Writ petition challenging confiscation and penalty for stock shortage dismissed due to admitted discrepancies and payment without protest.

Issue:

Whether a writ petition is maintainable against a show cause notice and demand order for penalty and fine in lieu of confiscation due to stock shortage, where the assessee had admitted the discrepancy and paid the amount without protest, especially when an appeal against the demand order was rejected on grounds of limitation.

Facts:

In March 2023, a search and seizure operation was conducted at the petitioner’s business premises. During this operation, enforcement officials discovered a shortage of 341.360 MT of Billet, valued at Rs. 1,53,61,200. Various documents, notebooks, registers, files, and loose slips were seized under Form GST-INS-02, which was duly countersigned by the petitioner’s authorized representatives. A show cause notice was subsequently issued in FORM GST-DRC-01. The petitioner admitted to the stock discrepancies and expressed a clear intention to pay the penalty and fine in lieu of confiscation. Following this, a demand order was issued, and the petitioner proceeded to pay the penalty and redemption fine without protest. The petitioner later filed an appeal against the demand order, which was rejected on the grounds of limitation. Subsequently, the petitioner filed a writ petition challenging both the show cause notice and the demand order.

Decision:

The writ petition was not maintainable and was dismissed in favor of the revenue. The court held that the proper officer possesses the power to confiscate goods under Section 130 of the CGST Act, which is an exhaustive provision covering situations like supplying or receiving goods in contravention of the Act with the intent to evade tax, and provides an option to pay a redemption fine in lieu of confiscation under sub-section (2). The court clarified that the powers and jurisdiction of the authorities extend to inspection, search, seizure, and confiscation, as well as the levy of redemption fine. Since the petitioner had admitted the stock discrepancies and had conceded to the payment of penalty and fine in lieu of confiscation after the search and seizure, and had made the payment without protest, it was not open to them to challenge the entire procedure adopted for confiscation. The court noted the absence of any document recording protest at the time of payment. The case was not one of complete lack of jurisdiction but rather concerned the exercise of powers in relation to goods liable to confiscation, and the definition of ‘goods’ under Section 2(52) of the Act was clear.

Key Takeaways:

The power of proper officers to confiscate goods and impose penalties under Section 130 of the CGST Act is comprehensive and includes scenarios of stock shortages with intent to evade tax.
If an assessee admits stock discrepancies and makes payment of penalty and redemption fine in lieu of confiscation without any protest, they generally lose the right to challenge the procedure or the order subsequently through a writ petition.
A clear admission of liability and voluntary payment without protest are significant factors that can prevent an assessee from successfully challenging the departmental action at a later stage, especially when alternate remedies (like appeal) have been exhausted or lost due to limitation.
The definition of ‘goods’ under Section 2(52) of the CGST Act is broad and covers all kinds of movable property relevant to such proceedings.

HIGH COURT OF ORISSA

Viraj Steel & Energy (P.) Ltd.

Joint Commissioner of State Tax (Appeal)

HARISH TANDON, CJ.
and B.P. Routray, J.

W.P.(C) No. 9367 of 2025

MAY 15, 2025

Kartik Kurmy, Adv. for the Petitioner. Sunil Mishra, Standing Counsel and S. Dash, Addl. Standing Counsel for the Opposite Parties.

JUDGMENT

Harish Tandon, CJ. – Having suffered an order passed by the appellate authority under Section 107 of the GST Act, 2017 on 28^th February, 2025 rejecting the same on the ground of limitation, the instant writ petition is filed not only assailing the said order, but also the show cause notice dated 27^th March, 2023 issued by opposite party No.2 on the basis whereof the order was passed on 29^th March, 2023 in FORM GST-DRC-07 imposing the penalty of Rs.27,65,016/- (CGST Rs.13,82,508/- + OGST Rs. 13,82,508/-) and redemption fine of Rs.79,87,824/- (CGST Rs.39,93,912/- + OGST Rs.39,93,912/-) in exercise of power under Section 130 read with Section 122 of the OGST Act, 2017, after having paid the penalty as well as the redemption fine as demanded.

2. A prelude to the initiation of proceeding can be reasonably traced from a search and seizure operation conducted on 22^nd March, 2003 at the factory/registered office premises of the petitioner located at village Gurupali, PO-Lapanga, District-Sambalpur, Odisha by a team consisting of the enforcement officials of the Enforcement Range, Samabalpur, the mining officials of the Deputy Director of Mines, Sambalpur and local police personnel. During the said search and seizure operation, the enforcement officials detected a shortage of 341.360 MT of Billet fetching a value of Rs.1,53,61,200/- and seized various documents/notebooks/registers/files/loose slips under Form GST-INS-02 which was duly countersigned by the authorized persons of the petitioner. The descriptions of the seized documents were vividly reflected in the Annexures appended to FORM-GST-INS-02 which has not been disputed by the petitioner in the writ petition.

2.1. In furtherance of the said search and seizure operation, the show cause notice dated 27^th March, 2023 was issued in FORM GST-DRC-01 along with its annexures for the period March, 2023 to show cause why the purported shortage detected in relation to supply of MS Billet should not be confiscated under Section 130 of the OGST Act and the penalty of the amount as indicated hereinabove be not imposed. It is further indicated therein that in lieu of the confiscation, the redemption fine as disclosed hereinabove be also not imposed. After the receipt of the show cause notice dated 27^th March, 2023, the petitioner caused a letter intimating to the revenue authority that as an authorized person and upon consulting the management of the Company, the stock discrepancies are admitted and the Company has agreed to pay the calculated amount of a penalty and fine in lieu of the confiscation under Section 130 read with Section 122 of the OGST Act for the shortage of the stock of goods noticed at the business premises of the petitioner at the time of search and seizure operation. Since the petitioner agreed to pay the penalty and the redemption fine in lieu of the confiscation, the authority issued the demand order on 29^th March, 2023 vividly reflecting the conduct of the petitioner in evading the tax in clandestine manner.

2.2. It is pertinent to record that pursuant to the said demand order dated 29^th March, 2023, the petitioner made deposit of the entire demanded amount which includes the redemption fine in lieu of the confiscation and after such deposit having made, the documents seized at the time of search and seizure operation were released to the petitioner.

2.3. After having availed the right conferred under Section 130 of the OGST Act, the appeal was filed before the appellate authority under Section 107 of the said Act on 7^th February, 2025 i.e. almost two years after the date of the said conclusion of the proceeding raising several points including the authority of the enforcement officials in imposing the redemption fine and penalty when the goods were not available for confiscation. Obviously, the appellate authority rejected the said appeal on 28^th February, 2025 having filed beyond the statutory period of limitation, more particularly, that the authority lacks jurisdiction to condone the delay beyond the outer limit set forth in sub-Section (4) of Section 107 of the said Act.

2.4. Upon dismissal of the appeal on the ground of inordinate delay and lack of power in condoning the delay beyond the outer cap fixed under sub-Section (4) of Section 107 of the said Act, the writ petition is filed not only challenging the order of the appellate authority, but the show cause notice which culminated into a demand order on the premise that the moment the goods are not available, there may not arise any occasion either for seizure or for confiscation in terms of Section 130 (2) of the Act and, therefore, the show cause notice and the demand order are palpably illegal having issued in gross violation of the statutory provision and, therefore, partakes a character of a nullity. It is further stated that once the foundation is found invalid, illegal and infirm being violative of the statutory provision, all subsequent decisions/order shall automatically fall.

3. On the backdrop of the aforesaid facts pleaded in the writ petition, the respective counsels were invited to address the Court and after the closure of the oral submissions, the written notes of argument are filed by the respective parties which are taken on record.

4. Learned counsel appearing for the petitioner submits that the demand order dated 29^th March, 2023 imposing the penalty under Section 130 (1) read with Section 122 (xviii) of the OGST Act, 2017 and the redemption fine under sub-Sections (2), (3), (4), (5), (6), (7) of Section 130 of the said Act for shortage of 341.360 MT of MS Billet in the stock, on the basis of a show cause notice dated 27^th March, 2023, are in clear contravention to the Clauses contained in (i), (ii) and (iv) of Section 130 (1) of the Act and, therefore, liable to be quashed and set aside. It is further submitted that on the alleged shortage of goods, a separate proceeding has been initiated under Section 74 of the CGST Act/OGST Act, 2017 upon issuing a show cause notice dated 30^th May, 2024 and, therefore, the interest of the revenue is fully protected despite the fact that the petitioner is pursuing its remedy available under the said Act which is not a subject matter of the instant writ petition. It is arduously submitted that Section 130 of the Act contains two parts wherein the first part is relatable to goods liable to confiscation, on the other hand, the second part contains the provision relating to the condition precedent for confiscation and imposition of redemption fine on physical availability of the goods sought to be confiscated. It is thus submitted that if the goods are not available for confiscation, the authority cannot impose redemption fine under the second part of Section 130 of the Act. In support of the contention that the assessee cannot be compelled to pay the redemption fine in lieu of a confiscation when the goods are not physically available for confiscation, the reliance is placed upon the judgment rendered in Chinku Exports v. Commissioner of Customs, CalcuttaELT 400 (CEGAT- NEW DELHI) which was affirmed by the apex Court and such judgment is reported in 2005 (184) ELT A36 (SC); Commissioner of Customs (Import), Mumbai v. Finesse Creation INC. , 2009 (248) ELT 122 (Bom.) which was further affirmed by the Supreme Court and such order is reported in 2010 (255) ELT A120 (SC); Commissioner of Customs, Bangalore v. G.M. Exports 2012 (279) ELT 493 (Kar.)/2012 (279) ELT 493 (Kar.); Commissioner of Customs, Amritsar v. Raja Impex (P) Ltd. 2008 (229) ELT 185 (P&H) and Shiv Kripa Ispat Pvt. Ltd. v. Commissioner of Central Excise and Customs 2009 /2009 235 ELT 623 (Larger Bench – Cestat).

4.1. It is strenuously argued that once the civil appeal is dismissed by the Supreme Court against the order passed in Chinku Exports (supra), it would invite the concept of merger and the decision of the apex Court would operate in the field, which can be supported by a judgment of the Supreme Court rendered in Kunhayammed v. State of Kerala/2001 (129) ELT 11 (SC). The counsel further submits that the redemption fine can be imposed even if the goods are not available, but on the special facts that after the confiscation of the goods, the same was released upon execution of a bond. In other words, it is contended that if the goods so confiscated was released on bond/undertaking given by the assessee, subsequent confiscation cannot be impinged as the goods are not physically available which would find support from the judgment of Gujarat High Court in case of Synergy Fertichem Pvt. Ltd. v. State of Gujarat,370/[2020] 33 GSTL 513 (Gujarat)/2019 SCC OnLine (Gujarat) 6127.

4.2. Learned counsel for the petitioner is very much vocal in his submission that no tax shall be levied or collected by the State save by the authority of law under Article 265 of the Constitution of India and, therefore, even if the assessee has consented or there appears to be a mistake committed by the parties, the constitutional provision cannot be whittled down and placed reliance upon the judgment of the Supreme Court in case of District Magistrate, Haridwar v. Harish Malhotra(2015) 11 SCC 513 and Bonanzo Engg. & Chemical P. Ltd. v. Commissioner of Central Excise 2012 (277) ELT 145 (SC). Learned counsel submits that the matter can be seen from an another angle. According to him, the moment the foundation of issuance of a show cause notice contemplating to confiscate the goods which is not physically available is illegal and/or infirm, all subsequent proceedings founded thereupon shall also be regarded as illegal and/or invalid as once the illegality strikes at the root of the jurisdiction, all structures standing thereupon would fall. To buttress the aforesaid submission, the reliance is placed upon the judgment of the apex Court in Kalabharati Advertising v. Hemant Vimalnath Narichania, (2010) 9 SCC 437 ; Kiran Singh v. Chaman Paswan (1954) 1 SCC 710; and Chiranjilal Shrilal Goenka v. Jasjit Singh (1993) 2 SCC 507. On the maintainability of the writ petition, the reliance is placed upon a judgment of the Supreme Court in Union of India v. Vicco Laboratories2008 218 ELT 647 (SC) and Magadh Sugar and Energy Limited v. State of Bihar (2022) 16 SCC 428 that if the show cause notice is issued without jurisdiction, there is no fetter on the part of the aggrieved person to approach the writ Court. Lastly, it is submitted that even if the penalty and the redemption fine are deposited under protest, in the event of the show cause notice being an outcome of illegality and violative of the provisions of the statute, there is no fetter put on the part of the writ Court to interfere with the same and quash and set aside the subsequent orders founded thereupon.

5. Mr. Sunil Mishra, Standing Counsel appearing for the opposite parties refuted the contention of the petitioner in contending that there is no infirmity and/or illegality in issuance of the show cause notice dated 27^rd March, 2023 by the authority for confiscation of the goods/documents/books or the things under Section 130 of the said Act. Mr. Mishra would further submit that Section 67 of the OGST Act, 2017 confers powers upon the proper officers as indicated therein to arrive at the reason to believe that any goods liable to confiscation or any documents or books or things which in his opinion shall be useful for or relevant to any proceeding under the said Act to search and seize the same. He further submits that there is no challenge thrown in the writ petition on the authority of the competent persons to search and seize the materials mentioned in Section 67 of the said Act bestowing power upon the authority to confiscate the same for the other proceedings to be initiated under the provision of Section 130 and/ or Section 122 of the OGST Act, 2017. He thus submits that at the time of search and seizure, the authorized revenue authority confiscated the unaccounted shortage of stocks, the books and the documents from the premises and issued a notice under Form-GST-INS-02 along with the annexures containing the description of the materials. He vehemently submits that immediately upon the service of the show cause notice dated 27^th March, 2023, the petitioner admitted the stock discrepancies and conveyed a clear intention of payment of penalty and fine in lieu of confiscation and on the basis of such admission, the authorities issued the demand order dated 29^th March, 2023 and the payment was made by the petitioner not only of the penalty but the redemption fine in lieu of confiscation. Mr. Mishra would submit that after the compliance of the demand order, the confiscated materials which include books and the documents seized at the time of the search and seizure operation were released in lieu of confiscation.

5.1. Mr. Mishra is very much vocal that having sat for a considerable period of time, the petitioner filed an appeal against the demand order before the appellate authority under Section 107 of the OGST Act, 2017 after a gap of almost two years along with an application for condonation of delay which was rightly rejected by the appellate authority as it sans power to condone the delay beyond the stipulated period provided in the said provision. According to Mr. Mishra, a person should not be permitted to approbate and reprobate at the same time by challenging the show cause notice in the writ petition after having accepted and implemented the demand order dated 29^th March, 2023. Mr. Mishra, vociferously submits that a litigant should not be permitted to achieve a thing which cannot be achieved directly taking recourse to an indirect manner. He thus submits that the appellate authority has rightly rejected the appeal being barred by limitation and that the said authority is denuded of power to condone the delay beyond the outer limit set forth in Section 107 (4) of the Act.

5.2. Mr. Mishra further submits that Section 130 of the Act has to be read by giving meaning to the words or expressions used therein which not only includes the goods received in contravention to any provision of Act or the Rules with an intent to evade payment of tax, but also the supplies in the same line. It is thus submitted that where the goods are supplied without issuing the invoices resulting into a shortage of the goods with an intent to evade tax, it is not mandatory that the goods must be found in physical condition and, therefore, the interpretation sought to be made by the petitioner would tantamount to frustration of the spirit of the said provision. He further submits that the provision contained under Section 130 of the Act has to be read in conjunction with Section 122 and Section 67 (2) of the said Act and the interpretation so sought to be made by the petitioner if accepted would render the provision contained under Section 130 of the Act a dead letter. In support of the contention that the confiscation can be made even when the goods are not physically available, Mr. Mishra relies upon a judgment of the Gujarat High Court rendered in case of Synergy Fertichem Pvt. Ltd. (supra) and Madras High Court judgment in Visteon Automotive Systems India Limited v. CESTAT 2017 SCC OnLine (Madras) 37615. Mr. Mishra thus submits that in view of the facts involved in the instant case, the petitioner cannot take a rebound and challenge the show cause notice and, therefore, the writ petition deserves dismissal.

6. Both the counsels appearing for the respective parties advanced lengthy arguments on the powers of the competent authorities to confiscate the goods which are not physically available and imposition of the redemption fine in lieu of such confiscation under Section 130 of the Act. Recently, the trend has developed in assailing the show cause notice and the demand order in the writ jurisdiction after exhausting the statutory remedy of appeal provided in the Act belatedly, when the appellate authority declined to condone the delay beyond the outer limit set forth under Section 107 (4) of the Act on the pretext that once the foundation of initiating the proceeding is found invalid and illegal, all subsequent decisions taken thereupon are liable to fall and, therefore, the writ Court is not denuded a power to decide such fundamental issue in exercise of power of judicial review. The arguments are advanced that once the order passed by the authority is per se illegal and attracts the principles of nullity, such action or a decision is amenable to be challenged before the Court or even in collateral proceeding. The authorities on the above proposition have been sighted to achieve a desired result taking a shelter under Article 226 of the Constitution of India as a collateral proceeding. The three Judge Bench of the Supreme Court rendered in Kiran Singh (supra) as cited for the proposition that the decree passed by the Court having inherent lack of jurisdiction is always perceived as nullity and its invalidity can be set up, anywhere or everywhere, it is sought to be enforced and even in a collateral proceeding. The relevant excerpt from the said judgment is reproduced as under:

“6. The answer to these contentions must depend on what the position in law is when a court entertains a suit or an appeal over which it has no jurisdiction, and what the effect of Section 11 of the Suits Valuation Act is on that position. It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities. The question is what is the effect of Section 11 of the Suits Valuation Act on this position.”

6.1. Although the judgment rendered by the three Judge Bench in Kiran Singh (supra) was an authority before a radical amendment had been brought in the Code of Civil Procedure in the year 1977, yet the ratio of the said judgment was considered to have its application and recognized in a subsequent judgment of the Supreme Court in Chiranjilal Shrilal Goenka (supra) in the following:

“18. It is settled law that a decree passed by a court without jurisdiction on the subject-matter or on the grounds on which the decree made which goes to the root of its jurisdiction or lacks inherent jurisdiction is a coram non judice. A decree passed by such a court is a nullity and is non est. Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings. The defect of jurisdiction strikes at the very authority of the court to pass decree which cannot be cured by consent or waiver of the party.”

6.2. In Kalabharati Advertising (supra), the legal maxim sublato fundamento, cadit opus meaning thereby in case a foundation is removed, the superstructure falls, was applied in a situation where the decree passed by a Court lacking inherent jurisdiction over the subject matter would always be regarded as a nullity and non est in the eye of law in the following:

“21. In Badrinath v. State of T.N. [(2000) 8 SCC 395 : 2001 SCC (L&S) 13] this Court observed that once the basis of a proceeding is gone, all consequential acts, action, orders would fall to the ground automatically and this principle of consequential order which is applicable to judicial and quasi-judicial proceedings is equally applicable to the administrative orders.”

7. There is no quarrel to the settled proposition of law as enunciated in the above report that the Court lacking inherent jurisdiction in relation to a subject matter if passes a decree which is per se nullity and, therefore, amenable to be assailed even at the stage of execution of the said decree or order and can further be challenged in any collateral proceedings. It is no longer res integra that the Court can only assume jurisdiction conferred by law and even by consent of parties such jurisdiction cannot be assumed. The jurisdiction exercised by the Court flows from the authority of law which can neither be exercised nor be assumed on the consent of the parties. It also admits no ambiguity in law that the Court exercising jurisdiction not vested in it in passing an order is regarded as a nullity and non est in the eye of law. It may have its equal application upon the statutory authority exercising powers provided in the statute and in the event such power is not so conferred, yet the same is exercised which may be assailed and/or challenged before the higher forum provided in the statute and also otherwise. Such broad and fundamental principles discerned from the aforesaid reports are to be applied on a factual matrix and not in abstract manner. The Court cannot shut its sight on the conduct of the parties in relation to the proceedings, more particularly, after exhausting all the remedies available in the statute. Had it been a case that the authority lacks inherent jurisdiction or powers which does not require a deep scrutiny into it, it is open to the writ Court to interfere, but the position would be different in the event the power can be traced from the statutory provisions and the challenge is founded upon irregular exercise of such power in a collateral proceeding. A distinction must be drawn between an inherent lack of powers or jurisdiction and the exercise of powers so conferred in an erroneous manner. In the latter situation, it can be corrected by approaching the appellate forum under the statute and should not be permitted to be opened under the extraordinary jurisdiction conferred upon the High Courts under Article 226 of the Constitution. Even though the proceedings may be maintainable under Article 226 of the Constitution of India, yet we see no absolute fetter on the part of the High Court exercising writ jurisdiction in refusing to entertain the writ petition. The support can be gainfully lend to a judgment of the apex Court in Vicco Laboratories (supra) where the show cause notice was challenged invoking the jurisdiction under Article 226 of the Constitution of India and a plea was taken that the Court should not interfere with such show cause notice as the authorities have not applied its conscious mind as yet, the apex Court clarified that normally the Court should relegate the parties to participate in the proceeding, but in the event, the show cause notice is issued either without jurisdiction or in abuse of process of law, there is no absolute bar that the writ Court would refuse to entertain the plea at such a stage in the following:

“30. Normally, the writ court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the concerned authorities and to satisfy the concerned authorities about the absence of case for proceeding against the person against whom the show cause notices have been issued. Abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities is the normal rule. However, the said rule is not without exceptions. Where a show cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show cause notice. The interference at the show cause notice stage should be rare and not in a routine manner. Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out.”

7.1. Even in Magadh Sugar and Energy Limited (supra), the three Judge Bench of the Supreme Court reiterated and reinstated the situation under which the High Court can exercise its jurisdiction under Article 226 of the Constitution of India in the following:

“20. While a High Court would normally not exercise its writ jurisdiction under Article 226 of the Constitution if an effective and efficacious alternative remedy is available, the existence of an alternative remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies. This principle has been crystallised by this Court in Whirlpool Corpn. v. Registrar of Trade Marks [Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1] and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [Harbanslal Sahnia v. Indian Oil Corpn. Ltd. , (2003) 2 SCC 107] Recently, in Radha Krishan Industries v. State of H.P. [Radha Krishan Industries v. State of H.P. , (2021) 6 SCC 771] a two-Judge Bench of this Court of which one of us was a part of (D.Y. Chandrachud, J.) has summarised the principles governing the exercise of writ jurisdiction by the High Court in the presence of an alternative remedy. This Court has observed : (Radha Krishan Industries case [Radha Krishan Industries v. State of H.P. , (2021) 6 SCC 771], SCC p. 795, para 27)

“27. The principles of law which emerge are that:

27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well.

27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternative remedy is available to the aggrieved person.

27.3. Exceptions to the rule of alternative remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged.

27.4. An alternative remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternative remedy is provided by law.

27.5. When a right is created by a 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. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.”

21. The principle of alternate remedies and its exceptions was also reiterated recently in the decision in Commr. of State Tax v. Commercial Steel Ltd. [Commr. of State Tax v. Commercial Steel Ltd. (2022) 16 SCC 447] In State of H.P. v. Gujarat Ambuja Cement Ltd. [State of H.P. v. Gujarat Ambuja Cement Ltd. , (2005) 6 SCC 499] this Court has held that a writ petition is maintainable before the High Court if the Taxing Authorities have acted beyond the scope of their jurisdiction. This Court observed : (Gujarat Ambuja Cement case [State of H.P. v. Gujarat Ambuja Cement Ltd. , (2005) 6 SCC 499], SCC pp. 517-18, para 23)

“23. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the Taxing Authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. CIT [L. Hirday Narain v. CIT, (1970) 2 SCC 355] that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non-exhaustion of statutory remedies; unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition.”

7.2. What emerges from the above report that ordinarily the High Court should refuse to entertain the writ petition under Article 226 of the Constitution of India if the efficacious alternative remedy is provided in the statute. Ordinarily, the High Court should relegate the parties to exhaust the statutory remedy so provided unless the challenges thrown in the writ petition to the action of the authorities is in gross violation of the fundamental rights guaranteed under Part-III of the Constitution; violation of principles of natural justice; vires of the Act or the subordinate legislation and the order or the proceeding is wholly without jurisdiction. It is highlighted that the High Court may decline to entertain the writ petition if it involves a disputed question of facts subject to the objective satisfaction of the High Court that it invites the exercise of the jurisdiction. Even though the power of the writ Court is not brindled in absolute sense, yet the High Court may refuse to entertain the writ petition in the event the point raised therein is amenable to be assailed before the statutory forum provided the case of such nature as envisaged in the above report is made out. The plea of jurisdiction striking at the root of the powers exercised by the statutory authority can be determined by the writ Court provided there appears to be a complete lack of such power and once the Court find a little departure, it should ordinarily relegate the parties to the forum available in the statute.

8. In the present case, there is no dispute on the conferment of power upon the proper officer to make inspection, search and seizure upon the formation of a reason to believe that a taxable person has suppressed any transaction relating to the supply of goods and services or both or the stock of goods in hand or any goods liable to confiscation or any documents, books or things which in his opinion shall be useful and relevant to any proceeding under the Act, sub-Section (2) of Section 67 is quoted as under:

“67. Power of inspection, search and seizure

xxx xxx xxx

(2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of State tax to search and seize or may himself search and seize such goods, documents or books or things:

Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer:

Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act.”

9. It is thus evident and eminent from the aforesaid provision that the power is conferred upon the proper officer to make search and seizure on a perceive reason to believe the eventualities provided in Section 67 liable to confiscation. It therefore cannot be said that the power to confiscate is eminently and/or evidently absent in the said proper officer and, therefore, exercise of such power cannot be fundamentally flawed on the ground of complete lack of inherent jurisdiction and powers. Even Section 122 of the Act exposes the taxable person liable for a penalty in the event it supplies any goods or services or both without issue of any invoices or issues an incorrect or false invoice with regard to any supply apart from the other incidents provided therein. Section 130 of the Act contains an exhaustive provision relating to the confiscation of goods or a conveyance and a levy of penalty which imbibes within itself the eventuality of supplying or receiving any goods in contravention to any provisions of the Act or the Rules made thereunder with intend to evade payment of tax. Sub-Section (2) of Section 130 of the Act postulates an option to pay a redemption fine in lieu of the confiscation. The conjoint reading of the provision as aforesaid are the expositions of the powers and the jurisdiction conferred upon the proper authorities not only to the inspection, search and seizure, but also the confiscation the goods and the payment of redemption fine in lieu of such confiscation. It is thus not a case of a complete lack of jurisdiction or powers, but hovers around the exercise of such powers or jurisdiction in relation to goods liable to confiscation and the meaning to be assigned to the word ‘goods’. The word ‘goods’ is defined in Section 2 (52) of the said Act to mean every kind of movable property other than money and securities and includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.

10. The canon of statutory interpretation in relation to a meaning to be assigned to a word given in the said statute which contain the expressions, “means and includes” should be given a broader meaning. The word ‘include’ in a definition provision is always regarded as expansive definition and, therefore, a word of wide connotation. It imbibes within itself, the things which apart from the other meaning, but included within the meaning of the said word and, therefore, to be considered in a wider perspective. The expression “every kind of movable property” has to be understood on the meaning assigned to the goods in the said definition section and, therefore, any restrictive meaning ascribed to the said word would oppose the legislative intent. Although the goods in its grammatical meaning is understood in the larger perspective, but the moment the definition is given in the statute, wherever such word is appearing in the said statute, it should be ascribed the meaning as given thereunder and no external aid should be resorted to. The tangible movable property of every description or kind is included within the definition of goods and, therefore, the expression supplies or receives any goods in contravention to the provision of the Act has to be understood in such literal sense and support from an external aid should be avoided. In catena of judgments relied upon by the respective parties on the powers of the authorities to confiscate the goods and payment of redemption fine in lieu thereof delivered in a case of a Customs Act are relied upon by the respective parties on the doctrine of pari materia. The decision rendered by the Supreme Court in Weston Components Ltd. v. Commissioner of Customs, New Delhi 1017/2000 115 ELT 278 (SC) is relied upon by the several High Courts and the Supreme Court on the proposition when the goods are not physically available for confiscation whether the redemption fine in lieu of such confiscation is permissible in law. The apex Court in the said decision held as under:

“It is contended by the learned counsel for the appellant that redemption fine could not be imposed because the goods were no longer in the custody of the respondent-authority. It is an admitted fact that the goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine.”

11. The Bombay High Court in Finesse Creation INC (supra) held that there is no fetter on the part of the authority to confiscate the goods not physically available, but such situation would arise when the goods which were physically available were released on execution of a bond or undertaking and not otherwise in the following:

“5. In our opinion, the concept of redemption fine arises in the event the goods are available and are to be redeemed. If the goods are not available, there is no question of redemption of the goods. Under Section 125 a power is conferred on the Customs Authorities in case import of goods becoming prohibited on account of breach of the provisions of the Act, rules or notification, to order confiscation of the goods with a discretion in the authorities on passing the order of confiscation, to release the goods on payment of redemption fine. Such an order can only be passed if the goods are available, for redemption. The question of confiscating the goods would not arise if there are no goods available for confiscation nor consequently redemption. Once goods cannot be redeemed no fine can be imposed. The fine is in the nature of computation to the state for the wrong done by the importer/exporter.”

12. In Chinku Exports (supra), the Tribunal in unequivocal term held when the goods are not available physically for confiscation then in absence of any bond or security for release thereof, the power of confiscation should not be exercised and consequently, redemption fine in lieu of confiscation cannot be imposed.

13. The Punjab and Haryana High Court in Raja Impex (P) Ltd. (supra), upon taking note of the judgment of the apex Court in Weston Components Ltd. (supra) and the judgment of the Tribunal in Chinku Exports (supra) held thus:

“12. It may also be noticed here that in the case of M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (supra), the goods were released to the assessee on an application made by it and on the execution of a bond by the assessee and in those circumstances, the Hon’ble Apex Court held that the mere fact that the goods were released on the bond being executed would not take away the power of custom authority to levy redemption fine. A reading of the judgment/order of the Hon’ble Apex Court in M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (supra), would show that the Apex Court has taken the view that redemption fine can be imposed even in the absence of the goods as the goods were released to the appellant on an application made by it and on the appellant executing a bond. Since the goods were released on a bond the position is as if the goods were available. The ratio of the above decision cannot be understood that in all cases the goods were permitted to be cleared initially and later proceedings were taken for under-valuation or other irregularity, even then redemption fine could be imposed. We are, therefore, not inclined to accept the contention raised by the appellant on this issue and set aside the redemption fine.

13. The reliance of learned counsel for the revenue upon the provisions of Section 125 of the Act is also misconceived. Section 125 of the Act is applicable only in those cases which have been cleared by the concerned authorities subject to furnishing undertaking/bond etc. However, in the present case, admittedly, the goods were cleared by the respondent-authorities without execution of any bond/undertaking by the assessee. Thus, in view of the fact and circumstances of the case, we find no error in teh impugned orders. No substantial question of law arises for our determination in the present appeal and the same is hereby dismissed.”

14. We need not multiply the other judgments so cited on such proposition as the distinction is noticeable that in relation to a confiscation of the goods under the Customs Act, in the event, the goods are released on bond or on undertaking and subsequently the same is held liable to confiscate, there is no fetter on the part of the authorities in confiscating such goods even in absence of its physical presence and imposition of redemption fine in lieu thereof. Even in case of Synergy Fertichem Pvt. Ltd. (supra), the Division Bench of the Gujarat High Court dealing with the case concerning the powers of the authority under Section 130 of the Act held that pre-requisite condition enshrined in Section 130 of the Act is that the goods are liable to be confiscated and the fine in lieu thereof, if paid, may not invite such confiscation and held as under:

“174. The per-requisite for making an offer of fine under Section 130 of the Act is pursuant to the finding that the goods are liable to be confiscated. In other words, if there is no authorisation for confiscation of such goods, the question of making an offer by the proper officer to pay the “redemption fine”, would not arise. Therefore, the basic premise upon which the citadel of Section 130 of the Act rests is that the goods in question are liable to be confiscated under the Act. It, therefore, follows that what is sought to be offered to be redeemed, are the goods, but not the improper conduct of the owner to transport the goods in contravention of the provisions of the Act or the Rules. We must also bare in mind that the owner of the goods is liable to pay penalty under Section 122 of the Act. The fine contemplated is for redeeming the goods, whereas the owner of the goods is penalized under Section 122 for doing or omitting to do any act which rendered such goods liable to be confiscated under Section 130 of the Act. In the aforesaid context, we may refer to and rely upon a decision of the Madras High Court in the case of M/s. Visteon Automotive Systems v. The Customs, Excise & Service Tax Appellate Tribunal, C.M.A No.2857 of 2011, decided on 11^th August, 2017, wherein the following has been observed in para-23;

“23. The penalty directed against the importer under Section 112 and the fine payable under Section 125 operate in two different fields. The fine under Section 125 is in lieu of confiscation of the goods. The payment of fine followed up by payment of duty and other charges leviable, as per sub-section (2) of Section 125, fetches relief for the goods from getting confiscated. By subjecting the goods to payment of duty and other charges, the improper and irregular importation is sought to be regularised, whereas, by subjecting the goods to payment of fine under sub-section (1) of Section 125, the goods are saved from getting confiscated. Hence, the availability of the goods is not necessary for imposing the redemption fine. The opening words of Section 125, “Whenever confiscation of any goods is authorised by this Act…”, brings out the point clearly. The power to impose redemption fine springs from the authorisation of confiscation of goods provided for under Section 111 of the Act. When once power of authorisation for confiscation of goods gets traced to the said Section 111 of the Act, we are of the opinion that the physical availability of goods is not so much relevant. The redemption fine is in fact to avoid such consequences flowing from Section 111 only. Hence, the payment of redemption fine saves the goods from getting confiscated. Hence, their physical availability does not have any significance for imposition of redemption fine under Section 125 of the Act. We accordingly answer question No.(iii).”

15. We may not lose sight of a Division Bench judgment of this Court in D. Murali Mohan Patanaik v. Secretary to Government of Odisha, Finance Department 532 (Orissa)/[2023] 96 GST 834 (Orissa)/[2023] 72 GSTL 70 (Orissa)/(W.P.(C) No.34787 of 2022 decided on 31^st January, 2023) wherein in an identical situation and on somewhat parity of facts, the Court declined to exercise the power under Article 226 of the Constitution of India in order to apply and appreciate the decision of the coordinate Bench, it is our ardent duty to find the facts parity. Undeniably, on the basis of a search and seizure, several documents/materials were seized detecting the shortage of the sizable quantity of MS Billet which was not accounted for nor any valid tax invoices were issued and, therefore, intended to evade the payment of tax. The materials/documents were sized under Form-GST INS-02. Immediately, the show cause notice was issued on 27^th March, 2023 as to why the proceeding should not be initiated and confiscation of the goods be not made. The petitioner communicated the authority that the Company has admitted the stock discrepancies and agreed to pay the calculated amount of penalty and fine in lieu of confiscation under Section 130 of the Act. Solely on the basis of such confession on the shortage of stocks and concession on payment of penalty and fine in lieu of confiscation, the demand order was issued which was challenged under Section 106 of the Act before the appellate authority beyond the outer limit set forth under the said provision. The appellate authority refused to condone the delay of nearly two years as the power of condonation of the period in filing the appeal have put a outer limit beyond which the appellate authority cannot exercise powers.

16. We find no ambiguity in the order of the appellate authority as the law is somewhat settled that the moment the outer cap is fixed in the statute beyond which the authority cannot travel, the rejection in this regard cannot be faulted with. The discretion vested upon the authority to condone the delay if brindled with an outer cap being fixed in the statute, the authority cannot exercise the power beyond such limit.

17. The petitioner was conscious that the order of the appellate authority in rejecting the application on the ground of limitation cannot be assailed on the legal parameters took a circuitous route under Article 226 of the Constitution of India assailing the show cause notice and imposition of the redemption fine in lieu of confiscation of a goods which is not physically available.

18. In the identical circumstances, the coordinate Bench in case of Shri D. Murali Mohan Patanaik (supra) as referred above found that once the payment is made without protest it is not open to challenge the entire procedure adopted for confiscation liable to be struck down. Though the petitioner in the instant case pleaded that the said payment of redemption fine and penalty was under protest, but we do not find from the documents that any such protest was recorded; rather, there has been categorical stand taken before the authority admitting the shortage of the stocks and conceding the payment of penalty and the fine in lieu of confiscation. The coordinate Bench in such perspective where the payment is made without any protest refused to exercise the jurisdiction under Article 226 of the Constitution of India in the following:

“7. Initially, Mr. Pattanaik, learned counsel for the Petitioner repeatedly urged that he was aggrieved by the above letter. When it was pointed out to him that there was nothing in the letter about which he can be aggrieved, his contention was that the Petitioner had actually made payments under protest and was, on account of the above letter, unable to file any appeal against the demands already raised and which had been paid by the Petitioner.

8. If the Petitioner wanted to contest the demand raised, he ought to have adopted the procedure already outlined under Rule 142 (1A) of the OGST Rules. For reasons best known to him, he did not opt for that procedure. Also, till date, he has actually not registered any protest with the Department which ought to have been made contemporaneous with the making of the payment. Three months after making such payment, he has sent a vague letter contending that the liability is “not acceptable” which is neither here nor there since the Petitioner had already made the full payment of the tax demanded.

9. The Petitioner has by his own conduct disabled himself from availing the remedy available to him in law, if indeed the payment was made under protest. Since, there is no material to support the contention of the Petitioner that he made payment of the demanded tax under protest, the Court is not persuaded to accept such submission at this stage.”

19. The comity of the judicial discipline demands the adherence of the decision of the coordinate Bench and the only option left to the subsequent coordinate Bench in the event of any dissent to refer the matter to the Chief Justice to constitute a Larger Bench. The subsequent coordinate Bench must record a cogent reason for dissent and in the event, noticeable materials are not eminent and evident, uniformity in a decision is the virtue.

20. In view of the discussions made hereinabove, we do not find that the instant case warrants invocation of extraordinary powers conferred under Article 226 of the Constitution of India.

21. The writ petition thus fails. No order as to costs.