The Hon’ble Calcutta High Court in the case of Assam Supari Traders v. Union of India & Ors. [WPA 1691 of 2025, order dated August 19, 2025] held that when a detention order under Section 129(3) of the CGST Act is passed amidst disputed facts, such as incongruities between driver’s statements, E-way bill details, and payment particulars, the writ petition is not maintainable and the taxpayer must pursue the statutory appellate remedy.
Facts:
Assam Supari Traders (“the Petitioner”), a dealer registered under the CGST/ Assam GST Act, is engaged in trading dried arecanuts across India. The Petitioner sold 34,510 kg of dried arecanutsto Ms. Ansaar Traders, Karnataka, with valid accompanying documents. The goods were transported through M/s Ajay Goods Carriers, accompanied by relevant E-way bills, consignment notes, and invoices.
The Union of India & Ors. (“the Respondent”) intercepted the transporter at Maynaguri More, Jalpaiguri, West Bengal, questioning the genuineness of the goods and documents. A physical verification on July 14, 2025, was followed by a penalty show cause notice dated July 21, 2025, proposing penalties under Section 129(1)(a) (₹8,65,708) and under Section 129(1)(b) alleging the suppliers’ existence as dubious.
The Petitioner argued that all statutory documents were present and relied on a 2018 GST circular about ownership determination, and claimed to treat the named person in the invoice as “owner” and for immediate release of goods under Section 129(1)(b).
The Respondent contended that there were material discrepancies between the case made out by the Petitioner and the driver’s statement, as well as inconsistencies regarding the time and place of loading. The Respondent claimed reasonable belief that the documents do not substantiate the legitimacy of transit, raising factual disputes unsuitable for writ jurisdiction and insisted that the proper forum was appellate remedy.
Aggrieved by the penalty and confiscation order under Section 129(3), the Petitioner invoked the writ jurisdiction of the High Court, seeking to quash the order and secure immediate release of the goods, referencing Section 129(1)(b), related GST circulars, and applicable precedent.
Issue:
Whether the High Court should entertain a writ petition against an order of detention and penalty passed under Section 129(3) of the CGST Act in the presence of disputed questions of fact regarding the legitimacy of goods in transit and the supporting statutory documents?
Held:
The Hon’ble Calcutta High Court in WPA 1691 of 2025 held as under:
- Observed that, while the Petitioner relied on statutory documents, the statement of the driver created incongruities regarding time and location of loading, casting doubt on the Petitioner’s claim to legitimate ownership and lawful movement of goods.
- Noted that, the proper officer’s order recorded a reasonable belief that the documents presented by the consignor failed to substantiate the legitimacy of the consignment in transit and that payment particulars and procurement details were lacking.
- Noted that, the Petitioner did not establish that the order was unsupported by evidence or perverse.
- Held that, given these circumstances and the existence of an appellate forum, the writ petition was not maintainable. Liberty was granted to the Petitioner to seek immediate release under Section 129(1)(b) and to pursue an appeal if so advised.
Our Comments:
This judgment exemplifies the well-established judicial principle of writ courts to refrain from adjudicating disputed facts that mandate evidence, especially where adequate statutory remedies exist. The Court analysed Circular No. 76/50/2018-GST dated December 31, 2018 and recognized the binding effect of departmental circulars as per Supreme Court precedent in Collector of Central Excise, Vadodra v. Dhiren Chemical Industries [(2002) 2 SCC 127]. However, it held that the statutory right to appeal under Section 107 of the CGST Act must be exercised where factual disputes colour the controversy.
In comparison, Halder Enterprises v. State of U.P. [2024 (2) ADJ 660] was distinguished because the facts did not involve disputed ownership or transport details; rather, the only ground was the consignee’s non-existence in records. In that case, the Allahabad High Court ruled in favour of the Petitioner on the basis that valid documents were sufficient for release, but here the driver’s statement and lack of payment particulars undermined such parity.
Relevant Provisions:
Section 129, CGST Act, 2017
129. Detention, seizure and release of goods and conveyances in transit.-
“(1) Notwithstanding anything to the contrary contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and such conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,—
(a) on payment of the applicable tax and penalty equal to one hundred percent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two percent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty equal to fifty percent of the value of the goods reduced by the tax amount paid thereon, in cases other than where the owner of the goods comes forward for payment of such tax and penalty…
(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1)”
Relevant extract of the Circular:
Circular No. 76/50/2018-GST dated December 31, 2018
“Who will be considered as the “owner of the goods” for the purposes of section 129(1) of the CGST Act?
It is hereby clarified that if the invoice or any other specified document is accompanying the consignment of goods, then either the consignor or the consignee should be deemed to be the owner. If the invoice or any other specified document is not accompanying the consignment of goods, then in such cases, the proper officer should determine who should be declared as the owner of the goods.”
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