In a significant ruling, the Allahabad High Court addressed the issue of confiscation under the Goods and Services Tax (GST) framework, specifically under Section 130 of the GST Act. The case, M/s Gospel Press v. State of U.P. & Ors., revolved around a seizure order and a subsequent show-cause notice issued for alleged non-maintenance of accounts, a violation of Section 35. The authorities had directly invoked Section 130, aiming to confiscate goods and vehicles, without first determining any tax liability under Sections 73 or 74.
The petitioner contended that such direct invocation of Section 130 was inappropriate, as it bypassed the necessary adjudication process required to establish tax liability. The court noted that previous judgments, such as those in the cases of Maa Mahamaya Alloys and others, had established that Section 130 could only be applied post-adjudication. The State's argument that the writ petition was premature was dismissed by the court.
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The High Court reaffirmed that the confiscation provisions under Section 130 are applicable only after a proper adjudication process under Sections 73 or 74 has determined any tax liability. As a result, the seizure order and the show-cause notice were deemed invalid and quashed. The court allowed the writ petition, noting that the State could still pursue the matter by first issuing a proper show-cause notice under the appropriate sections if tax liability was indeed present.
Order Date: 13 November 2025
Case Title: M/s Gospel Press v. State of U.P. & Ors.
Fact
- A seizure order dated 06.09.2025 was issued under Form GST INS-02, and a show-cause notice dated 17.09.2025 was issued under Section 130 read with Section 122, alleging violation of Section 35 (non-maintenance of accounts).
- The department directly invoked Section 130 seeking confiscation of goods and vehicle. The petitioner argued confiscation under Section 130 cannot be triggered unless tax liability is first determined under Sections 73/74.
- A mere allegation of non-maintenance of accounts under Section 35 cannot justify confiscation.
- Multiple judgments of Allahabad High Court—Maa Mahamaya Alloys, Dayal Products, Shree Om Steels, Dinesh Kumar Pradeep Kumar—all held that Section 130 proceedings must be preceded by adjudication.
- The State argued that the writ petition was premature against an SCN.
Issue
- Whether a show-cause notice under Section 130, issued solely for violation of Section 35 and without prior adjudication of tax liability under Sections 73/74, is legally sustainable?
Order
- The Court reaffirmed that Section 130 is a post-adjudication provision, and can be invoked only after tax liability is determined in accordance with Sections 73 or 74.
- Violation of Section 35 alone cannot trigger confiscation, and such action is without jurisdiction. The seizure order dated 06.09.2025 and the SCN dated 17.09.2025 were quashed as invalid.
- The State is at liberty to proceed in accordance with law by first issuing a proper SCN under Section 73/74 if tax liability exists.
- Writ petition allowed.
