TPJ Carriers Vs State of Karnataka (Karnataka High Court)
Summary: The petitioner, M/s. TPJ Carriers, was the owner of a 14-wheeler tanker bearing No. KL-40/S-7040, which had been hired by M/s. SVP Petro Products for transporting bulk bitumen. The conveyance was intercepted by the State GST Authorities, and orders were passed under Section 129 of the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Act, 2017. A penalty of Rs.23,86,590/- was imposed.
The petitioner, being the transporter, contended that it was entitled to release of the conveyance upon payment of Rs.1,00,000/-. The Court recorded that this amount was the lesser amount contemplated under the first proviso to Section 129(6) of the Act and that the petitioner had already paid Rs.1,00,000/-.
The writ petition was filed under Articles 226 and 227 of the Constitution of India, seeking quashing of the adjudication order dated 28.04.2026 passed by the Deputy Commissioner of Commercial Taxes (Enforcement), West Zone, Mangaluru, and a direction to release the lorry along with the goods in favour of the petitioner.
Before the High Court, the petitioner submitted that although the penalty order was approximately two and a half months old, the authorities had taken no action for sale of the goods. This, according to the petitioner, provided a cause for approaching the Court.
The Court considered Section 129(6), which provides that where the person transporting the goods or the owner of the goods fails to pay the amount of penalty under sub-section (1) within fifteen days from receipt of the order passed under sub-section (3), the goods or conveyance detained or seized shall be liable to be sold or otherwise disposed of in the prescribed manner and within the prescribed time for recovery of the penalty. The first proviso further provides that the conveyance shall be released on payment by the transporter of the penalty under sub-section (3) or one lakh rupees, whichever is less. The second proviso permits the fifteen-day period to be reduced where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time.
The Court held that the seized goods should have been brought to sale if the consignor had not paid the penalty within fifteen days from receipt of the order. This was subject to the statutory power of the authorities to reduce the fifteen-day period and sell the goods where the seized goods were perishable, hazardous or likely to depreciate in value.
The respondents submitted that the seized goods had not been brought to sale because the appeal period might not have expired. The Court, however, observed that this did not dispense with the statutory obligation of the authorities to act within the prescribed period. The Court emphasised that the authorities were required to act even within fifteen days and, where the seized goods were perishable, hazardous or likely to depreciate in value, to bring them to sale even earlier.
In the present case, the Court found that the seized goods were undoubtedly inflammable and therefore hazardous. The Court also noted the possibility of damage to the conveyance.
On consideration of the circumstances, the High Court directed the authorities to exercise their powers under the proviso to Section 129(6) of the CGST/KSGST Act for sale of the seized goods after issuing due notice. The Court further directed that if the owner of the seized goods did not avail the appellate remedy despite publication of the sale notice, the authorities should proceed with the sale. While issuing the notice of sale, the authorities were also directed to ensure that a copy was served in due course upon the consignor.
The writ petition was accordingly disposed of, with the authorities directed to bring the goods to sale by issuing a public notice of sale and causing notice thereof to be given to the owner at the earliest and, in any event, within five weeks from the date of the order.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is the owner of a 14-wheeler Tanker bearing No. KL-40/S-7040 [a conveyance] which is hired by M/s. SVP Petro Products for transporting goods [the bulk bitumen]. The conveyance is intercepted by the State GST Authorities, and there are orders under Section 129(3) of the Central Goods and Services Tax Act, 2017/State Goods and Services Tax Act, 2017 [for short, the Act’]. The penalty imposed is Rs.23,86,590/-. The petitioner, being a transporter, is entitled for release of the conveyance subject to payment of Rs.1,00,000/-. This amount is the lesser amount contemplated under the first proviso to Section 129(6) of the Act and the petitioner has paid a sum of Rs.1,00,000/-.
2. Sri Ashok Kumar Shetty K., the learned counsel for the petitioner, submits that the penalty order is about two and a half months back, but the authorities have taken no action for the sale of the goods and that this provides a cause for the petitioner. Sri K. Hema Kumar, the learned Additional Government Advocate who accepts notice for the respondents, is heard in the light of these circumstances and the provision of Section 129(6) of the Act which read as under:
“Where the person transporting any goods or the owner of the goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3).
Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less;
Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.”
3. The goods seized should have been brought to sale if the consignor has not paid the penalty within fifteen days from the date of receipt of such order. However, this is subject to the condition that the authorities can reduce the period of fifteen days and sell the goods where the seized goods are perishable or hazardous or likely to depreciate in value over a period.
4. Sri K. Hema Kumar submits that the seized goods are not brought to sale because the appeal time may not have expired. However, this Court must observe that if this is one aspect of the matter, the other is that the statute enjoins the authorities with the obligation to act even within fifteen days, and to bring the seized goods to sale even earlier if the seized goods are either perishable or hazardous or are likely to depreciate in its value.
In the present case, the seized goods is undoubtedly inflammable and therefore hazardous. This is in addition to the damage that could be to the conveyance.
5. On careful consideration of all the circumstances, this Court is of the view that 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 authorities, while taking out notice for sale, must also ensure that a copy is served in due course to the consignor. In the light of the afore, the following:
ORDER
The petition stands disposed of calling upon the authorities to act in exercise of the powers under the proviso to Section 129(6) of the KSGST/CGST Act to bring the goods to sale issuing public notice of sale causing notice thereof to the owner at the earliest and in any event within five [5] weeks from today.
