HC Directs Assessee to Appeal, Declines Writ Petition Against Confiscation Order.

Issue

Can a taxpayer bypass the statutory appeal process provided under the GST Act and directly approach a High Court with a writ petition to challenge a confiscation order, even on the grounds of an alleged violation of the principles of natural justice?

Facts

The petitioner’s consignment of arecanuts was intercepted while in transit, despite being accompanied by a valid tax invoice and e-way bill.
The tax authorities initiated proceedings, which culminated in an order for the confiscation of the goods and vehicle under Section 130 (issued in Form MOV-11).
The petitioner alleged a severe breach of the principles of natural justice, claiming they were never served with the crucial notice proposing confiscation (Form MOV-10) before the final order was passed.
Instead of filing a statutory appeal under Section 107, the petitioner directly filed a writ petition in the High Court, seeking to quash the confiscation order.
The Revenue department opposed the writ, arguing that the petitioner should first exhaust the efficacious alternative remedy of an appeal available to them under the law.

Decision

The High Court ruled in favour of the revenue on the point of maintainability and did not entertain the writ petition.
It held that the petitioner must first exhaust the statutory appellate remedy available under Section 107 of the CGST Act before approaching the High Court.
The court relegated the petitioner to the appellate authority without going into the merits of the claim (i.e., whether natural justice was actually violated).
To ensure the petitioner was not left without a remedy due to the time limit for appeals having passed, the court directed that the time spent pursuing the writ petition would be considered bona fide, and the delay would be condoned if the appeal was filed within two weeks.

Key Takeaways

Exhaust Alternate Remedies First: The “Rule of Alternate Remedy” is a strong principle of judicial restraint. A High Court will generally not use its extraordinary writ jurisdiction when a specific, effective, and equally adequate remedy (like a statutory appeal) is available under the law.
Appeal is the Proper Forum for Factual Disputes: Allegations like the non-service of a notice are often mixed questions of fact and law. The appellate authority is the appropriate forum to examine the complete record and adjudicate such factual disputes.
Writ Jurisdiction is Discretionary: Entertaining a writ petition is a discretionary power of the High Court. It will typically be exercised only in exceptional cases, such as a complete lack of jurisdiction by the authority or a flagrant violation of fundamental rights, not for procedural errors that can be corrected on appeal.
Protecting the Right to Appeal: While directing the petitioner to the correct forum, the court also protected their substantive right to be heard by making a provision to condone the delay in filing the appeal, ensuring that justice is not denied on a technicality.

HIGH COURT OF GUJARAT

S R Enterprises

Union of India

BHARGAV D. KARIA and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPL. NO. 5670 of 2025

SEPTEMBER 12, 2025

Monal S Chaglani for the Petitioner. Pradip D Bhate for the Respondent.

ORDER

Bhargav D. Karia, J.- Heard learned advocate Mr. Sameer Gupta with learned advocate Mr. Monal Chaglani for the petitioner and learned Assistant Government Pleader Ms. Shrunjal Shah for the respondent Nos. 3 to 5.

2. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs:

“a.

Certiorari quashing the MOV 11 (Detention order dated 01.10.2024 (Annexure A to the Writ Petition);

(b)

Certiorari quashing and Summary Order form GST DRC-07 dated 30.10.2024 (Annexure B to the Writ Petition);

(c)

Pending notice, admission and final hearing of the petition, this Hon’ble Court may be pleased to direct the learned Respondent Authorities to forthwith release goods along with vehicle No. RJ23 GC 1469 detained/seized in purported exercise of powers under Section 129 of the GST Acts;

(d)

Issue any other Writ, Order or Direction in favour of the Petitioner which this Hon’ble Court deems fit in the facts and circumstances of the case;”

3. Brief facts of the case are as under:

3.1 It is the case of the petitioner that the petitioner is a buyer of the goods (Arecanuts) sold by one M/s. Himachal Traders.

3.2 It is the case of the petitioner that the conveyance carrying the goods purchased by the petitioner was accompanied with Tax Invoice No. 008 dated 03.09.2024 along with E-way Bill No. 1619 30937638 generated on 03.09.2024, valid up to 14.09.2024.

3.3 It is also the case of the petitioner that the consignment was intercepted by respondent No.5 on 05.09.2024 at Rangpur and statement of the driver was recorded in FORM GST MOV-01 and it was also recorded that the goods were being transported from Delhi to Bengaluru.

3.4 Respondent No.5 thereafter passed an order for physical verification/ inspection of the conveyance and documents in FORM GST MOV-02 on the ground that the genuineness of the goods in transit and the accompanied documents were required further verification.

3.5 After conducting the physical verification, a report was prepared in FORM GST MOV-04 on 08.09.2024.

3.6 On 08.09.2024, a detention order in FORM GST MOV-06 under section 129(1) of the Goods and Services Tax Act, 2017 [‘GST Act] for short read with section 20 of the Integrated Goods and Services Tax Act,2017 [‘IGST Act’ for short] was passed by respondent No.5.

3.7 On 14.09.2024, respondent No.5 issued a show-cause notice in FORM GST MOV-10 under section 130 of the GST Act asking the petitioner to show cause as to why the goods in question along with conveyance should not be confiscated.

3.8 It is the case of the petitioner that without serving the notice upon the petitioner, the impugned order in GST MOV-11 dated 01.10.2024 was passed confirming the demand of penalty and fine as proposed in the show-cause notice.

3.9 When the petitioner came to know about the confiscation proceedings from the driver of the conveyance, the petitioner approached respondent No.5 for getting the goods and vehicle released. Respondent No.5 granted temporary registration to the petitioner on 18.10.2024. On 25.10.2024, respondent No.5 issued a final reminder letter to the seller and the petitioner regarding nonpayment of penalty and fine.

3.10 On 29.10.2024, the petitioner filed an objection to the reminder letter stating that despite passing the confiscation order, respondent No.5 did not issue the summary order in FORM GST DRC-07, as provided under Rule 142(5) of the Goods and Service Tax Rules,2017 [‘the GST Rule’ for short].

3.11 Thereafter, upon receipt of the letter dated 29.10.2024 of the petitioner, the respondent No.5 served all the documents on temporary GST Registration of the petitioner on 30.10.2024 and also issued summary notice in FORM GST DRC-01 and summary order in FORM GST DRC-07.

Being aggrieved, the petitioner has preferred this petition with the aforesaid prayers.

4. Learned advocate Mr. Sameer Gupta for the petitioner submitted that the petitioner has purchased the goods from M/s. Himachal Traders and the petitioner is ready and willing to pay the penalty and fine and therefore, the goods should be released. It was further submitted that there is a breach of principles of natural justice as no notice was served upon the petitioner though in the impugned order passed in FORM GST MOV-11 it is mentioned that M/s. Himachal Traders has generated bogus E-way Bill to pass fraudulent Input Tax Credit without supply of the goods to the petitioner as vehicle location status mentioned in E-way Bill is different than the actual/genuine route.

4.1 It was submitted that the petitioner is a bona fide purchaser of the goods in question and as the petitioner, in turn, has sold the goods to its customers therefore, the goods in question ought to have been released in favour of the petitioner on payment of fine and penalty by the respondent-authority.

4.2 It was further submitted that as the petitioner was not heard by issuing notice in FORM GST MOV-10, the impugned order is required to be quashed and set aside.

4.3 Learned advocate Mr. Gupta also referred to and relied upon Rule 142 of the GST Rules which provides for issuance of notice by the proper officer and a summary electronically in FORM GST DRC-01 which was never served upon the petitioner.

4.4 It was further submitted that thus, there is a violation of Rule 142 of the GST Rule read with section 130 of the GST Act as the proper officer has not issued the notice in FORM GST MOV-10 under section 130 of the Act along with a summary thereof electronically in GST DRC-01 and only when the petitioner filed reply dated 29.10.2024, the same was provided to the petitioner on 30.10.2024. It was also submitted by learned advocate Mr Gupta that it was not within the control of the petitioner as to from which route the driver was carrying the goods. It was submitted that as per Rule 138 of the GST Rules, the required documents in form of the tax invoice and the E-way Bill were accompanying the goods in question in the conveyance and therefore, there is no violation of any of the Rules which requires confiscation of the goods by the respondent-authority.

5. On the other hand, learned AGP Ms. Shrunjal Shah submitted that an alternative efficacious remedy is available with the petitioner to challenge the impugned order of confiscation passed under section 130 of the Act in FORM GST MOV-11 before the appellate authority as per the provision of section 107 of the GST Act. On merits, learned AGP Ms. Shah relied upon the following averments made in the affidavit in-reply filed on behalf of the respondent No.5-the State Tax Officer, Mobile Squad Team No.1 of the Office of the Deputy Commissioner of State Tax Enforcement Division-2 in respect of the contention raised on behalf of the petitioner for not serving notice to the petitioner as required under Rule 142 of the GST Rules which reads as as under:

“12. In this regard, it is submitted that while show cause notice was issued on 14.09.2024 and physically served upon the driver being the person-in-charge of the vehicle, it was also spent by e-mail to Himachal Traders on the next i.e. on 15.09.2024. A copy of the E-mail evidencing communication with the supplier intimating him about the issuance of notice in Form GST MOV 10 is attached herewith and marked as Annnexure R4.

13. It is further submitted that further a reminder letter was also issued on 24.09.2024 to the supplier to file reply to the said notice. It is submitted that in the facts of the preset case since the goods were actually being transported from the supplier, Himachal Traders, Delhi to Ahmedabad considering the facts that the said supplier was owner of the goods the said notices were issued to the owner.

14. It is further submitted that the Supplier-Himachal Traders had supplied goods in contravention of the provisions of this Act and therefore, service of notice to the said supplier is sufficient to invoke the provisions of Section 130.

15. It is further submitted that when the owner of the goods has been given sufficient opportunity to reply to MOV 10 by issuance of notice and the reminder thereafter, now it cannot be alleged by the Petitioners herein that there is violation of provision of section 130 of the GST Act.

16. It 1s further submitted that subsequently since no reply was filed an order in Form GST MOV 11 dated 01.10.2024 was passed which is attached at Annexure A to the impugned petition.

17 It is submitted that on 15.10.2024 after passing an order in Form GST MOV 11, the petitioner herein wrote an email to the answering Respondent which which is attached herewith ae ANNEXURE R&. Along with the said Email a PDF document was also attached dated 09.10.2024 in which the petitioner requested the answering respondent to create a temporary ID and further, referred to Circular no. 76 dated 31.12.2018. It wae submitted that the Petitioner being a recipient of goods (s to be construed as the owner of the goods and should therefore be Permitted to make the payment or file appeal through the temporary id.

18. There were various further correspondences between the answering Respondent and the Petitioner after which the temporary id was issued to the Petitioners of 18.10.2024, In the said E-mail it is also informed to the petitioner that an order in Form DRC 07 will be uploaded online and therefore, any payment to be made against GST MOV-11 will not be in Form DRC 03 but will be against such order uploaded online.

19. Thereafter, vide letter dated 25.10.2024 a remainder was issued for making payment of the liability ascertain in order in Form GST MOV 11 to which an objection was filed by the Petitioner stating that Form DRC 07 which is mandatory has not yet been issued and uploaded on the portal electronically.

20. It is further submitted that such summary order in Form DRC 07 shall be deemed to be notice of a recovery and therefore since no summary order has been uploaded on the portal, no amount is due pursuant to Form Gst MOV 11. It is submitted that since the petitioner was not registered in the State of Gujarat after due procedure, a summary show cause notice and summary order dated 30.10.2024 were uploaded on the portal.”

5.1 It was further submitted by learned AGP Ms. Shah that it is also found that by order dated 22.07.2025, registration of the petitioner has been cancelled pursuant to the show-cause notice dated 20.02.2025 issued after investigation by DGGI, Bangalore, wherein, it was found that petitioner was nonexistent at the registered address and appeared to have been indulged in issue/receipt of fake invoices for passing/receipt of fraudulent ITC.

5.2 It was also submitted that the supplier of the petitioner M/s. Himachal Traders had claimed ITC amounting to Rs. 22 lakh of IGST, Rs. 80 Lakh of CGST, Rs. 80 Lakh of SGST in GSTR-3B for the month of September 2024 during which, the transaction has taken place. It is also evident from the GSTR 2A that the supplier has only received the goods of ITC worth Rs. 51,000/- in the said month. It was therefore, submitted that without any actual receipt of the goods and without making any payment, ITC was availed by the supplier M/s. Himachal Traders by merely filing such number in their GSTR 3B illegally.

5.3 It was further submitted that registration of M/s. Himachal Traders was also cancelled on 23.09.2024 and therefore, a show-cause notice could not be served.

5.4 Learned AGP Ms. Shah also referred to statement of driver of the conveyance at Annexure R1 to the affidavit and submitted that as per the said statement recorded on 05.09.2024, the driver of the conveyance has stated that he was asked to load the goods (Arecanuts) from Delhi and bring it to Ahmedabad and accordingly, he was travelling from Delhi to Ahmedabad. It was therefore, submitted that the contention of the petitioner, that the goods were to be supplied at Bengaluru, is therefore, incorrect in view of the statement of the driver of the conveyance recorded by the respondent-authority. It was therefore, submitted that no interference may be made by entertaining the petition as the transaction which is the subject matter of this petition is a bogus transaction with issuance of bogus tax invoices and the E-way bill between the parties.

6. Having heard learned advocates for the respective parties and considering the facts of the case we are not inclined to entertain this petition in view of the alternative efficacious remedy available to the petitioner so as to challenge the impugned order passed in GST MOV-11 by the Adjudicating Authority. Therefore, in view of the decision of the Hon’ble Apex Court in case of Asstt. Commissioner of State Tax v. Commercial Steel Limited GST 799/52 GSTL 385 (SC)/2021 (9) TMI 480 wherein it is observed:

“12. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent.

13. For the above reasons, we allow the appeal and set aside the impugned order of the High Court. The writ petition filed by the respondent shall stand dismissed. However, this shall not preclude the respondent from taking recourse to appropriate remedies which are available in terms of Section 107 of the CGST Act to pursue the grievance in regard to the action which has been adopted by the state in the present case.”

7. In view of the above dictum of law, without entering into the merits of the matter, this petition is disposed of by relegating the petitioner to avail alternative efficacious remedy under section 107 of the GST Act. We also made it clear that the time spent by the petitioner shall be considered as bona fide for issue of delay in preferring appeal if the petitioner files an appeal before the appellate authority within a period of two weeks from today. With the aforesaid direction, the petition is dismissed. No order as to costs.