Calcutta High Court on GST Seizure of Perishable Goods: Scope of Relief for Non-Owner Under Section 129(1)(b)

Background of the Dispute

An intra-court appeal came before the Calcutta High Court in Ratul Talukdar Vs Union of India & Ors. (Calcutta High Court), arising out of an order passed in a writ petition concerning detention and seizure of goods in the course of an inter-State movement. The dispute centred around:

The authority of CGST officers in the intermediary State to detain and seize goods under Section 129 where the supply was admittedly inter-State;
Whether the appellant, claiming to be the consignor and owner of the goods, could secure release under Section 129(1)(a); and
The legality of directions issued by the learned Single Judge for auctioning the goods and compelling the appellant to participate in such auction.

The goods in question were perishable, which significantly influenced the relief granted by the Division Bench.

Appellant’s Core Contentions

Challenge to jurisdiction of CGST officers in intermediary State

The appellant, represented by learned Senior Advocate Mr. Bose, argued that the order under challenge suffered from multiple infirmities. The principal submission was jurisdictional:

Relying on Section 17 of the Integrated Goods and Services Tax Act, 2017 (IGST Act, 2017), it was urged that in the case of an inter-State supply of goods, the intermediary State of West Bengal had no lawful power to detain or seize the goods under Section 129 of the Central Goods and Services Tax Act, 2017 (CGST Act).
According to this line of argument, the power to detain and seize in such circumstances should not vest in the authorities of the transit State.

Objection to direction for auction and participation

The appellant also attacked the nature of directions issued by the learned Single Judge:

The Single Judge had ordered the CGST authorities to auction the seized goods.
Additionally, the Court had directed the appellant – who claimed to be the owner – to take part in the auction process.
Mr. Bose submitted that such directions were unsustainable when the appellant asserted ownership and sought release under the statutory scheme itself.

Dispute over alleged admission and ownership

The CGST authorities produced, for the first time before the Division Bench, certain documents including a letter and statements said to have been made by the appellant before the Anti-Evasion wing. These documents recorded that:

The appellant was not the consignor,
He was a painter by profession, and
His credentials had been allegedly misused for obtaining GST registration.

The appellant’s stand was:

The alleged letter relied upon by the department was obtained under coercion, and therefore could not be treated as voluntary or reliable.
The tax invoice on record, showing the appellant as proprietor of Talukdar Enterprise and as consignor, ought to be treated as strong evidence of deemed ownership of the goods.
Various precedents of the High Court were cited to support the proposition that the tax invoice carries significant evidentiary value regarding ownership in the context of detention proceedings.

Stand of the CGST Authorities

Power to detain and seize under IGST–CGST scheme

On behalf of the respondents, learned Advocate Mr. Banik contended that:

GST detention of perishable goods: Calcutta HC clarifies rights of non-owner under Section 129(1)(b)