Venkateshwara Traders vs. The Union Of INDIA

Held

The Court acknowledged that arecanuts are perishable goods. Considering the factual aspects of the dispute, the Court directed that the goods be released to the petitioner upon furnishing a bank guarantee or solvency security equivalent to the amount reflected in the purchase invoice. The Court clarified that the release of goods would not prejudice the merits of the demand being raised by the Department, which would be examined independently by the authorities. This examination was to be completed within three months, and the goods would be released if the solvency security was filed within fifteen days. The Court did not definitively rule on whether Section 130 was correctly invoked but provided a procedural relief pending further adjudication.

Facts

The petitioner, Venkateshwara Traders, a proprietorship firm based in Karnataka, is challenging an order dated 08.07.2025 passed under Section 130 of the Central Goods and Services Tax Act, 2017 (CGST Act). The order imposed a total penalty and fine of Rs. 53,33,125/- on the petitioner. The petitioner was engaged in trading arecanuts and had issued a tax invoice for the supply of 250 bags of non-edible arecanuts to M/s. Aryan Traders, a registered dealer in Delhi. The valuation of the goods was Rs. 18,20,000/-, with IGST of Rs. 91,000/-. The impugned order confirmed a penalty of Rs. 2,31,875/-, a fine of Rs. 46,37,500/-, and an additional penalty of Rs. 2,31,875/- under Section 130, along with a fine in lieu of confiscation. The petitioner contends that Section 130 of the CGST Act could not have been invoked and seeks release of the goods and setting aside of the order.

Key Issues

1. Whether the provisions of Section 130 of the CGST Act, 2017, were rightly invoked by the authorities against the petitioner for the alleged contravention of the Act. Petitioner's contention: The petitioner argued that Section 130 of the CGST Act could not have been invoked. They sought the release of the goods and the setting aside of the order dated 08.07.2025. No specific precedents or circulars were mentioned in the judgment for the petitioner's argument regarding the invocation of Section 130. Revenue's contention: The State contended that the Court should not exercise its extraordinary jurisdiction as the record indicated that the petitioner had defrauded the State exchequer through a web of sham firms and bogus transactions. They also stated that summons were issued to the petitioner, but no personal appearance was made, and a written reply was considered before passing the orders.