Ashok Parasuram Uthale vs The Intelligence Officer on 20 February, 2025

Judgment Summary

Case Title: Ashok Parasuram Uthale vs The Intelligence Officer
Court: High Court of Kerala at Ernakulam
Judge: Hon'ble Mr. Justice Bechu Kurian Thomas
Date of Judgment: 20th February 2025
Citation: 2025:KER:14819

1. Outcome

The writ petition was dismissed.

However, the Court preserved the petitioner's liberty to seek the provisional release of the seized goods by availing the remedy provided under Section 130(2) of the GST Act during the pendency of the confiscation proceedings.

2. Core Issue

Whether a taxpayer is entitled to the mandatory provisional release of seized goods under Section 67(6) of the GST Act on the ground that the six-month period for issuing a show-cause notice has expired, especially when the tax authorities have already initiated confiscation proceedings under Section 130 of the Act.

3. Key Facts

• Petitioner: A traditional goldsmith engaged in job work in Varkala, Kerala.
• Search and Seizure: On 28.12.2023, GST intelligence officers searched the petitioner's shop and residence, seizing 3522.14 grams of gold and certain records under Section 67 of the GST Act.
• Petitioner's Claim: The petitioner argued that since six months had passed from the date of seizure and no show-cause notice was issued, the goods were liable to be released provisionally upon furnishing a bond as per Section 67(6).
• Department's Action: The Intelligence Officer issued a show-cause notice (SCN) dated 26.12.2024 under Section 130 of the GST Act, proposing to confiscate the seized gold.
• Allegations in SCN: The department alleged that the petitioner had carried out unregistered sales of old gold worth ₹47.73 Crores and supplied gold to a jewellery store without valid tax invoices or documents.

4. Arguments

• Petitioner's Arguments:

  1. The six-month statutory period under Section 67 for the retention of seized goods without a show-cause notice had expired.
  2. Consequently, the petitioner was legally entitled to the provisional release of the seized gold upon furnishing a bond and security.
  3. The confiscation notice under Section 130 was challenged.

• Respondents' (GST Department's) Arguments:

  1. The time limit for completing the investigation under Section 67 was validly extended by an order of the Joint Commissioner of State Tax on 22.06.2024, as permitted by the proviso to Section 67.
  2. Therefore, the petitioner's claim based on the expiry of the time limit is legally untenable.
  3. Since confiscation proceedings under Section 130 have already been initiated, the remedy of provisional release under Section 67(6) is no longer available.

5. Court’s Reasoning

1. On the Limitation Period: The Court found the petitioner's contention regarding the expiry of the six-month period to be legally untenable. It accepted the department's submission that the time limit for the investigation had been validly extended under the proviso to Section 67 of the Act.

2. On the Applicability of Section 67(6): The Court held that the stage for seeking provisional release under Section 67(6) was "already over." Once confiscation proceedings under Section 130 are initiated by issuing a show-cause notice, the specific remedy under Section 67(6) is no longer available. The Court noted that the petitioner had not sought to avail this benefit before the Section 130 notice was issued.

3. Validity of Confiscation Proceedings: The Court observed that the initiation of proceedings under Section 130 could not be considered prima facie without authority, given the serious allegations of large-scale unregistered sales. It is for the petitioner to participate in these proceedings and present his case.

4. Alternative Statutory Remedy: The Court pointed out that the petitioner is not without a remedy. The GST Act itself provides a mechanism for the provisional release of goods even during confiscation proceedings. This remedy is available under Section 130(2), which allows the owner of the goods to pay a redemption fine in lieu of confiscation. The petitioner was given the liberty to pursue this statutory remedy.

6. Statutory References

• Central Goods and Services Tax Act, 2017 / State Goods and Services Tax Act, 2017 (the GST Act)
  • Section 67: Power of inspection, search, and seizure.
  • Section 67(6): Provision for the release of seized goods on a provisional basis upon execution of a bond if no notice is issued within six months of the seizure.
  • Proviso to Section 67: Allows for the extension of the six-month period by a proper officer.
  • Section 130: Confiscation of goods or conveyances and levy of penalty.
  • Section 130(2): Provides an option to the owner of the goods to pay a fine in lieu of confiscation.

7. Precedents Cited

None cited in the provided text of the judgment.