Goods Can’t Be Released Under S. 129 Once Confiscation Order U/s 130 Is Passed, Title Vests in Govt.: Karnataka HC

The Karnataka High Court has ruled that once a confiscation order is passed under Section 130 of the CGST/KGST Act, the mechanism for release of goods available under Section 129 ceases to operate, as the title over the confiscated goods and conveyance stands vested in the Government. The Division Bench comprising Justices Sachin Shankar Magadum and Rajesh Rai K dismissed the writ appeals challenging interim orders concerning release of detained goods and vehicles. The appeals arose from interim orders passed in earlier writ proceedings where the petitioner sought modification of conditions imposed for release of goods and vehicles that had been subjected to confiscation proceedings under GST law. The appellant, Sreekrishna Traders, argued that in several similar cases involving arecanut traders, the High Court had granted interim relief by directing release of goods and conveyances upon deposit of 200% of the tax payable and execution of indemnity bonds. The trader contended that identical treatment ought to be extended in the present cases as well. The appellant relied upon the principle of judicial consistency and argued that similarly placed litigants should receive similar treatment in the exercise of judicial discretion. The trader further argued that the statutory timeline prescribed for conducting inspection and verification under Rule 138C of the CGST/KGST Rules had allegedly been exceeded by the authorities. According to the appellant, instead of completing the process within the prescribed three-day period, the authorities repeatedly extended the proceedings for around 45 days. It was contended that such extension defeated the statutory right of the assessee to obtain release of goods by payment of amounts contemplated under Section 129 of the Act. The petitioner asserted that the detention and confiscation orders were consequently barred by limitation and therefore without jurisdiction. The State opposed the appeals and distinguished the earlier decisions relied upon by the trader. The Government argued that the cited cases concerned notices and proceedings under Section 129, which deal with detention and seizure of goods in transit and permit release upon payment of penalties. In contrast, the present matters concerned confiscation orders already passed under Section 130 of the CGST/KGST Act. The State submitted that once an order under Section 130 is passed, sub-section (5) expressly provides that ownership of the goods and conveyance vests in the Government. Therefore, release of goods thereafter would be governed by Section 130 alone and not by the detention provisions under Section 129. Examining the dispute, the High Court noted a fundamental distinction between detention proceedings under Section 129 and confiscation proceedings under Section 130. The Court observed that the earlier cases relied upon by the appellant dealt with detention orders and notices for confiscation, whereas the present proceedings involved final confiscation orders already issued under Section 130. The Bench relied upon an earlier coordinate Bench ruling which had clarified the legal position. It reiterated that Section 129 empowers authorities to detain, seize and release goods and conveyances in transit and provides a mechanism for release upon payment of specified amounts. However, Section 130 operates differently and authorizes confiscation of goods and levy of penalty. Once confiscation takes place and title vests in the Government, the statutory mechanism under Section 129 cannot be invoked. The Court observed that after confiscation, issues relating to valuation, tax determination, penalty and fine are governed exclusively by Section 130. Therefore, a person cannot seek release of confiscated goods by invoking the procedure applicable to detention proceedings. Holding that the interim orders passed by the Single Judge were consistent with the statutory framework and existing judicial precedent, the High Court found no reason to modify them. Consequently, both writ appeals were dismissed. Case Details Case Title: Sreekrishna Traders Versus State Of Karnataka Citation: JURISHOUR-1328-HC-2026(KAR) Case No.: Writ Appeal No. 1385 Of 2026 (T-Res) Date: 07/05/2026 Counsel For Petitioner: D.R. Ravishankar, Senior Counsel Counsel For Respondent: Aditya Vikram Bhat, AGA Click Here To Read Order Read More: Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court

Goods Can’t Be Released Under S. 129 Once Confiscation Order U/s 130 Is Passed, Title Vests in Govt.: Karnataka HC

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