GST Authorities Must Sell Seized Goods After Due Notice If Owner Does Not Appeal: Karnataka High Court

The Karnataka High Court held that Goods and Services Tax authorities must proceed with the sale of seized goods under Section 129(6) of the Central Goods and Services Tax Act, 2017 and Karnataka State Goods and Services Tax Act, 2017 after issuing due notice if the owner of the goods does not avail the available appellate remedy.

Justice B.M. Shyam Prasad disposed of a writ petition filed by TPJ Carriers, a transporter, and directed the State GST authorities to bring the seized goods to sale by issuing a public notice and serving notice on the owner of the goods at the earliest and, in any event, within five weeks. The Bench held:

"…the authorities must act under the proviso to Section 129(6) of the Act for sale of the seized goods after taking out due notice and if the owner of the seized goods [the owner] does not avail the appellate remedy despite publication of such notice",

The State GST authorities had intercepted TPJ Carriers' 14-wheeler tanker carrying bulk bitumen and passed an order under Section 129(3), imposing a penalty of Rs. 23,86,590.

TPJ Carriers submitted that, as the transporter and owner of the conveyance, it was entitled to the release of the vehicle on payment of Rs. 1 lakh, being the lesser amount prescribed under the first proviso to Section 129(6). It stated that it had already deposited the amount.

Although the State GST authorities had passed the penalty order around two-and-a-half months earlier, they had not taken steps to sell the seized goods. The Department argued that it had not sold the goods because the period for filing an appeal might not have expired.

The Court examined Section 129(6), which provides that detained or seized goods or a conveyance become liable to sale for recovery of the penalty if the person transporting the goods or the owner fails to pay the penalty within 15 days of receiving the order. The provision also permits the authorities to reduce this period where the goods are perishable, hazardous or likely to depreciate in value.

Rejecting the Department's submission, the Bench observed that the provision obliges the authorities to act within the prescribed period and, where goods are perishable, hazardous or likely to depreciate, to consider an even earlier sale. It noted that the bulk bitumen carried in the tanker was inflammable and therefore hazardous.

It further held that the authorities must issue due notice before selling the goods and ensure that they serve a copy of the notice on the owner of the goods. If the owner does not avail the appellate remedy despite publication of the sale notice, the authorities must proceed with the sale.

Accordingly, the High Court directed the State GST authorities to bring the seized goods to sale by issuing a public notice and serving notice on the owner of the goods at the earliest and, in any event, within five weeks, and disposed of the writ petition.

For Petitioner: Ashok Kumar Shetty K., Advocate 

For Respondent: K. Hema Kumar,