The Kerala High Court ruled that under the amended GST law, goods detained for confiscation under Section 130 cannot be provisionally released by paying a fine in lieu of confiscation. The release of such goods is permissible only after a final confiscation order is issued. This decision arose from a case involving M/s. Authentic Metals, a GST-registered dealer in scrap materials, whose vehicle transporting copper scrap was intercepted and detained by the GST Enforcement Squad. Despite having proper documentation, the authorities alleged discrepancies and issued a MOV-10 notice proposing confiscation and demanding a fine.
M/s. Authentic Metals contested the allegations, paid the proposed fine via DRC-03, and sought provisional release of the goods. They argued that Section 130(2) of the CGST Act allows for the release of goods upon payment of a fine during adjudication, referencing a previous High Court decision. However, the court clarified that post-2021 amendments to Sections 129 and 130, the statutory framework had changed significantly, and the earlier legal position no longer applied.
The court emphasized that Section 130(2) allows payment of a fine only after a final confiscation order, not at the proposal stage. Unlike Section 67(6), which expressly permits provisional release, Section 130 does not. Therefore, the payment of the proposed fine does not entitle the petitioner to provisional release, which can only occur after a final confiscation order in accordance with Section 130(7).
Order Date - 20 February 2026
Parties: M/S. AUTHENTIC METALS Vs THE ENFORCEMENT OFFICER, THE ASSISTANT STATE TAX OFFICER AND STATE GOODS AND SERVICE TAX DEPARTMENT
Facts -
- M/s. Authentic Metals, a registered GST dealer in scrap materials, transported copper scrap on 25.11.2025 with proper invoice and E-way bill when the vehicle was intercepted and detained by the GST Enforcement Squad for scrutiny.
- The authorities issued Forms MOV-01, MOV-02, MOV-04 and later a MOV-10 notice proposing confiscation under Section 130, alleging discrepancies and demanding ₹18,92,053 as fine in lieu of confiscation along with penalty.
- The petitioner denied irregularities, filed objections, sought cross-examination, and paid the entire proposed fine through DRC-03, requesting provisional release of goods and vehicle.
- Relying on an earlier High Court decision in Sales Tax Officer v. Y. Balakrishnan, the petitioner argued that Section 130(2) permits release on payment of fine even during adjudication.
Issue -
- Whether Section 130(2) of the CGST Act permits provisional release of detained goods during confiscation proceedings upon payment of fine in lieu of confiscation?
Order -
- The Court noted that after the 2021 amendments to Sections 129 and 130, the earlier legal position (as relied on in Y. Balakrishnan) no longer applies because the statutory scheme was substantially changed.
- Section 130(2) provides an option to pay fine after confiscation is authorized, meaning after a final confiscation order, not at the proposal stage.
- Unlike Section 67(6), which expressly provides for provisional release, Section 130 contains no such provision; courts cannot read into the statute a power that the legislature consciously omitted.
- Therefore, payment of fine proposed in MOV-10 does not entitle the petitioner to provisional release, and release can only follow a final confiscation order in accordance with Section 130(7).
