The Madurai Bench of the Madras High Court has directed the release of detained ready-made garments claimed by a trader upon payment of the penalty specified in its order, after adjusting amounts already remitted. The direction came in a case where the trader disputed the imposition of a penalty covering 45 bundles, contending that he owned only 10 bundles.
The bench of Justice Senthilkumar Ramamoorthy has directed payment of a penalty of “200% of the value of said goods”, with credit for amounts already remitted by the trader. It ordered that the goods for which that penalty was paid should be released.
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The central issue was whether the trader could obtain release of the goods over which he asserted ownership by paying the penalty attributable to those goods, despite the disputed demand covering a larger consignment.
The trader approached the High Court under Article 226 of the Constitution, challenging an order issued in Form GST MOV-09 and seeking release of ready-made garments purchased by him.
According to the submissions made on his behalf, the garments had been purchased from an unregistered dealer. His counsel contended that the department had imposed a penalty on 45 bundles even though the trader owned only 10 of them.
The dispute therefore concerned the extent of the goods attributable to the trader and the payment required to secure their release.
The department referred to a document at page 31 of the paper book and submitted that 13 bags had been consigned to the trader.
The submissions thus disclosed a difference between the trader’s claim of ownership over 10 bundles and the department’s reliance on a document indicating 13 bags.
The court did not conclusively determine whether the relevant quantity was 10 or 13. Instead, it framed its release direction with reference to the goods over which ownership was being asserted and for which the specified penalty was paid.
Referring to Section 129 of the applicable GST enactments, the court stated that the owner could seek release of the goods subject to payment of the penalty described in the order, unless the goods were exempted.
The direction was therefore linked to the particular goods claimed by the trader and covered by the payment. It did not require him, as a condition stated in the order, to pay the penalty relating to all 45 bundles referred to in his submissions.
The court expressly directed the department to account for payments already made by the trader while determining the amount payable for release.
This adjustment forms part of the relief granted: the release condition must be applied after giving credit for the sums previously remitted.
The judgment’s reference to a penalty of 200% of the value of the goods is reproduced here as recorded in the order. It should be distinguished from an independently verified statement of the statutory formula under Section 129.
The High Court disposed of the writ petition on these terms, imposed no costs and closed the connected miscellaneous petitions.
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