TaxTMI 
TaxTMI 
2026 (2) TMI 1150
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.... MOV-10. 2. The facts which led to the filing of this Writ Petition are as follows: 2.1. The petitioner is a registered taxpayer under the provisions of CGST Act and deals with scrap materials. As part of the business, the petitioner undertook the delivery of certain goods on 25.11.2025, vide invoice No. AM./010/2025-26 dated 24.11.2025 and E-way Bill No.5619 1335 5668 dated 24.11.2025, for transporting copper scrap. Exhibits P1 and P2 are the invoice and e-way bills referred to above, respectively. The goods were being transported in a vehicle bearing registration KA-01-AM-0216. 2.2. During such transit, the 2nd respondent detained the goods and ordered for physical verification of the vehicle on the ground that genuineness of the goods in transit requires scrutiny. Exhibit P3 is the Form MOV-1 issued by the 2nd respondent on 4.12.2025 and Exhibit P4 is the Form MOV-2 issued by the 2nd respondent on the same day. Exhibit P5 is the Form MOV-4 dated 27.11.2025. According to the petitioner, the goods were being transported with all necessary documents to be accompanied, and there was no irregularity in such transit. 2.3. Thereafter, the petitioner was issued with Ext.P7 n....
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....and along with the said counter affidavit, Exhibits R1(a) to R1(j) were produced to substantiate the objections raised in the counter affidavit. The said documents include the copies of the Forms GST MOV-1 and MOV-2 that contain the signature of the person in charge of the conveyance, as an acknowledgment thereof. It was contended that, all the statutory requirements as contemplated under Section 130 and also Ext.P6 Circular No. 41/15/2018-GST dated 13.4.2018 published by the Central Board of Indirect Taxes and Customs that governs the field, are complied with. Thus, dismissal of the writ petition was sought. 4. I have heard Sri. Cyriac Tom, the learned counsel appearing for the petitioner, Sri. Mohammed Rafiq, the learned Special Government Pleader (Taxes), appearing for the respondents 1 to 3. 5. The learned Counsel for the petitioner vehemently contended that, Ext.P7 requires to be interfered with, as the same was passed without following any of the procedure contemplated under section 130, as clarified in Ext.P6 circular issued by the Central Board of Indirect Taxes and Customs. It was also contended that, the petitioner is entitled to get the goods released under section....
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....yal Trading Co. [(2005) 11 SCC 518]. 8. The learned Special Government Pleader also brought to the notice of this Court, the judgment rendered in WP(C) No. 40450/2023, where a learned Single Judge of this Court followed Ext.P15 order, but the provisional release was ordered only on payment of fine in lieu of the confiscation and also the payment of the entire penalty proposed, as an interim measure. Apart from Ext.P15, the learned Counsel for the petitioner places reliance upon the Commissioner of Income Tax (Central)-1, New Delhi v. Vatika Township Pvt Ltd. [(2015) 1 SCC 1]. 9. I have carefully gone through the records, examined the statutory provisions and considered the contentions raised by both sides. 10. Before considering the questions that arise for consideration, it is necessary to examine the relevant statutory provisions under the CGST Act, relating to the detention, seizure and confiscation. Section 67 of the CGST Act deals with power of inspection, search and seizure in any place and the same reads as follows: "Section 67. Power of inspection, search and seizure.- "(1) Where the proper officer, not below the rank of Joint Commissioner, has re....
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....ised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of ....
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....lows: "Section 68. Inspection of goods in movement.- "(1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed. (2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed. (3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods." Section 129 deals with the powers and procedure for detention, seizure and release of the goods and conveyance in transit which reads as follows; Section 129 - Detention, seizure and release of goods and conveyances in transit "(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in trans....
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..... (5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3): PROVIDED that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less: PROVIDED FURTHER that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer." [Substituted as per Finance Act, 2021 w.e.f. 1-1-2022 and before substitution it reads as "Where the person transporting any goods or the owner of the goods fails to pay the amount of....
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....ne equal to the tax payable on the goods being transported thereon. [(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance] omitted by Finance Act, 2021 w.e.f. 1-1-2022 vide Noti. No. 39/2021-Central Tax dt. 21-12-2021. (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving r....
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....99899 (For e.g. EWBVER 120100231897). (c) For the purposes of verification of the e-way bill, interception and inspection of the conveyance and/or goods, the proper officer under rule 138B of the CGST Rules shall be the officer who has been assigned the functions under sub-section (3) of section 68 of the CGST Act vide Circular No. 3/3/2017 - GST, dated 05.07.2017. (d) Where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in charge of the conveyance in FORM GST MOV01. In addition, the proper officer shall issue an order for physical verification/inspection of the conveyance, goods and documents in FORM GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods. The proper officer shall, within twenty four hours of the aforementioned issuance of FORM GST MOV-02, prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal. (e) Within a period of three working days from the date of issue of the ....
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....liability register by debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. (i) Where the owner of the goods, or the person authorized by him, or any person other than the owner of the goods comes forward to get the goods and the conveyance released by furnishing a security under clause (c) of sub-section (1) of section 129 of the CGST Act, the goods and the conveyance shall be released, by an order in FORM GST MOV-05, after obtaining a bond in FORM GST MOV-08 along with a security in the form of bank guarantee equal to the amount payable under clause (a) or clause (b) of sub-section (1) of section 129 of the CGST Act. The finalisation of the proceedings under section 129 of the CGST Act shall be taken up on priority by the officer concerned and the security provided may be adjusted against the demand arising from such proceedings." 13. The issues raised in this writ petition are to be considered in the above factual and legal background. The first issue to be considered is with regard to the question as to whether, a provisional release of the goods pending confiscati....
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....passed in a Review Petition submitted by the State, seeking review of an interim order passed and as the said writ petition in which the said interim order was passed, itself was withdrawn, the observations in Ext.P15 need not be taken into account, as the same cannot be treated as a binding precedent. 14. After carefully examining the relevant circumstances, I am of the view that, even though the writ petition in which Ext.P15 order was passed was withdrawn, the detailed discussion made in the said order regarding the question of law and the principles laid down therein cannot be simply ignored by this Court, when the same issue being adjudicated. 15. However, even while arriving at the conclusion that the principles laid down in Ext.P15 order will have to be considered for determining the similar issue involved in this case, certain crucial change in the position of law by virtue of amendments carried out in the relevant statutory provisions, after the said order, cannot be ignored. Ext.P15 order was rendered by interpreting the provisions contained in section 130 as it stood before the amendment by way of the Finance Act, 2021 with effect from 1.1.2022. Exhibit P15 order w....
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....ges in the matter of procedure relating to seizure, detention and confiscation. 17. Therefore, the statutory stipulations contained in Section 130(2) of the Act need to have a different interpretation than made in Y. Bakaksrishan's case (supra), as there is a substantial change in the legal procedure and power to release the goods, in view of the aforesaid amendments. When Section 130(2) is considered in that perspective, I find merit in the submission made by the learned Special Government Pleader. It is to be noted that, Section 130(2) of the Act, provides an option to the owner of the goods to get the goods or conveyance released, by paying fine in lieu of confiscation. However, on careful reading of sub-section (2) of Section 130, it can be seen that, what is intended therein is not a provisional release, but it is a release of the goods after confiscation and the amounts to be paid, are determined by way of final order of confiscation by the authority concerned. Nowhere in sub-section (2) of Section 130, any reference with regard to the provisional release of the goods is made. The examination of sub-section (7) of Section 130 would make this aspect clear. The said provisio....
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....atutory mandate. Another aspect to be noted in this regard is that such an exclusion of provisional release from section 130 is a conscious exclusion of the legislature and such omission or exclusion cannot be filled or implied by the courts if the language of the section is plain and unambiguous as enumerated in Union of India v. Rajiv Kumar, [(2003) 6 SCC 516], Padma Sundara Rao (Dead) v. State of T.N., [(2002) 3 SCC 533] . In CST v. Parson Tools and Plants, [(1975) 4 SCC 22], it was observed that; 16. If the legislature wilfully omits to incorporate something of an analogous law in a subsequent statute, or even if there is a casus omissus in a statute, the language of which is otherwise plain and unambiguous, the Court is not competent to supply the omission by engrafting on it or introducing in it, under the guise of interpretation, by analogy or implication, something what it thinks to be a general principle of justice and equity. To do so "would be entrenching upon the preserves of legislature" [At p. 65 in Prem Nath L. Ganesh v. Prem Nath L. Ram Nath, AIR 1963 Punj 62, Per Tek Chand, J.], the primary function of a Court of law being jus dicere and not jus dare. ....
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....e confiscation of goods or conveyance is authorized by this Act", is a matter of crucial importance. The word 'authorized' has been discussed in Corpus Juris Secundum, [7A C.J.S, AUDITA QUERELA, § 12, at p. 915 (1980)] as thus ; "In the past tense, or as the past participle, "authorized" has been defined as meaning clothed with authority, warrant, or legal power; directed; empowered; empowered and directed ; entitled; permitted; possessed of, or endowed with, authority; sanctioned or approved with authority." 20. It is to be noted that, word used under section 130(2) is "authorized" and not, "permitted" or "provided" or 'contemplated". Therefore, the question that arises is when such an authorization comes into effect. Evidently, mere notice to initiate confiscation proceedings will not amount to authorisation for confiscation. On the other hand, authorisation would come into force when the final order of confiscation is passed after following the procedure contemplated in this regard. It is also to be noted in this regard that, as per sub-section 5 of section 130 of the CGST Act, where any goods or conveyance are confiscated under the Act, the title of such goods ....
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....or the purpose of sub-section (7) and thus, the release on payment of fine in lieu of confiscation, provided therein, is only after the order of confiscation and not as a provisional measure. 22. The next question that arises for consideration is whether the official respondents have the power to retain the goods proposed to be confiscated, until an order of confiscation is passed. While considering this question, it is to be noted that, Article 300A of the Constitution of India provides that "No person shall be deprived of his property save by authority of law". Admittedly, the goods which are sought to be confiscated, are the properties of the petitioner and the title vests upon the petitioner, so long as an order of confiscation is not passed, by following the procedure contemplated under the Act. Sub-section (5) of Section 130 provides that, the title of the goods passes on to the Government only upon issuing an order of confiscation. Therefore, since the petitioner is the owner of the goods, it can be deprived off its right to hold the said goods, by the actions of any statutory authority, only in exercise of statutory powers, which are specifically incorporated in the rele....
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....n order of detention and to pass an order imposing a penalty within seven days from the date of issuance of notice. The consequences of the same is that, if the officer concerned fails to follow the timeline as contemplated under the Act or issuing a detention order and serving the same, as contemplated under proviso to sub-section (1) of section 129 of the Act, the detention affected by the authorities concerned becomes illegal. In such circumstances, the owner of the goods would be entitled to get the goods released, as the officer concerned would not have any right to hold the possession of the articles. As far as this case is concerned, no order of detention as contemplated under section 129 of the Act has been passed. Even though in the counter affidavit submitted by the respondents, it is averred that, the proceedings under section 68(3) r/w section 129 are initiated on 25.11.2025, there is nothing on record to indicate that any order of detention as required under proviso to sub-section (1) of section 129 was passed. 25. In this regard, it is to be noted that, the Central Board of Indirect Taxes and Customs, has issued Ext.P6 Circular for ensuring uniform procedure to be ....
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....on/inspection. Thus, a specific timeline is contemplated for completing the inspection as per the aforesaid Circular. 26. In this case, the relevance of these clauses is that, the petitioner was served with notices in Forms MOV-1, MOV-2 and MOV-4. Thereafter, the officer concerned had straight away issued Form GST MOV-10, which is intended to invoke section 130 of the CGST Act for the purpose of confiscation. The specific case of the learned Special Government Pleader while defending the right of the officer concerned to retain the possession of the goods, is by placing reliance upon the directions in Form GST MOV-2. Three directions are contemplated therein which read as follows: "i) To station the conveyance carrying goods at (place) at your own risk and responsibility. ii) To allow and assist in physical verification and inspection of the goods in movement and related documents. iii) Not to move the goods and conveyance from the place at which it is stationed until further orders and not to part with the goods in question." 27. According to the learned Special Government Pleader, the direction No. 3, i.e., "Not to move the goods and conveyance fr....
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....s not to take the goods away until further orders, I am not inclined to accept the same. This is because, the learned Special Government Pleader could not explain the source of power under which, such a prohibitory order could be issued. It is a settled principle that exercise of the power is always referable to the source of power and must be considered in conjunction with it, as rightly observed by the Apex Court in a catena of judgments including Joint Action Committee of Air Line Pilots' Assn. of India v. DG of Civil Aviation, (2011) 5 SCC 435 . Similarly in Union of India v. Tulsiram Patel, (1985) 3 SCC 398, it was observed that; "126. As pointed out earlier, the source of authority of a particular officer to act as a disciplinary authority and to dispense with the inquiry is derived from the service rules while the source of his power to dispense with the disciplinary inquiry is derived from the second proviso to Article 311(2). There cannot be an exercise of a power unless such power exists in law. If such power does not exist in law, the purported exercise of it would be an exercise of a non-existent power and would be void. The exercise of a power is, therefor....
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....e authority of law. The word "law" in the context of Article 300-A must mean an Act of Parliament or of a State legislature, a rule, or a statutory order, having the force of law, that is positive or State made law. The rights in property can be curtailed, abridged or modified by the State only by exercising its legislative power. Deprivation of property can only be done according to law. Without law, there can be no deprivation of property. No law, no deprivation of property is the principle underlying Article 300A as held in Bishambhar Dayal Chandra Mohan v. State of U.P., [(1982) 1 SCC 39], as well as in State of Mysore v. K. Chandrasekhara Adiga, [AIR 1976 SC 853]. Even if the right to property ceased to be a fundamental right by the Constitution (Forty Fourth Amendment) Act, 1978, however, it continued to be a human right in a welfare State, the same cannot be taken away except in accordance with law. Article 300A of the Constitution protects such rights. The provisions of the Act seeking to divest such right, keeping in view of the provisions of Article 300A of the Constitution of India, must be strictly construed, as observed in Tukaram Kana Joshi v. MIDC,[(2013) 1 SCC 353],....
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....pection are completed as contemplated under sub-clauses 2(d), (e) and (f) of Clause 2 of Ext.P6. This is particularly because, a mere direction in Form MOV-2 restraining the person from taking the goods until further orders cannot substitute the requirement of passing an order or detention as provided in section 129(10. Since what is required is "order of detention"; necessarily it must be an order, highlighting the reasons for such detention, and it cannot be in the form of a simple direction. 33. The learned Special Government Pleader specifically contended that, the procedure contemplated under section 129 and 130 of the CGST Act, are independent proceedings and clause (l) of Ext.P6 Circular specifically authorises the officer concerned to strictly invoke the powers under section 130 without resorting to the procedure under section 129 of the Act. Thus, according to the learned Special Government Pleader, since MOV-10 is already issued and there is a prohibitory order passed in MOV-02, the officer concerned is entitled to keep the custody of the goods until the finalisation of the confiscation. However, I am not inclined to accept the said contention. Of course, it is true th....
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.... the proceedings were initiated under section 129 and during the course of such proceedings, the officer concerned arrives at a reasonable belief that the transactions which are the subject matter of the proceedings were carried out by the party concerned with an intention to evade the tax, it shall be open to the officer concerned, to switch over to the proceedings under section 130 of the Act. If that switching over of the proceedings takes place after an order of detention as contemplated under section 129(1), that would enable the officer concerned to hold the possession of the goods which are under confiscation proceedings. In other words, only in cases where, an order of detention was passed by following the statutory procedure contemplated in this regard, the officer concerned would be in a position to hold the goods in their possession. In cases where no such order is passed, the moment the statutory period contemplated under section 129 expires, without passing an order of detention, the possession of the goods by the officer concerned would become illegal. Mere initiation of the confiscation proceedings would not validate such possession. This is because, when the detenti....
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....of the goods would not be vitiated. At the most, goods will have to be returned to the party concerned. This is not a proposition that supports the contentions raised by the learned Special Government Pleader, in the factual circumstances of this case, with regard to the authority of the officer concerned to retain the goods. 37. Another aspect to be noticed in this regard is that, permitting the officer concerned, to retain the goods and conveyances, without issuing a detention order, merely because of the reason that proceedings under section 130 are initiated, has to be treated as improper, for a different reason. This is because, such an interpretation would enable the officer concerned, to exercise uncontrolled powers, without following the timeline contemplated under section 129(1) for issuing an order of detention. In other words, when a detention is specifically authorised under section 129, subject to a procedure bound by a timeline, if section 130 is interpreted to have such power, it would create a situation where, the officer concerned would be in a position to retain the goods without following the timeline contemplated under section 129. Thus, even in cases where, ....
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....thority to make the law is vested in the Parliament and the State Legislatures and other law making bodies and whatever legislative power the executive administration possesses must be derived directly from the delegation of the legislature and exercised validly only within the limits prescribed. The notion of inherent or autonomous law-making power in the executive administration is a notion that must be emphatically rejected. As observed by Jackson, J., in a recent American case - Youngstown Sheet & Tube Co. v. Sawyer [343 US 579, 655] - "With all its defects, delays and inconveniences men have discovered no technique for long preserving free government except that the Executive be under the law, and that the law be made by parliamentary deliberations". In our constitutional system, the central and most characteristic feature is the concept of the Rule of law which means, in the present context, the authority of the law courts to test all administrative action by the standard of legality. The administrative or executive action that does not meet the standard will be set aside if the aggrieved person brings the appropriate action in the competent court. The Rule of law rejects the....