 941 - GUJARAT HIGH COURT, Special Civil Application No. 9250 of 2020 and allied matters, decided on 11.12.2025, the earlier notices and orders in Forms GST MOV- 10 and MOV- 11 were set aside, and the matters were remanded. This did not automatically extinguish the Department' s right to examine the alleged contraventions. A fresh order could still be passed after following the law and providing the required safeguards. However, remand does not permit the authority to simply repeat its earlier conclusion. It must disclose the material relied upon, allow the taxpayer to answer the allegations, and consider the defence before deciding the matter afresh.

In the present case of Shreeji Steel, the fresh notice was accompanied by the supplier spot- visit documents and the driver's statement. The registration- cancellation documents were also supplied. A personal hearing was offered on 22.01.2026, but the petitioner did not attend. It subsequently submitted a written reply dated 09.02.2026, which was considered before the fresh order was passed. The verification and detention documents had also been supplied to the person in charge of the conveyance. These circumstances did not establish that the petitioner had been denied an opportunity to defend its case. A fair opportunity requires disclosure and consideration of the defence; it does not require the authority to accept that defence. An unfavourable decision, therefore, does not by itself establish a breach of natural justice.

The difference is easily understood through an example. If the Department alleges that a supplier was not operating from its registered premises and relies upon an inspection report that it does not supply, the taxpayer may be unable to challenge what was inspected, when the visit occurred, or what the report actually recorded. That concerns the fairness of the proceedings. If the report is supplied but the taxpayer argues that it is inaccurate or does not prove that the particular transaction was fictitious, the dispute concerns the evidence and the correctness of the resulting order. The taxpayer may pursue that challenge through the statutory appeal. An allegation of non-disclosure should therefore identify the missing document, the allegation based on it, and how its absence prevented an effective reply. In this case, the record did not establish such a denial.

A Bias Objection Requires More Than Disagreement with the Decision

The petitioner objected that the same officer had issued the show-cause notice and passed the adjudication order. It relied upon ASHOK KUMAR YADAV Versus STATE OF HARYANA - 1985 (5) TMI 243 - Supreme Court, which explains the importance of impartial decision-making. A taxpayer need not always prove that actual bias affected the final result; circumstances creating a reasonable apprehension of bias may also require examination. However, that apprehension must rest on identifiable circumstances, not merely on an unfavourable decision. For example, a complaint that the officer rejected the taxpayer's explanation concerns the correctness of the decision. Evidence suggesting that the officer had already decided the outcome before considering the reply raises a different concern about impartiality. Authorisation to act and the grant of a hearing do not, by themselves, answer every possible objection of bias.

The petitioner also cited Swastik Plastics Versus Commissioner Of DGST - 2022 (10) TMI 409 - DELHI HIGH COURT. There, the officer who conducted the investigation, search and seizure also passed the adjudication order. The Delhi High Court initially expressed a preliminary concern about the likelihood of bias. Subsequently, revised departmental guidelines were placed before it, and the adjudication order was set aside, with fresh proceedings directed under those guidelines. The officer's role in the investigation and the applicable guidelines were therefore important to the outcome. The decision should not be understood simply as requiring different officers to sign every notice and final order. Issuing a notice and conducting an investigation are not necessarily the same function; the officer's actual responsibilities and the governing legal framework must be examined.

In the present case of Shreeji Steel, the High Court did not separately develop a general rule on whether an investigating officer could also adjudicate the matter. It concluded that the authorities cited by the petitioner did not justify a different outcome on the facts before it. The petitioner also relied on M/s G.R. Infra Projects Limited Ratlam Versus The State of Madhya Pradesh & Ors. - 2026 (8) TMI 1497 - Supreme Court, to support its objection regarding the non-supply of documents. The judgment did not separately analyse that decision's legal principles. The rejection of the petitioner's objections must therefore be understood in the context of this case's particular record. It cannot be presented as general approval of adjudication by an investigating officer or as permission to withhold material necessary for an effective defence.

A Writ Petition Cannot Replace an Appeal Without an Established Exception

The normal remedy against an adverse GST adjudication order is an appeal under Section 107 of the CGT Act, 2017. In The Assistant Commissioner of State Tax and Others Versus M/s Commercial Steel Limited - 2021 (9) TMI 480 - Supreme Court, relied upon by the Department, the Supreme Court clarified that the availability of an appeal does not bar the High Court from exercising jurisdiction under Article 226. However, direct intervention ordinarily requires exceptional grounds, such as a breach of fundamental rights, denial of natural justice, action beyond the officer's jurisdiction, or a challenge to the validity of the governing law. The High Court's power to intervene and the taxpayer's justification for seeking intervention are separate questions. Merely describing an order as "without jurisdiction" or alleging "violation of natural justice" is insufficient. The taxpayer must identify the particular defect and establish it from the record.

The Department also relied upon M/s. Power Line Air Express Versus Principal Commissioner of Central Goods & Service Tax, New Delhi, Directorate General Of GST Intelligence, Through Its Director Delhi Zonal Unit, Delhi, Union of India - 2026 (3) TMI 1140 - DELHI HIGH COURT. The passages adopted in Shreeji Steel explain that complaints about service of notices, supply of documents, consideration of replies, and reasons given in an order may require detailed examination of the proceedings. The appellate authority can compare the notice, correspondence, service records, evidence, taxpayer's reply, and final order to determine whether the complaint is justified. An objection does not fall outside the appeal process merely because it concerns procedural fairness. The Supreme Court, by its order dated 02.04.2026 in SLP (Civil) No. 11496 of 2026, declined to interfere with the Delhi High Court's decision and disposed of the petition with clarification, expressly stating that it had not expressed any opinion on the merits of the matter. Accordingly, that order should not be presented as an endorsement of every legal conclusion in the Delhi High Court's judgment.

This approach does not mean that a genuine denial of natural justice can never justify a writ petition. It requires distinguishing an established denial of an effective opportunity to defend from a disagreement about how the evidence was evaluated. For example, a taxpayer may argue that an inspection report does not prove fictitious trading, that delivery records were wrongly rejected, or that the reasons given do not support confiscation. These may be substantial grounds of appeal without necessarily proving that the officer lacked authority to decide the matter. In the present case of Shreeji Steel, the findings concerning fake dealers and invoices formed part of the disputed adjudication order. They must not be read as a general rule that cancellation of a supplier's registration automatically proves that every purchase from that supplier was fictitious. The decision concerned the appropriate forum for challenging the order on the record before the Court, not an automatic test for declaring transactions false.

Dismissal of the Writ Does Not Foreclose a Statutory Appeal

Dismissal of the writ petition did not mean the petitioner lost every opportunity to challenge confiscation. The High Court left it to pursue an appeal under Section 107 of the CGST Act, 2017. Through that remedy, the petitioner could contest the evidence, the findings and the legal basis of the confiscation order, subject to the applicable filing requirements. The dismissal did not automatically establish that every departmental finding was correct. It meant that the grounds raised did not justify bypassing the statutory appeal.

Authorisation under Rule 138B of the CGST Rules, 2017 disclosure of the material relied upon and a meaningful opportunity to reply remain important safeguards. In this case, the record did not establish the alleged breach. The remaining objections therefore had to be pursued through the appellate process. The judgment directs the taxpayer to the appropriate remedy; it does not remove the right to contest the order. However, it should not be understood as granting an extension of limitation or waiving pre-deposit or any other mandatory condition for filing the appeal.

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