Writ jurisdiction is denied for factual disputes on stock seizure when

Writ jurisdiction is denied for factual disputes on stock seizure when alternative appellate remedy exists.

Issue

Whether a writ petition under Article 226 of the Constitution is maintainable to challenge a confiscation and penalty order passed under Section 130 of the CGST/OGST Act for alleged stock variance, when the dispute turns on factual evaluations and an effective alternative statutory appeal remedy remains open.

Facts

The petitioner is a GST-registered garment trader.
The Revenue issued an authorization in Form GST INS-01 to inspect and search the business premises of the petitioner.
Following the execution of a spot summon during the search, the department seized the petitioner’s excess garment stock.
The Deputy Commissioner subsequently issued an order imposing a penalty and a fine in lieu of confiscation by invoking Section 130 of the Act.
The petitioner filed a writ petition under Article 226 of the Constitution to challenge the validity of the search authorization, the verification process, and the consequential confiscation order.
The petitioner raised contentions regarding the validity of digital signatures and the accuracy of the stock variance calculations.

Decision

Held, in favour of the Revenue: The writ petition is dismissed, and the petitioner is relegated to the statutory appellate forum.
Factual Disputes Require Proper Adjudication: The core challenges raised by the petitioner—such as the validity of digital signatures and the physical stock variance measured without referencing the formal stock register—are intensely factual disputes.
Alternative Remedy Must Be Exhausted: Because these factual arguments require detailed evidence evaluation, they must be adjudicated by the proper statutory authorities rather than through extraordinary writ jurisdiction.
Protection Against Limitation: The petitioner is granted the liberty to file a standard statutory appeal. The time spent bona fide pursuing this writ petition shall be considered by the appellate authority when deciding on any delay condonation application.

Key Takeaways

Writ is a Remedy of Discretion: High Courts will consistently decline to exercise their writ jurisdiction under Article 226 when an effective, parallel statutory appeal route is readily available to the taxpayer under the GST Act.
Fact-Finding Belongs to Authorities: Complex disputes involving physical stock reconciliation, inventory search procedures, and mechanical or digital signature validity are factual questions that must be threshed out before appellate authorities, not via a writ court.
Exclusion of Limitation for Writ Period: When a writ petition is dismissed on the structural grounds of an alternative remedy, courts routinely provide a protective safety net by allowing the period spent in court to be condoned in subsequent statutory filing timelines.

HIGH COURT OF ORISSA

Manoj Kumar Debnath

Commissioner of Commercial Taxes and Goods and Services Tax^*

HARISH TANDON, CJ.
and MURAHARI SRI RAMAN, J.

WP(C) No. 16093 of 2025

MAY 18, 2026

Rudra Prasad Kar, Sr. Adv. and Sriman Arpit Mohanty, Adv. for the Petitioner. Sunil Mishra, Standing Counsel for the Respondent.

ORDER

1. Challenging the legality, validity and sustainability of the authorization in Form GST INS-01 dated 18^th December, 2023 vide Annexure-1 issued by the Joint Commissioner of State Tax to the Deputy Commissioner of State Tax to make search of the premise of the petitioner in exercising the powers conferred upon him under sub-section (2) of Section 67 of the Central Goods and Services Tax Act, 2017/Odisha Goods and Services Tax Act, 2017 (for short, “the GST Act”) and the order dated 1 ^st March, 2025 passed by the Deputy Commissioner of State Tax, CT and GST, Enforcement Unit, Jeypore under Section 122 read with Section 130 of the GST Act vide Annexure-6, the petitioner has approached this Court by way of filing this writ petition under Articles 226 and 227 of the Constitution of India.

2. The petitioner, a registered person under the GST Act, deals garments in the town of Malkangiri. On 19^th December, 2023, a spot summon under Section 70 of the GST Act was issued to the petitioner by the Deputy Commissioner of State Tax, CT and GST-opposite party No.3 to appear in person and produce books of account and also adduce evidence.

3. Learned Senior Advocate appearing for the petitioner submitted that the Joint Commissioner of State Tax, Berhampur without affixing physical or digital signature issued authorization in Form GST INS-01 dated 18^th December, 2023 to the opposite party No.3 for inspection of the business premises of the petitioner and consequently the opposite party No.3 seized physical stock available at the place of business.

3.1. He further submitted that the opposite party No.3 vide order dated 1^st March, 2025 invoking powers under Section 122 read with Section 130 of the GST Act erroneously imposed penalty to the tune of Rs.10,01,250/- and fine of Rs.43,53,516/- at the behest of the petitioner. He would submit that the method of calculation to jump to conclusion that there was discrepancy in stock without taking physical inventory is irrational and whimsical. He placing reliance on Dayal Product v. Additional Commissioner Grade-2 98 GSTL 351 (Allahabad)/Writ Tax No.1319 of 2024 disposed of by Allahabad High Court vide Order dated 19.02.2025 (2025:AHC:23801) vehemently contended that the recourse to Section 122 read with Section 130 of the GST Act to determine the stock discrepancy and impose penalty cannot be sustained.

4. Per contra, the learned Standing Counsel appearing for the CT&GST Organisation-opposite parties forcefully submitted that if the argument of the learned Senior Advocate is accepted then the scope of determination contemplated under Section 122 read with Section 130 would be rendered otiose. The Revenue can not only has power to adjudicate upon the facts and determination of stock discrepancy by initiating proceeding under Section 73 or Section 74, as the case may be, but also the procedure adopted in the present case. He made valiant attempt to justify the action of the Deputy Commissioner of State Tax and contended that since stock register was not maintained nor filed return in Form GSTR-3B for the period 2023-24, the authority concerned has correctly quantified the stock discrepancy by adopting plausible method. Therefore, he fervently prayed not to entertain the writ petition.

5. Heard learned Senior Advocate for the petitioner and learned Standing Counsel appearing for the CT & GST Organization.

6. Whether digital signature could sanctify the authorization to conduct inspection of the premises of the registered person carrying on business and whether as consequence of search and inspection of the business premises invoking provisions of Section 122 read with Section 130 of the GST Act the authority could adopt a device to ascertain stock position (discrepancy) in absence of stock register being maintained by the taxable person are essentially question of fact and such disputed questions of fact can be settled by the statutory authority empowered under the GST Act and the Rules framed thereunder. Therefore, such disputed questions of fact are left for the appropriate authority to consider.

7. It is urged by the learned Standing Counsel that the petitioner has alternative remedy available under the statute and if he is so advised he may prefer appeal under Section 107 of the GST Act and the authority can also consider the period spent before this Court from 29.05.2025, i.e., date of filing of the writ petition. Considering the stance of the CT&GST Organisation, this Court is of the considered opinion that the issues raised by the petitioner can well be considered by the statutory authorities. The Hon’ble Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh 86 GST 665/48 GSTL 113 (SC)/(2021) 3 SCR 406, held, inter alia, that where an effective alternative remedy is available to the aggrieved person, the High Court ought to restrain itself from exercising power under Article 226 of the Constitution of India and when a right is created by statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution of India. It is made clear that this rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

8. As has already been observed supra disputed questions of fact being involved in the present matter, this Court desists from entertaining the writ petition; nevertheless, the petitioner is at liberty to file appeal within a period of fifteen days hence and move appropriate application for condonation of delay before the authority concerned. The appellate authority, as suggested by the learned Standing Counsel, may take into account the period spent before this Court in pursuing the writ petition. Needless to observe that it is open to the petitioner to raise all such legal and factual objections or grounds as are available to him in law. The Appellate Authority shall adjudicate each point or ground taken before him and decide the appeal on merit.

9. With the aforesaid observation, the writ petition along with the pending Interlocutory Application(s), if any, shall stand dismissed.