Karnataka High Court Directs Timely Sale of Hazardous Goods Seized Under Section 129(6) of GST Law

Background and Context

M/s. TPJ Carriers approached the Karnataka High Court in relation to the detention of a 14-wheeler tanker bearing No. KL-40/S-7040, which had been engaged by M/s. SVP Petro Products to transport bulk bitumen. The vehicle and the consignment were intercepted by the State GST Authorities, resulting in proceedings under Section 129(3) of the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Act, 2017 (collectively referred to as “the Act”).

Pursuant to such interception, a penalty of Rs.23,86,590/- was imposed. Being the transporter, the petitioner claimed entitlement to release of the conveyance upon remitting Rs.1,00,000/-, in terms of the first proviso to Section 129(6) of the Act. This amount, being lower than the penalty determined under Section 129(3), was duly paid by the petitioner.

The assessee invoked the writ jurisdiction of the High Court under Articles 226 and 227 of the Constitution of India, seeking:

  • Quashing of the adjudication order dated 28.04.2026 issued by the Deputy Commissioner of Commercial Taxes (Enforcement), West Zone, Mangaluru; and
  • A direction for release of the lorry along with the goods.

A central grievance raised was that although the penalty order had been passed approximately two-and-a-half months earlier, the authorities had not initiated any steps to sell the seized goods, particularly relevant given the hazardous nature of the consignment and the express scheme of Section 129(6) of the Act.

Statutory Framework: Section 129(6) of GST

The High Court reproduced and examined Section 129(6) of the Act, which stipulates the mechanism for disposal of detained or seized goods and conveyances where the penalty is not paid within a prescribed time:

“Where the person transporting any goods or the owner of the goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3).
Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less;
Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.”

From this text, the Court emphasised several key elements:

  • Failure of the person transporting the goods or the owner of the goods to remit the penalty under Section 129(1) within 15 days from the date of receipt of the order under Section 129(3) triggers a statutory consequence;
  • In such a case, the detained or seized goods or conveyance “shall be liable to be sold or disposed of otherwise” in the manner and within the time prescribed, for recovery of the penalty;
  • The first proviso confers a distinct right on the transporter to secure release of the conveyance by paying either the penalty determined under Section 129(3) or Rs.1,00,000/-, whichever is lower;
  • The second proviso permits the proper officer to shorten the 15-day period where the goods are perishable, hazardous, or susceptible to loss in value with time.

Submissions Before the Court

Petitioner’s Submissions

Counsel for the petitioner, Sri Ashok Kumar Shetty K., made the following principal points: