TaxTMI 
TaxTMI 
2025 (5) TMI 1607
X X X X Extracts X X X X
X X X X Extracts X X X X
....,912/- + OGST Rs. 39,93,912/-) in exercise of power under Section 130 read with Section 122 of the OGST Act, 2017, after having paid the penalty as well as the redemption fine as demanded. 2. A prelude to the initiation of proceeding can be reasonably traced from a search and seizure operation conducted on 22nd March, 2003 at the factory/registered office premises of the petitioner located at village Gurupali, PO-Lapanga, District-Sambalpur, Odisha by a team consisting of the enforcement officials of the Enforcement Range, Samabalpur, the mining officials of the Deputy Director of Mines, Sambalpur and local police personnel. During the said search and seizure operation, the enforcement officials detected a shortage of 341.360 MT of Billet fetching a value of Rs. 1,53,61,200/- and seized various documents/notebooks/registers/files/loose slips under Form GST-INS-02 which was duly countersigned by the authorized persons of the petitioner. The descriptions of the seized documents were vividly reflected in the Annexures appended to FORM-GST-INS-02 which has not been disputed by the petitioner in the writ petition. 2.1. In furtherance of the said search and seizure operation, the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the ground of inordinate delay and lack of power in condoning the delay beyond the outer cap fixed under sub-Section (4) of Section 107 of the said Act, the writ petition is filed not only challenging the order of the appellate authority, but the show cause notice which culminated into a demand order on the premise that the moment the goods are not available, there may not arise any occasion either for seizure or for confiscation in terms of Section 130 (2) of the Act and, therefore, the show cause notice and the demand order are palpably illegal having issued in gross violation of the statutory provision and, therefore, partakes a character of a nullity. It is further stated that once the foundation is found invalid, illegal and infirm being violative of the statutory provision, all subsequent decisions/order shall automatically fall. 3. On the backdrop of the aforesaid facts pleaded in the writ petition, the respective counsels were invited to address the Court and after the closure of the oral submissions, the written notes of argument are filed by the respective parties which are taken on record. 4. Learned counsel appearing for the petitioner submits that the demand or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upreme Court against the order passed in Chinku Exports (supra), it would invite the concept of merger and the decision of the apex Court would operate in the field, which can be supported by a judgment of the Supreme Court rendered in Kunhayammed v. State of Kerala, 2001 (129) ELT 11 (SC). The counsel further submits that the redemption fine can be imposed even if the goods are not available, but on the special facts that after the confiscation of the goods, the same was released upon execution of a bond. In other words, it is contended that if the goods so confiscated was released on bond/undertaking given by the assessee, subsequent confiscation cannot be impinged as the goods are not physically available which would find support from the judgment of Gujarat High Court in case of Synergy Fertichem Pvt. Ltd. v. State of Gujarat, 2019 SCC OnLine (Gujarat) 6127. 4.2. Learned counsel for the petitioner is very much vocal in his submission that no tax shall be levied or collected by the State save by the authority of law under Article 265 of the Constitution of India and, therefore, even if the assessee has consented or there appears to be a mistake committed by the parties, the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ul for or relevant to any proceeding under the said Act to search and seize the same. He further submits that there is no challenge thrown in the writ petition on the authority of the competent persons to search and seize the materials mentioned in Section 67 of the said Act bestowing power upon the authority to confiscate the same for the other proceedings to be initiated under the provision of Section 130 and/ or Section 122 of the OGST Act, 2017. He thus submits that at the time of search and seizure, the authorized revenue authority confiscated the unaccounted shortage of stocks, the books and the documents from the premises and issued a notice under Form-GST-INS-02 along with the annexures containing the description of the materials. He vehemently submits that immediately upon the service of the show cause notice dated 27th March, 2023, the petitioner admitted the stock discrepancies and conveyed a clear intention of payment of penalty and fine in lieu of confiscation and on the basis of such admission, the authorities issued the demand order dated 29th March, 2023 and the payment was made by the petitioner not only of the penalty but the redemption fine in lieu of confiscatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re not physically available, Mr. Mishra relies upon a judgment of the Gujarat High Court rendered in case of Synergy Fertichem Pvt. Ltd. (supra) and Madras High Court judgment in M/s. Visteon Automotive Systems India Limited v. CESTAT, Chennai, 2017 SCC OnLine (Madras) 37615. Mr. Mishra thus submits that in view of the facts involved in the instant case, the petitioner cannot take a rebound and challenge the show cause notice and, therefore, the writ petition deserves dismissal. 6. Both the counsels appearing for the respective parties advanced lengthy arguments on the powers of the competent authorities to confiscate the goods which are not physically available and imposition of the redemption fine in lieu of such confiscation under Section 130 of the Act. Recently, the trend has developed in assailing the show cause notice and the demand order in the writ jurisdiction after exhausting the statutory remedy of appeal provided in the Act belatedly, when the appellate authority declined to condone the delay beyond the outer limit set forth under Section 107 (4) of the Act on the pretext that once the foundation of initiating the proceeding is found invalid and illegal, all subsequ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plication and recognized in a subsequent judgment of the Supreme Court in Chiranjilal Shrilal Goenka (supra) in the following: "18. It is settled law that a decree passed by a court without jurisdiction on the subject-matter or on the grounds on which the decree made which goes to the root of its jurisdiction or lacks inherent jurisdiction is a coram non judice. A decree passed by such a court is a nullity and is non est. Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings. The defect of jurisdiction strikes at the very authority of the court to pass decree which cannot be cured by consent or waiver of the party." 6.2 In Kalabharati Advertising (supra), the legal maxim sublato fundamento, cadit opus meaning thereby in case a foundation is removed, the superstructure falls, was applied in a situation where the decree passed by a Court lacking inherent jurisdiction over the subject matter would always be regarded as a nullity and non est in the eye of law in the following: "21. In Badrinath v. State of T.N. [(2000) 8 SCC 395 : 2001 SCC (L&S) 13]....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der the extraordinary jurisdiction conferred upon the High Courts under Article 226 of the Constitution. Even though the proceedings may be maintainable under Article 226 of the Constitution of India, yet we see no absolute fetter on the part of the High Court exercising writ jurisdiction in refusing to entertain the writ petition. The support can be gainfully lend to a judgment of the apex Court in Vicco Laboratories (supra) where the show cause notice was challenged invoking the jurisdiction under Article 226 of the Constitution of India and a plea was taken that the Court should not interfere with such show cause notice as the authorities have not applied its conscious mind as yet, the apex Court clarified that normally the Court should relegate the parties to participate in the proceeding, but in the event, the show cause notice is issued either without jurisdiction or in abuse of process of law, there is no absolute bar that the writ Court would refuse to entertain the plea at such a stage in the following: "30. Normally, the writ court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are that: 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternative remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternative remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged. 27.4. An alternative remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternative remedy is provided by law. 27.5. When a right is created by a statute, which itself prescribes the remedy or procedu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ily the High Court should refuse to entertain the writ petition under Article 226 of the Constitution of India if the efficacious alternative remedy is provided in the statute. Ordinarily, the High Court should relegate the parties to exhaust the statutory remedy so provided unless the challenges thrown in the writ petition to the action of the authorities is in gross violation of the fundamental rights guaranteed under Part-III of the Constitution; violation of principles of natural justice; vires of the Act or the subordinate legislation and the order or the proceeding is wholly without jurisdiction. It is highlighted that the High Court may decline to entertain the writ petition if it involves a disputed question of facts subject to the objective satisfaction of the High Court that it invites the exercise of the jurisdiction. Even though the power of the writ Court is not brindled in absolute sense, yet the High Court may refuse to entertain the writ petition in the event the point raised therein is amenable to be assailed before the statutory forum provided the case of such nature as envisaged in the above report is made out. The plea of jurisdiction striking at the root of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sdiction and powers. Even Section 122 of the Act exposes the taxable person liable for a penalty in the event it supplies any goods or services or both without issue of any invoices or issues an incorrect or false invoice with regard to any supply apart from the other incidents provided therein. Section 130 of the Act contains an exhaustive provision relating to the confiscation of goods or a conveyance and a levy of penalty which imbibes within itself the eventuality of supplying or receiving any goods in contravention to any provisions of the Act or the Rules made thereunder with intend to evade payment of tax. Sub-Section (2) of Section 130 of the Act postulates an option to pay a redemption fine in lieu of the confiscation. The conjoint reading of the provision as aforesaid are the expositions of the powers and the jurisdiction conferred upon the proper authorities not only to the inspection, search and seizure, but also the confiscation the goods and the payment of redemption fine in lieu of such confiscation. It is thus not a case of a complete lack of jurisdiction or powers, but hovers around the exercise of such powers or jurisdiction in relation to goods liable to confisca....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under: "It is contended by the learned counsel for the appellant that redemption fine could not be imposed because the goods were no longer in the custody of the respondent-authority. It is an admitted fact that the goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine." 11. The Bombay High Court in Finesse Creation INC (supra) held that there is no fetter on the part of the authority to confiscate the goods not physically available, but such situation would arise when the goods which were physically available were released on execution of a bond or undertaking and not otherwise in the following: "5. In our opinion, the concept of redemption fine arises in the event the goods are available and are to be redeemed. If the goods are not available, there is no ques....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., even then redemption fine could be imposed. We are, therefore, not inclined to accept the contention raised by the appellant on this issue and set aside the redemption fine. 13. The reliance of learned counsel for the revenue upon the provisions of Section 125 of the Act is also misconceived. Section 125 of the Act is applicable only in those cases which have been cleared by the concerned authorities subject to furnishing undertaking/bond etc. However, in the present case, admittedly, the goods were cleared by the respondent-authorities without execution of any bond/undertaking by the assessee. Thus, in view of the fact and circumstances of the case, we find no error in the impugned orders. No substantial question of law arises for our determination in the present appeal and the same is hereby dismissed." 14. We need not multiply the other judgments so cited on such proposition as the distinction is noticeable that in relation to a confiscation of the goods under the Customs Act, in the event, the goods are released on bond or on undertaking and subsequently the same is held liable to confiscate, there is no fetter on the part of the authorities in confiscating such g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yment of fine under sub-section (1) of Section 125, the goods are saved from getting confiscated. Hence, the availability of the goods is not necessary for imposing the redemption fine. The opening words of Section 125, "Whenever confiscation of any goods is authorised by this Act ....", brings out the point clearly. The power to impose redemption fine springs from the authorisation of confiscation of goods provided for under Section 111 of the Act. When once power of authorisation for confiscation of goods gets traced to the said Section 111 of the Act, we are of the opinion that the physical availability of goods is not so much relevant. The redemption fine is in fact to avoid such consequences flowing from Section 111 only. Hence, the payment of redemption fine saves the goods from getting confiscated. Hence, their physical availability does not have any significance for imposition of redemption fine under Section 125 of the Act. We accordingly answer question No.(iii)." 15. We may not lose sight of a Division Bench judgment of this Court in Shri D. Murali Mohan Patanaik v. Secretary to Government of Odisha, Finance Department and others (W.P.(C) No.34787 of 2022 dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n case of Shri D. Murali Mohan Patanaik (supra) as referred above found that once the payment is made without protest it is not open to challenge the entire procedure adopted for confiscation liable to be struck down. Though the petitioner in the instant case pleaded that the said payment of redemption fine and penalty was under protest, but we do not find from the documents that any such protest was recorded; rather, there has been categorical stand taken before the authority admitting the shortage of the stocks and conceding the payment of penalty and the fine in lieu of confiscation. The coordinate Bench in such perspective where the payment is made without any protest refused to exercise the jurisdiction under Article 226 of the Constitution of India in the following: "7. Initially, Mr. Pattanaik, learned counsel for the Petitioner repeatedly urged that he was aggrieved by the above letter. When it was pointed out to him that there was nothing in the letter about which he can be aggrieved, his contention was that the Petitioner had actually made payments under protest and was, on account of the above letter, unable to file any appeal against the demands already raised ....