Goods Confiscated Under Section 130 Of GST Act Can Be Released | Kerala High Court Allows Release During Appeal If Not Auctioned
Sanchayita Lahkar
The High Court of Kerala Single Bench of Justice Ziyad Rahman A.A. directed the release of goods confiscated under Section 130 of the GST Act upon the petitioner making the payment of fine in lieu of confiscation. The court concluded that since the goods had not yet been sold and the statutory period for availing the option to pay fine had lapsed, the petitioner should nonetheless be granted the opportunity to retrieve the goods by making the stipulated payment. Accordingly, the writ petition was disposed of with a directive to release the goods subject to compliance within the prescribed timeframe.
The petitioner, a registered taxpayer under the CGST/KSGST Act, was engaged in the business of scrap materials. During a routine transport operation, scrap materials dispatched by the petitioner in a vehicle bearing registration number KL-52Q 8144 were intercepted by the second respondent, the Enforcement Officer of the Pattambi Enforcement Squad, on 09.10.2024 at 03:40 hours at Koonathara, Palakkad. The interception was carried out under the authority of the Kerala State Goods and Services Tax Department.
Following the interception, the Enforcement Officer initiated proceedings under Section 130 of the GST Act, citing certain irregularities found during the inspection. Subsequently, these proceedings culminated in a confiscation order (Exhibit P8), wherein fines under both the CGST and KSGST Acts were determined as Rs. 10,82,539 each. The order also stipulated that the goods could be released to the supplier upon payment of the penalty and fine in lieu of confiscation within three months from the date of the order.
The petitioner, aggrieved by the confiscation order, filed an appeal before the appellate authority. Exhibit P9 was submitted as acknowledgment of the appeal's submission. While the appeal was pending, the petitioner received Exhibit P10, a notice indicating that the vehicle and goods would be auctioned unless a stay order was obtained.
In response, the petitioner approached the High Court seeking three specific reliefs: (i) quashing of Exhibit P10 as illegal and unsustainable; (ii) a writ directing the release of the vehicle and goods referenced in Exhibits P3, P8, and P10; and (iii) any other relief the Court deemed appropriate.
The Court recorded that the only question for determination was whether it was appropriate to order the release of goods already confiscated under Section 130 of the GST Act while the appeal was still pending.
The Court recorded that the statutory scheme under Section 130 does not contemplate release of goods already confiscated except under Sections 130(2) or 130(7). It stated “as far as the statutory stipulations contained in Section 130 is concerned, it does not contemplate for release of the goods confiscated otherwise than in the manner contemplated under Section 130 (2) or 130 (7) of the CGST Act."
The Court also noted that under Section 130(7), a reasonable time of three months is provided for the person concerned to obtain release of the confiscated goods by paying fine in lieu of confiscation. Referring to the facts of the case, the Court stated "Of course it is true that as per Ext.P8, the said option has already been granted to the petitioner, but the period stipulated therein is already expired."
Despite the expiration of the original time period, the learned Senior Government Pleader submitted that the goods had not yet been sold. Based on this submission, the Court held that the petitioner could still be granted an opportunity to pay the fine and retrieve the goods.
The Court stated “as the goods are not reportedly sold, I do not find any reason to deny the opportunity to the petitioner to avail the option of getting the goods released, by making the payment of fine in lieu of the confiscation as mentioned in Ext.P8 order."
It further recorded, "Such an exercise would not cause any prejudice to the State as well."
The Court disposed of the writ petition with the following direction:
The second respondent was directed to release the goods that were the subject matter of Exhibit P8 order upon the petitioner paying the fine in lieu of confiscation. The Court stated that the payment shall be made within an outer limit of one month. Upon making the payment within this period, the goods were to be released immediately.
"This writ petition is disposed of, directing the 2nd respondent to release the goods which are the subject matter of Ext.P8 order, upon the petitioner paying the fine in lieu of confiscation. The payment shall be done within an outer limit of one month, and upon making the payment, the goods shall be released immediately."
Advocates Representing the Parties:
For the Petitioners: Sri. Salim V.S., Shri. K. Muhammed Thoyyib, Smt. A.M. Fousi, Shri. A.B. Ajin
For the Respondents: Sri. Muhammed Rafiq, Special Government Pleader
Case Title: Nikhil Ayyappan v. State of Kerala and Others
Neutral Citation: 2025: KER:39945
Case Number: WP(C) No. 19789 of 2025
Bench: Justice Ziyad Rahman A.A.
