S. 130 CGST Act Does Not Permit Provisional Release Pending Confiscation, Goods cannot be Retained Without Detention Order: Kerala HC [Read Order]

In a recent ruling, the Kerala High Court held that Section 130(2) of the Central Goods and Services Tax (CGST) Act does not allow provisional release of goods during confiscation proceedings, and that goods cannot be kept by the department without a proper detention order under Section 129.

The petitioner, Authentic Metals, was transporting copper scrap with valid invoice and e-way bill when the vehicle was intercepted. The officers issued MOV-1, MOV-2 and MOV-4, and later issued MOV-10 proposing confiscation under Section130 and fine in lieu of confiscation. The petitioner paid the fine amount and asked for release of the goods.

The petitioner’s counsel argued that Section 130(2) permits release on payment of fine even before final confiscation order. They also argued that no proper detention order under Section 129 was passed, so keeping the goods was illegal and against Article 300A of the Indian Constitution.

The State’s counsel argued that Section 130(2) only gives option to pay fine after confiscation is ordered. They also said that proceedings under Section 130 can be started directly and that MOV-02 had a direction not to move the goods.

Justice Ziyad Rahman A.A. observed that Section 130 does not mention provisional release. The court explained that provisional release is clearly given under Section 67(6) but not under Section 130. After 2021 amendments, the law changed and earlier position is no longer same.

The court also observed that detention of goods in transit must follow Section 129 and requires a proper detention order. In this case, no such order was passed. Section 68 only allows inspection, not detention. The court said that property right under Article 300A cannot be taken away without authority of law.

The court held that provisional release under Section 130(2) is not allowed. But it also held that keeping the goods without a valid detention order is illegal. The court directed the department to release the goods on furnishing a simple bond. The confiscation proceedings will continue and be decided after hearing the petitioner.

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