Case Law Details
S.N. Trading Company & Anr. Vs Union of India & Ors. (Calcutta High Court)
The Division Bench of the Calcutta High Court dismissed an intra-court appeal filed against a Single Bench order that had declined to entertain a writ petition challenging a penalty order passed under Section 129(3) of the CGST Act, 2017.
The case arose from the interception of a vehicle transporting areca nuts on 16 May 2025 in Jalpaiguri District. The authorities examined the goods and generated a weighment slip. According to the adjudicating authority, there was a discrepancy of 420 kilograms between the weight of the goods declared in the documents and the weight determined after deducting the unladen weight of the vehicle from the gross weight.
Read SC Judgment in this case: SC Dismisses GST Challenge Because Effective Statutory Appeal Remedy Was Available
The adjudicating authority initiated proceedings and imposed penalties. The allegations against the appellants were threefold: first, a difference in the quantity of goods; second, failure to produce any bill of supply or tax invoice; and third, failure to produce proof of payment, whether full or partial.
The appellants challenged the penalty order through a writ petition. However, the Single Bench declined to entertain the petition on the ground that an effective alternative remedy was available by way of a statutory appeal. The Single Bench clarified that if an appeal was filed, it would be decided on its own merits without being influenced by any observations contained in the writ order.
Before the Division Bench, the appellants argued against the findings concerning the weighment and the resulting discrepancy. However, the Court observed that these issues involved disputed questions of fact. The Division Bench held that the Single Bench was correct in refusing to exercise writ jurisdiction and in directing the appellants to avail themselves of the statutory appellate remedy.
The Court found no fault with the conclusion reached by the Single Bench and agreed that the correctness of the penalty order could only be tested in appellate proceedings. Accordingly, the appeal was liable to be dismissed on that ground.
However, while affirming the Single Bench’s order, the Court also considered the practical consequences of continued detention of the goods and the vehicle. The Court observed that if the vehicle remained in departmental custody, it would deteriorate, causing prejudice to the owner. The Court further noted that the goods, namely dried areca nuts, were perishable in nature and that by the time the appellate process concluded, they might lose their value.
In view of these circumstances, the Court directed the appellants to file a statutory appeal within fifteen days from the receipt of the order. The Court further directed the department to sell the detained areca nuts through a public auction, with the appellants also being entitled to participate in the auction process.
The Court ordered that the sale proceeds received from the successful bidder should be retained by the department, preferably in an interest-bearing account, and should remain subject to the final outcome of the appellate proceedings.
With regard to the vehicle, the Court directed its release upon payment of Rs. 50,000 and execution of a bond for the remaining amount of Rs. 1,50,000, undertaking to produce the vehicle whenever required. The release was made subject to the outcome of the statutory appeal.
The Court further directed that the auction of the areca nuts be completed as early as possible, preferably within forty-five days, and that the vehicle be released within seven days of payment of Rs. 50,000 and furnishing of the required bond.
Accordingly, while upholding the Single Bench order and requiring the appellants to pursue the statutory appellate remedy, the Division Bench issued interim directions for disposal of the detained goods and conditional release of the vehicle. The appeal was disposed of on those terms.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. This intra-Court appeal by the writ petitioner is directed against the order dated 20th June, 2025 in W.P.A. 1240 of 2025. In the said writ petition, the appellants/writ petitioners challenged an order passed by the Assistant Commissioner (HAEU) CGST & CX, Siliguri Commissionrate dated 2nd June, 2025 passed under Section 129(3) of the Central Goods and Services Tax Act, 2017 (for brevity, “CGST Act, 2017”) read with relevant provisions of the State/Union Territory and Goods & Services Tax Act, 2017, and Integrated Goods and Services Tax Act, 2017 (for brevity, “IGST Act, 2017”).
2. The goods, which are stated to belong to the appellant/writ petitioner viz. areca nuts were being transported in a vehicle bearing Registration No. UP14HT 7566 and was intercepted on 16th May, 2025 at about 2:10 p.m. in Jalpaiguri District. The goods were examined and the net weight of the goods alongwith the vehicle was taken and a weighment slip was generated.
3. The learned senior advocate appearing for the appellant would vehemently contend that no such weighment was made. However, this is touching upon the merits on which we do not wish to make any comment.
4. Be that as it may, in terms of the conclusion arrived at by the adjudicating authority, there is a difference of weight of 420 kgs, i.e. the total weight deducted by the unladen weight of the vehicle, as mentioned in the registration certificate book. Adjudication process was undertaken and an order of penalty was passed. There are three allegations against the petitioner. Firstly, with regard to the difference in the quantity of goods, secondly, the appellants could not produce any bill of supply or tax invoice and thirdly, no proof of payment either full or in part was produced.
5. The learned Single Bench by the impugned order refused to entertain the writ petition as there was an efficacious alternate remedy available to the appellant by way of an appeal before the appellate authority. It was made clear by the learned Single Bench that in the event, the appellants file a statutory appeal, the appeal will be decided on merits uninfluenced by any observation made in the impugned order. The appellants being aggrieved by such order, have preferred the present appeal.
6. We have elaborately heard Mr. Amales Ray, learned senior advocate assisted by Ms. Mousumi Bhowal, learned advocate for the appellants, Mr. Ratan Banik, learned advocate assisted by Mr. Bishwaraj Agarwal and Mr. Saptarshi Banik, learned advocates for the CGST & CX authorities including Mr. Falguni Bandyopadhyay, learned advocate appearing for the Union of India.
7. So far as the conclusion arrived at by the learned Single Bench for not entertaining the writ petition cannot be faulted and we are in full agreement with the said conclusion, as disputed questions of fact are involved to test the correctness of the order of penalty dated 2nd June, 2025.
8. Therefore, the learned Single Bench was right in relegating the appellants to avail the statutory appellate remedy. Therefore, we have to dismiss the appeal on the said ground.
9. Considering the penalty order, we find that apart from penalty being imposed under Section 20 of the IGST Act read with Section 129(1)(a) of the CGST Act, there is penalty of Rs.2,00,000/- (Rupees Two Lakh only) imposed on the vehicle for the conveyance of the goods and the conveyance and the vehicle was directed to be released upon payment of Rs.2,00,000/-(Rupees Two Lakh only) and such penalty was imposed under Section 20 of the IGST Act read with first proviso to Section 129 (6) of the CGST Act.
10. As we have already held that a writ petition was rightly not entertained, the appellants have to necessarily avail a statutory appellate remedy. Two things needs to be considered; firstly, if the vehicle is allowed to be retained by the Department, then it is bound to deteriorate and the owner of the vehicle will be put to prejudice. Secondly, with regard to the goods, which are being detained and not seized till date, are perishable goods. Therefore, even assuming certain orders are passed by the statutory appellate authority or the revisional authority etc., by then, the goods will be of no value. Therefore, while affirming the order passed by the learned Single Bench and directing the appellants to file a statutory appeal within a period of 15 days from the date of receipt of the server copy of this order, we issue the following directions.
11. The respondents/department are directed to sell the goods, which are stated to be dried areca nuts by calling for a public auction and the appellants are also entitled to participate in such auction.
12. Upon the goods being sold and the successful bidder remitting the amount, the amount shall be retained by the department preferably in an interest bearing account and shall abide by the ultimate orders that may be passed by the appellate authority. As observed, the appellants will also be entitled to participate in the auction to be called for by the respondents authority.
13. So far as the vehicle is concerned, the respondents authority is directed to release the vehicle on payment of Rs.50,000/- (Rupees Fifty Thousand) and furnishing a bond of Rs.1,50,000/-(Rupees One Lakh Fifty Thousand) undertaking to produce the vehicle as and when required. This payment shall be subject to the outcome of the appeal before the statutory appellate authority.
14. The sale of the areca nuts shall be done at the earliest, preferably within a period of 45 days from the date of receipt of server copy of the order and the vehicle in question shall be released within seven days from the date on which the appellants remit a sum of Rs.50,000/- (Rupees Fifty Thousand) and furnishes a bond of the remaining amount for the satisfaction of the respondents authority.
15. Thus, the appeal stands disposed of on the above terms.
16. No costs.
17. Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.
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