Court Cannot Confer Power Of Provisional Release Where Statute Is Silent: Kerala High Court On Section 130 CGST

Interpreting Section 130 of the Central Goods and Services Tax Act, 2017, the Court clarified that the option to pay fine in lieu of confiscation under Section 130(2) becomes available only after confiscation is authorised by a final adjudication order and cannot be invoked as a provisional measure pending proceedings.

Therefore, emphasising settled principles of statutory interpretation, the Court held that where the legislature has expressly provided for provisional release in one provision and consciously omitted it in another, courts cannot introduce such a mechanism through interpretation.

Justice Ziyad Rahman A.A. observed, “…this Court cannot confer such a power upon the officer concerned, to release the goods provisionally by paying fine in lieu of confiscation. As mentioned above, section 67 of the CGST Act, that deals with the seizure of goods, contains specific provision namely, subsection (6), providing for provisional release. Thus, as per the scheme of the statute, wherever, the provisional release is permitted, it is expressly provided. Therefore, as section 130 does not contain an express provision that deals with provisional release, is a factor which is very conspicuous, when it comes to the question of interpretation of the said provision. Moreover, a careful scrutiny of subsections (2) and (7) of section 130 would make it clear that, subsection (7) is depending upon subsection (2). It is to be noted that, even though, subsection (7) of section 130 deals with the release of the confiscated goods and conveyance, on payment of fine in lieu of confiscation, the manner in which such fine is to be calculated, is not provided therein, but on the other hand, the same is contemplated in subsection (2). Thus, it is amply clear that, stipulations in subsection (2) is for the purpose of subsection (7) and thus, the release on payment of fine in lieu of confiscation, provided therein, is only after the order of confiscation and not as a provisional measure”.

“…Even though the petitioner sought provisional release of the said goods on payment of confiscation of goods, I am of the view that, since I found that the provisional release is not contemplated under section 130, the said prayer cannot be granted. However, I have already found that the continued detention of the goods is not legally sustainable, merely because of the reason that proceedings under section 130 of the Act is in progress. In the absence of any valid order of detention, the respondents cannot hold the possession of the goods”, the bench further observed.

Advocate Jikku Seban George appeared for the petitioner and Mohammed Rafiq, Special Government Pleader appeared for the respondent.

The writ petition was filed by M/s. Authentic Metals, a registered dealer in scrap materials, whose consignment of copper scrap was intercepted during transit by the Enforcement Squad at Palakkad.

Though the goods were accompanied by invoice and e-way bill, the authorities issued Forms MOV-1 and MOV-2 for inspection and subsequently initiated confiscation proceedings by issuing a show cause notice in Form MOV-10 under Section 130 of the Act. A fine of ₹18,92,053 was proposed in lieu of confiscation, apart from penalty.

Thereafter, the petitioner remitted the entire amount proposed as fine through DRC-03 and sought release of the goods and conveyance pending adjudication, contending that Section 130(2) entitled it to secure release upon payment of fine in lieu of confiscation.

Reliance was placed on an earlier decision of the High Court rendered prior to the 2021 amendments to the GST law.

The Bench, however, undertook a detailed examination of the statutory framework post the Finance Act, 2021 amendments, which significantly altered the scheme relating to detention and confiscation.

The Court noted that while Section 67(6) of the CGST Act expressly provides for provisional release of seized goods upon execution of bond and furnishing of security, no such provision exists in Section 130. The omission, the Court observed, is “very conspicuous” and indicative of legislative intent.

The Court also clarified that the word “authorised” in Section 130(2) signifies a stage reached upon passing of a final confiscation order, and that a mere proposal to confiscate goods in a MOV-10 notice does not amount to authorisation. Until such final order is passed, the title of goods continues to vest with the owner under Section 130(5).

“It is to be noted that, word used under section 130(2) is ‘authorized’ and not, ‘permitted’ or ‘provided’ or ‘contemplated’. Therefore, the question that arises is when such an authorization comes into effect. Evidently, mere notice to initiate confiscation proceedings will not amount to authorisation for confiscation. On the other hand, authorisation would come into force when the final order of confiscation is passed after following the procedure contemplated in this regard. It is also to be noted in this regard that, as per sub-section 5 of section 130 of the CGST Act, where any goods or conveyance are confiscated under the Act, the title of such goods or conveyance immediately vests with the Government. Thus, the authorization comes into effect only upon final order of confiscation is passed and until such an order is passed, the proceedings that are undergoing can only be a proposal to confiscate the goods, which is falling short of an authorization to confiscate…”, the bench noted in the judgment.

Cause Title: M/s. Authentic Metal v. The Enforcement Officer & Ors. WP(C) No.881 of 2026

Appearances:

Petitioner: Jikku Seban George, Deepti Susan George, Shruthi Balakrishnan, Cyriac Tom, Advocates.

Respondents: Mohammed Rafiq, Spl. Govt. Pleader.

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