Facts of the Case

The petitioner, M/s. Mundkar Madhavaraya Prabhu, approached the Karnataka High Court under Article 226 of the Constitution of India challenging two orders, namely Order No. 09/2022-23 and Order No. 10/2022-23 dated 09.11.2022, issued in Form GST MOV-09 by Respondent No. 2 under Section 129(3) of the CGST Act, 2017.

The petitioner sought quashing and setting aside of the impugned GST MOV-09 orders and also sought a direction for immediate release of Conveyance Nos. GJ-03-AX-7785 and GJ-03-BY-8577, together with the goods contained therein, without requiring payment of penalty and/or furnishing of security and bond.

In respect of GST MOV-09 Order No. 09/2022-23, the petitioner challenged the penalty demand of Rs. 2,60,272 under Section 129(1)(a) or Rs. 26,02,724 under Section 129(1)(b) of the CGST Act, 2017.

In respect of GST MOV-09 Order No. 10/2022-23, the petitioner challenged the penalty demand of Rs. 3,19,261 under Section 129(1)(a) or Rs. 31,92,614 under Section 129(1)(b) of the CGST Act, 2017.

The petitioner further sought a declaration that, in the absence of the jurisdictional facts contemplated under Section 129(3), the impugned orders were without jurisdiction. It was also contended that there had been no violation of Section 31(1) of the CGST Act, 2017 or Rule 46(h) of the CGST Rules, 2017 and, therefore, the goods could not have been detained.

Issues Involved

The principal issues arising before the High Court were:

  1. Whether the impugned orders dated 09.11.2022 issued in Form GST MOV-09 under Section 129(3) of the CGST Act, 2017 were liable to be quashed in exercise of writ jurisdiction under Article 226 of the Constitution of India.
  2. Whether the alleged absence of jurisdictional facts under Section 129(3) rendered the impugned orders without jurisdiction.
  3. Whether the petitioner had violated Section 31(1) of the CGST Act, 2017 and Rule 46(h) of the CGST Rules, 2017 so as to justify detention of the goods.
  4. Whether the penalty demands raised under Sections 129(1)(a) and 129(1)(b) were liable to be set aside.
  5. Whether, despite availability of an equally efficacious alternative remedy of statutory appeal before the First Appellate Authority, the High Court should adjudicate the rival contentions on merits.
  6. Whether the perishable nature of the goods justified immediate release of the detained conveyances and goods.

Petitioner’s Arguments

The petitioner’s case, as reflected from the reliefs and contentions recorded in the order, was that the two GST MOV-09 orders passed under Section 129(3) were liable to be quashed and set aside.

The petitioner contended that the necessary jurisdictional facts stipulated under Section 129(3) did not exist and, consequently, the impugned orders were without jurisdiction.

It was further asserted that the petitioner had not violated Section 31(1) of the CGST Act, 2017 or Rule 46(h) of the CGST Rules, 2017, and therefore the detention of the goods was not justified.

The petitioner also challenged the substantial penalty demands under Sections 129(1)(a) and 129(1)(b) and sought release of both conveyances and the goods without payment of penalty and/or furnishing of security and bond.

The petitioner thus sought writ relief against the impugned proceedings as well as immediate release of the detained goods and vehicles.

Respondents’ Arguments

The respondents opposed the petition and advanced contentions in support of their respective position. The High Court expressly recorded that several contentions had been urged by both sides in support of their respective claims.

However, the Court did not record or adjudicate the detailed merits or demerits of the rival contentions, because it considered the availability of an equally efficacious alternative remedy by way of appeal before the First Appellate Authority.

Accordingly, the respondents’ case on the merits of the GST MOV-09 orders, detention, alleged statutory violations and penalty demands was not finally determined in the writ proceedings.

Court Order / Findings

The Karnataka High Court disposed of the writ petition primarily on the ground that an equally efficacious alternative remedy by way of appeal before the First Appellate Authority was available to the petitioner.

The Court expressly refrained from expressing any opinion on the merits or demerits of the rival contentions and reserved liberty to the petitioner to avail such remedies as were available in law, including challenging Annexures A and B before the First Appellate Authority.

At the same time, considering the perishable nature of the subject goods and the peculiar and special facts and circumstances of the case, the High Court directed the respondents to release:

  • Conveyance No. GJ-03-AX-7785; and
  • Conveyance No. GJ-03-BY-8577,

along with the goods contained therein, in favour of the petitioner within 48 hours from the date of receipt of a copy of the order.

The writ petition was accordingly disposed of subject to the aforesaid directions. All rival contentions were kept open, and no opinion was expressed on them.

The Court further directed that, if the petitioner preferred a statutory appeal before the First Appellate Authority, the appellate authority should consider and decide the appeal on merits and in accordance with law, without being influenced by the observations and directions contained in the High Court’s order.

Important Clarification

The High Court specifically clarified that its direction for release of the conveyances and goods was passed in the peculiar and special facts and circumstances of the case, particularly having regard to the perishable nature of the goods.

Crucially, the Court expressly declared that the order:

“shall not be treated as a precedent nor have any precedential value for any purpose whatsoever.”

Therefore, the order cannot be cited as laying down a general proposition that detained goods or conveyances must invariably be released within 48 hours in every proceeding under Section 129 of the CGST Act, 2017.

The Court also did not decide whether the petitioner had actually violated Section 31(1) or Rule 46(h), whether the jurisdictional requirements under Section 129(3) were satisfied, or whether the penalty demands under Sections 129(1)(a) and 129(1)(b) were legally sustainable. Those rival contentions were expressly kept open for consideration in appropriate statutory proceedings.

Sections / Legal Provisions Involved

Article 226 of the Constitution of India — Writ jurisdiction of the High Court.

Section 31(1) of the CGST Act, 2017 — Provision concerning issuance of tax invoice in relation to supply of taxable goods.

Section 129(1)(a) of the CGST Act, 2017 — Provision invoked in relation to penalty consequences where the owner of the goods comes forward for payment.

Section 129(1)(b) of the CGST Act, 2017 — Provision invoked in relation to penalty consequences where the owner of the goods does not come forward for payment.

Section 129(3) of the CGST Act, 2017 — Provision concerning issuance and adjudication of notice/order in detention or seizure proceedings; the impugned GST MOV-09 orders were passed under this provision.

Rule 46(h) of the CGST Rules, 2017 — Invoice particulars provision relied upon in the controversy concerning the alleged statutory violation.

Link to download the order -

Download the Order – M/s. Mundkar Madhavaraya Prabhu vs State of Karnataka & Ors.

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