Detention of transit goods is valid when a vehicle travels opposite

Detention of transit goods is valid when a vehicle travels opposite its declared destination to a shell company.

Issue

Whether the revenue authorities are legally justified in detaining a vehicle and its cargo under Section 129 when the conveyance is intercepted moving in the exact opposite direction of its declared destination to a recipient whose registration is cancelled.
Whether a taxpayer can seek a summary declaration in a writ petition to invalidate an investigative statement by claiming it was recorded under duress, despite significant financial and operational irregularities on record.

Facts

The Operation: The petitioner, a newly registered proprietor trading in arecanuts, procured goods from unregistered dealers and generated self-invoices and e-way bills for interstate dispatch.
The Interception: During transit, the vehicle was intercepted by enforcement officers, who issued forms MOV-01 and MOV-02, and subsequently extended the inspection period twice via MOV-03.
The Route Deviation: The vehicle was caught moving towards Kannur, which was completely opposite to the declared statutory destination of New Delhi.
The Recipient Flaws: Investigation revealed that the petitioner had generated 15 e-way bills worth over ₹5.11 crores to a single recipient whose registration was already cancelled and who was traced to a known shell company cluster.
Financial Mismatches: Despite invoicing over ₹5.11 crores across 15 consignments, the petitioner’s bank account showed a negligible debit activity of just ₹28,000, alongside severe mobile number mismatches on the invoices.
The Statement: Under a personally served Section 70 summons, the petitioner gave a videographed statement disowning the goods and naming a third-party mastermind as the true owner.
The Writ Petition: The petitioner approached the High Court via a writ petition, claiming the statement was coerced, demanding the return of their mobile phone, and challenging the validity of the MOV-06 detention order.

Decision

Prima Facie Contravention Proven: The court held that the physical movement of the vehicle in the opposite direction of its declared legal destination constitutes a strong, undeniable prima facie contravention of the transit rules.
Detention Affirmed: The physical affixation of the GST MOV-06 detention order on the vehicle and the office notice board, along with the inspection timeline extensions, was ruled entirely lawful.
Duress Claims Rejected at Investigation Stage: The court ruled that a plea of coercion or duress cannot be evaluated under writ jurisdiction during an active investigation, especially when the petitioner’s claim is heavily undermined by massive financial discrepancies and inconsistent pleadings.
Writ Dismissed: The High Court dismissed the writ petition, refusing to interfere with the ongoing investigation, and directed the petitioner to exhaust standard statutory remedies. The final decision was delivered in favor of the revenue.

Key Takeaways

Destination Deviations Fatal to Transit: An e-way bill loses its legal validity if the physical conveyance routes itself in structural opposition to the declared destination. Such geographical variance acts as an immediate ground for interception and detention.
Writ Benches Will Not Stifle Investigations: High Courts will not use their extraordinary writ jurisdiction under Article 226 to prejudge the voluntariness of a statement or micro-manage evidence while an tax evasion probe is active.
Shell Alignment Explodes Commercial Claims: When an enterprise displays classic high-risk indicators—such as rapid multi-million currency invoicing immediately after registration, negligible bank footprint, and links to cancelled shell entities—the department is fully empowered to invoke coercive transit measures.

Aswin Gopakumar, Anwin Gopakumar, Aditya Venugopalan, Mahesh Chandran, Smt. Saranya Babu, Smt. Gouri Kailash and Rohit P., Advs. for the Petitioner. Mohammed Rafique, SPL GP Taxes for the Respondent.

JUDGMENT

HIGH COURT OF KERALA

Jamaludin

Commissioner of State Tax^*

ZIYAD RAHMAN A.A., J.

WP(C) NO. 1984 OF 2026

MARCH 2, 2026

1. The petitioner claims to be the proprietor of M/s. Bandadka Traders, a registered business concern engaged in the aggregation, trading, and interstate dispatch of arecanuts. As part of his business activities, the petitioner carried out interstate dispatch of certain consignments. Since the arecanuts procured by the petitioner were from the unregistered dealers, the petitioner issued a self-invoice and also generated an E-Way Bill dated 27.12.2025. Exts.P1 and P2 are the said documents.

2. While being in transit, on 28.12.2025, the 3^rd respondent intercepted the vehicle bearing Registration No. TN40R9159 near Kanhangad. Since then, the vehicle has been in the custody of the 3^rd respondent. According to the petitioner, on 29.12.2025 at 2.30 pm, the petitioner came to the GST office in compliance with the summons and thereafter, his mobile phone was seized unlawfully and he was coerced to make certain statements, which have been recorded by the 3^rd respondent. According to the petitioner, video graphed recording was also made of the interrogation of the petitioner and thereby extracted false statements from him. In the meantime, the petitioner also received GST MOV3 dated 30.12.2025, proposing to extend the time for conducting inspection.

3. Since the goods and the vehicle were not released, despite the expiry of more than two weeks, the petitioner has approached this Court seeking the following reliefs:-

issue a writ of mandamus or such other appropriate writ, direction, or order commanding the Respondents to forthwith release and restore full custody and possession of the consignment of areca nut and the commercial conveyance (Registration No. TN40R9159) to the Petitioner or his authorized agent/transporter, for completion of the interstate dispatch to the destination in Delhi;

ii.

issue a writ of mandamus or such other appropriate writ, direction, or order commanding the Respondents to cease and desist from any further investigation, inquiry, or coercive action against the Petitioner and to withdraw any show cause notices, detention orders, or related correspondence issued or communicated to the Petitioner;

iii.

issue a writ of certiorari or such other appropriate writ, direction, or order quashing and setting aside the detention order and all proceedings and actions taken by the Respondents in relation to the detention of the goods and conveyance;

iv.

declare that the statement allegedly made by the Petitioner under Section 70 of the CGST Act on 29 December 2025 is false, fabricated, obtained under coercion and duress, legally void, and of no evidentiary value whatsoever, and that the Petitioner expressly retracts and disowns the same;

declare that the seizure of the Petitioner’s mobile phone without acknowledgment or legal authority is unlawful, arbitrary, and in violation of Articles 19(1)(a) and 21 of the Constitution, and issue a writ of mandamus commanding Respondents No.3 and No.4 to immediately return the mobile phone to the Petitioner with a certified list of all items seized;

vi.

declare that the proceedings under Section 130 of the CGST Act are wholly misconceived, arbitrary, and devoid of any legal or factual foundation, and issue a writ of certiorari quashing all such proceedings;

vii.

direct and command Respondents No.1 through No.4 to conduct a thorough and impartial investigation into the coercive interrogation, extraction of false confessions through threats and duress, unlawful seizure of mobile phone, and malicious publication perpetrated by Respondents No.3 and No.4, and to initiate appropriate disciplinary, administrative, and/or criminal proceedings against the concerned officers for the said violations;

viii.

grant such other and incidental reliefs as this Hon’ble Court may deem fit, just, and necessary in the peculiar facts and circumstances of this case; and

ix.

allow this Writ Petition with costs to the Petitioner.

4. A detailed counter affidavit has been submitted by the 3^rd and 4^th respondents, wherein, the averments contained in the writ petition are denied. It is averred therein that, as far as registration of M/s. Bandadka Traders is concerned, it is obtained very recently on 11.12.2025 and had generated 15 Ewaybills amounting to Rs.5,11,57,250/- with a tax liability of Rs.25,57,862/-. All these supplies were to a single taxpayer, M/s. Sobhar Enterprises, New Delhi, whose registration was cancelled for non-filing of return. According to the respondents, the petitioner had appeared at the GST Office, Kasargod on 08.01.2026 pursuant to a telephonic conversation and thereupon, a detailed statement was recorded under Section 70 of the CGST Act, 2017, which was video-graphed in its entirety from 3.45 PM to 5.55PM. As per the statement given by the petitioner, he has no knowledge of the functioning of M/s.Bandadka Traders and he stated that his ignorance and financial hardship were exploited by certain individuals to obtain a GST registration in his name, for their own benefit, offering Rs.50,000/-. He also mentioned about a person, named Hameed from Karnataka, as the individual who brought him to the GST office under the false pretext of receiving the balance payment from the offered amount of Rs.50000/- for signing some papers for vehicle release. It is also averred that the findings from the petitioner’s statements are further corroborated by the statement of the Tax Practitioner, Sri. Ajmal M., recorded on 08.01.2026. As far as the said Ajmal is concerned, it was he, who submitted an unsigned application in the name of the petitioner earlier.

5. The further investigation conducted into the activities of the recipient to whom all 15 consignments were dispatched revealed that, the same was part of a shell company cluster. Five different entities are registered at this same address of M/s. Sobhar Enterprises, out of which, two have been cancelled and one has been suspended by the GST authorities. Further investigation into the mobile number, through which, the petitioner was contacted was also done and it was found that, it was belonging to Hameed, who is the proprietor of M/s.A.T. Enterprises, and found to be a habitual tax defaulter that failed to file returns for July and August 2025 despite generating E-way bills for arecanuts worth Rs. 17.7 Crores. Since the petitioner denied ownership of the goods, the Department issued a summons to the owner and driver of the vehicle (TN40 R 9159) on 10.01.2026 to identify the actual owner. In the meantime, the petitioner submitted this writ petition.

6. It is also pointed out that, on 27.12.2025, M/s. Bandadka Traders generated three E-way Bills for vehicles KL59U9104, KA01AJ3319, and TN40R9159 showing the dispatch of arecanuts worth Rs.1,04,97,500/- (950 bags) to M/s. Sobhar Enterprises, New Delhi. The further analysis of the vehicle details also reveals the following:-

(a)

Vehicle TN40R9159 (Detained Vehicle): Intercepted at Padnekkad travelling towards Kannur—diametrically opposite to the declared destination of New Delhi.

(b)

Vehicle KL59U9104: Crossed Thiruvangad Toll Plaza (Kerala) on 28.12.2025 but was next recorded on 30.12.2025 at toll plazas in Karnataka with a fresh E-way Bill No. 591931780276 dated 29.12.2025 showing dispatch from M/s. Madappally Traders, Malappuram to M/s. A K_ Traders, Belthangadi, Karnataka for Rs.35,10,000/-. The goods ostensibly destined for Delhi were diverted to Karnataka under new documentation.

(c)

Vehicle KA01AJ3319: Crossed Thiruvangad Toll Plaza on 28.12.2025 at 05:02 AM but has NO toll plaza record anywhere on the 2,500 km route to Delhi—no crossings in Karnataka, Maharashtra, Madhya Pradesh, or Uttar Pradesh. On 05.01.2026, the E-way Bill was updated to change the vehicle to KA01AN0266 at Pollachi, Tamil Nadu—a location not on the Delhi route. And this new updated Vehicle KA01AN0266 is also not seen crossed any Toll plazas enroute to Delhi till date. This vehicle change at an unrelated location confirms that the original vehicle never reached Delhi and the E-way Bill was manipulated to create a false paper trail.

7. It is also averred that, the petitioner has dispatched 15 consignments worth Rs.5,11,57,250/- to M/s. Sobhar Enterprises, New Delhi. For the detained consignment alone, the Petitioner produced 63 purchase invoices totaling Rs.30,28,562/- purportedly paid to farmers. For all 15 consignments, purchases from farmers would necessarily exceed Rs.4 to 4.5 Crores. However, the analysis of the bank statement attached with the registration of the petitioner, for the period from 23.12.2025 to 23.01.2026 reveals the following aspects:-

Parameter	Actual in Bank Statement	Expected from claimed business
Total Debits	Approximately Rs. 28,000/-	Rs. 4-4.5 Crores to farmers
Largest single debit	Rs. 11,000/-(Personal UPI transfer)	Lakhs per consignment
Nature of Debits	Paytm, mobile recharges, food orders	Payments to farmers, transporters
Payments to farmers,	NIL	63+farmers for each consignment

It was averred that the total debits of approximately Rs.28,000/- during the entire business period – consisting entirely of petty expenses like Paytm payments of Rs.10-100 and mobile recharges,but the total transactions in respect of the 63 purchase invoices which are the subject matter for the detained transaction alone would come to Rs.30,28,562/

8. The bank account linked with the petitioner is the savings bank account of the petitioner and the account balance as on 23.12.2025 was merely Rs.20.33 and on 23.01.2026 it stood at Rs.89.33/-, which are wholly inconsistent with a business having turnover of Rs.5+ Crores. Moreover, it is also stated in the counter affidavit that, on verification of the 63 purchase invoices purportedly from unregistered farmers from Adkasthala, it was revealed from the verification of the mobile numbers provided in these invoices that, the persons shown as ‘unregistered farmers are in fact GST registered persons from different states.

9. In the counter affidavit, the respondents also referred to the procedure adopted while issuing GST MOV-01 and GST MOV-02 to the petitioner and the owner of the conveyance. It is also averred that, in the meantime order of extension of time for inspection in Form GST MOV-02 were issued on 30.12.2025 and 13.01.2026. Since the registered taxpayer denied the ownership of the goods, summons was issued to the persons in charge of the vehicle at the time of interception, the driver of TN 40R 9159, the co-driver, to appear on 19.01.2026 and but none of them appeared. Hence, Form GST MOV-06, notice of detention was affixed on the vehicle and Notice Board of the Office of the Enforcement Officer, Enforcement Squad 1, Kasaragod.

10. Further, the averments in the writ petition that the mobile phone of the petitioner was seized is denied. According to the respondent, no seizure of mobile was affected. It is pointed out that, the petitioner himself filed GSTR-1 on 13.01.2026 using the email OTP procedure. It is also averred that, so far the invocation of Section 130 of the CGST Act is not initiated and the matter is under investigation. Thus, they contended that, all the procedure adopted by them were in tune with the statutory provisions.

11. A detailed reply affidavit has filed by the petitioner, disputing the averments contained in the counter affidavit filed by the respondents and reiterating the contentions raised in the writ petition.

12. I have heard Sri. Aswin Gopakumar, the learned counsel appearing for the petitioner and Sri. Mohammed Rafeeq, the learned Special Government Pleader (Taxes) for the respondents.

13. Today when the matter came up for consideration, apart from the documents produced along with the counteraffidavit, the learned Spl. Government Pleader made available original file relating to the proceedings that are in progress against the petitioner and thus, this Court got the advantage to peruse the same as well.

14. The learned counsel for the petitioner mainly contended that, proceedings under Sec.129 are not at all legally sustainable and the continuation of detention of the vehicle after it seizure on 28.01.2026 is illegal. As regards the issuance of the detention order as claimed by the respondents, it is submitted by the petitioner that, as of now, no such order has been received by him and hence the same is denied.

15. It is further contended by the learned counsel for the petitioner that, as per Sec.129 of the Act, the detention or seizure can be effected only in cases where any person transports any goods in contravention to the provisions of the Act and the Rules made thereunder. According to him, in this case there is nothing to indicate that, the goods were being transported in contravention of any provisions, and since the stipulations contained in Sec.129 are very specific, unless the transport by itself is not in contravention of the provisions of the Act, no proceedings can be initiated.However, when it comes to the aforesaid question, one important aspect to be noticed is that, at this stage, the legality of the same cannot be gone into in detail, as the matter is now under investigation. Therefore, what is relevant is, whether is there any prima facie materials available on record.

16. In the counter affidavit filed by the respondents, it is specifically mentioned in paragraph 12 that, the detained vehicle, at the time of interception was traveling towards Kannur, which is diametrically opposite to the declared destination of New Delhi. This itself is a strong prima facie case to suggest that the transportation was in contravention of the provisions. When it comes to the other matters regarding the release of the vehicle sought by the petitioner, one important aspect to be noticed is that, going by the statement given by the petitioner, on 08.01.2026 before the 3^rd respondent, the petitioner had completely disowned the ownership of the goods and he denied any knowledge about the transactions that resulted in the aforesaid consignment. Of course, the learned counsel for the petitioner vehemently contended that, the statement claimed to have been recorded on 08.01.2026 was under duress and the same cannot be acted upon. However, I am of the view that, the same cannot be considered in a writ petition under Article 226 of Constitution of India. It is also noted in this regard that, no documents are produced to show that the petitioner had submitted any complaints against any of the officers and none of the said officers are impleaded in the writ petition in their personal capacity.

17. Besides, the date of interrogation referred to in paragraph 8 of writ petition is 29.12.2025, whereas, the actual date of the statement was on 08.01.2026. Of course, the learned counsel for the petitioner attempted to explain the same by pointing out that, it was only a mistake due to a communication gap between the petitioner and the learned counsel while preparing the statement. However, the fact remains that, no amendment of the same has been sought as of now. Besides, from the perusal of the relevant files made available learned Special Government Pleader, it is discernible that, on 30.12.2025 itself, summons under Sec.70 was issued to the pertinent herein in two known addresses including the declared business place, but both the said summons were returned with the postal endorsement that “addressee left” and “no such addressee” on 06.01.2026. In the meantime, extension of time for completing the inspection was also granted by the competent authority acting upon Form MOV3 issued to the petitioner. Later, only on 08.01.2026, the petitioner was personally served the summons and thereafter, statement of the petitioner was recorded. As mentioned above, even though the petitioner alleged coercion in obtaining the said statement, certain factual findings that are disclosed from the counter affidavit filed by the respondents indicate that, the said contention of the petitioner cannot be accepted simply. This is because of several reasons that have come out at the time of investigation conducted so far, which include:-

The petitioner had obtained the licence only during the month of October 2025 and immediately thereafter, 15 consignments were carried out , having a total turnover of Rs.5 crores

The bank account linked with the registration of the petitioner contained transactions only for Rs.28,000/- alone.

In the statement furnished by the petitioner, he specifically referred to a name of Sri. Hameed, who according to him, brought the petitioner into this transactions by offering Rs.50,000/-.It is also stated in the said statement of the petitioner that, the mobile number which is used by the petitioner for communication is provided by Hameed.

In the investigation into the mobile number, it was revealed that the said mobile number is belonging to Hameed, who is the proprietor of M/s.A.T. Enterprises. The said entity also found to be a habitual tax defaulter that failed to file returns for July and August 2025 despite generating E-way bills for arecanut worth Rs. 17.7 Crores.

From the verification of mobile numbers from the 63 purchase invoices, which formed the basis of the good detained, revealed that, even though the same was claimed to be from unregistered farmers from Adkasthala, it was found that, some of the persons were GST registered persons from different states.

Further, as observed above, at the time of detention, the vehicle was traveling towards the opposite direction from the destination mentioned in the invoices.

18. When these aspects are taken into account, it can be seen that, to some extent, the same goes along with the statement of the petitioner alleged to have been obtained by way of coercion. These are strong circumstances that have to be inquired into in detail and the same cannot be resolved in the writ petition.

19. Therefore, I am of the view that, at this stage, an interference in the said proceedings may not be justifiable under Article 226 of the Constitution of India. The learned counsel for the petitioner places reliance upon the decision rendered by this Court in Authentic Metals v. Enforcement Officer 114 GST 671/107 GSTL 156 (Kerala)/[2026 KLT OnLine 1328] where this court held that, unless an order of detention as contemplated under proviso to sub-section (1) of Section 129 is issued, the detention cannot be continued and directions will have to be issued to release the said goods. However, the principles laid down in the said decision cannot be made applicable to this case, in view of the fact that, an order of detention is indeed claimed to have been affixed on the vehicle on 23.01.2026. This is a crucial distinction that has to be drawn in this case and hence, the observation made in the above judgment cannot be made applicable to the facts of this case.

20. Of course, the learned counsel for the petitioner seriously opposed the receipt of detention order. However, a specific explanation is forthcoming from the respondents in this regard, which is to the effect that, as the petitioner had disowned the ownership of the goods and also denied the knowledge of any transactions in question, they have issued summons to the persons in charge of the vehicle who are the driver and codriver, but no one responded to the same. It was in those circumstances, the detention order in GST MOV-06 was affixed on the Vehicle and Notice Board of the Office of the Enforcement Officer, Enforcement Squad 1, Kasaragod. In the facts and circumstance of this case, I do not find any illegality in adopting the said procedure so as to warrant an interference by this Court at this juncture. Besides, it is also discernible from the records that, the respondents had got the period extended by way of orders, which is a permissible course of action under the provisions of the Act.

Therefore, after considering all the relevant aspects, I do not find any merits in this writ petition so as to entertain the reliefs sought for. Accordingly, this writ petition is dismissed without prejudice to the right of the petitioner to pursue the statutory remedies available. It is also ordered that, since it is submitted by the petitioner that, GST MOV-06 has not been received by him, it is ordered that, in case the petitioner appears before the 3^rd respondent, a copy of the same shall be served upon him.