Release of Detained Areca Nuts As It Is Perishible In Nature: Calcutta High Court

The Calcutta High Court, Circuit Bench at Jalpaiguri, has declined to exercise its writ jurisdiction to set aside a GST penalty order passed against a trader dealing in areca nuts, holding that the dispute involves contested factual issues best examined by the statutory appellate authority. Taking note of the perishable nature of the goods, the bench of Justice Om Narayan Rai permitted their release subject to payment of part penalty and furnishing of security for the balance amount. The case arose from a writ petition filed by M/s JJ Traders challenging an order dated July 31, 2025, issued by the Assistant Commissioner, Central GST & CX, Siliguri. The impugned order imposed penalties under Sections 129(1)(a) and 129(1)(b) of the CGST/WBGST Acts, 2017, following detention of a consignment of areca nuts during transit from Assam to Nagpur. The consignment was intercepted at Husludanga Toll Plaza in Jalpaiguri, where physical verification allegedly revealed an excess quantity of 1,300 kg over what was declared in the tax invoice and e-way bill According to the petitioner, the detention and penalty proceedings were vitiated by violation of principles of natural justice. It was contended that although the petitioner and its authorised representative appeared before the GST authority pursuant to the show cause notice, no effective personal hearing was granted before passing the final order. The petitioner further argued that since valid invoices and e-way bills accompanied the goods, it ought to have been treated as the “owner” of the consignment in terms of the CBIC Circular dated December 31, 2018, and therefore the harsher penalty under Section 129(1)(b) was wrongly invoked The GST authorities opposed the writ petition, asserting that serious discrepancies had been found during inspection. They pointed to the excess weight of goods, absence of inward e-way bills for procurement, and statements indicating that the supplier’s existence appeared doubtful. On this basis, the department argued that the genuineness of the transaction itself was under suspicion, disentitling the petitioner from the benefit of the CBIC circular. It was also submitted that the petitioner had an effective alternative remedy of appeal under Section 107 of the CGST Act and that the High Court should not interfere under Article 226 of the Constitution. After hearing both sides, the Court observed that while availability of an alternative remedy is not an absolute bar to writ jurisdiction, interference is justified only in limited circumstances such as violation of natural justice, lack of jurisdiction, or infringement of fundamental rights. In the present case, the Court noted that the dispute revolved around factual controversies, including whether a personal hearing was actually afforded and whether the supplier and transaction were genuine. Such issues, the Court held, could not be conclusively determined on the basis of affidavit evidence in a writ proceeding and were more appropriately examined by the appellate authority. The Court also examined the reliance placed on the CBIC circular deeming consignor or consignee as the owner when proper documents accompany the goods. It held that such a circular cannot be mechanically applied in cases where the very genuineness of the transaction and accompanying documents is under serious doubt. The Court clarified that departmental circulars operate within the statutory framework and cannot be used as a shield to avoid scrutiny in cases involving suspected tax evasion or dubious documentation. While refusing to quash the penalty order, the High Court took a balanced view on the issue of continued detention of the goods. Accepting the petitioner’s contention that areca nuts have a limited shelf life, the Court directed that the goods and conveyance be released if the petitioner pays the penalty determined under Section 129(1)(a) and furnishes a bank guarantee for the balance penalty imposed under Section 129(1)(b). The GST authorities were directed to effect release within two days of compliance and to provide the necessary GST credentials to enable the petitioner to file an appeal. The court disposed of the writ petition with liberty to the petitioner to approach the appellate authority within one week, with a direction that the appeal be decided expeditiously. The Court clarified that it had not expressed any opinion on the merits of the case and that all issues were left open for consideration in appeal. Case Details Case Title: M/s. JJ Traders Vs Union of India & Ors. Case No.: WPA 2144 of 2025 Date: 10/12/2025 Counsel For Petitioner: P. Verma Counsel For Respondent: Ratan Banik Click Here To Read Order Read More: Dept. Can’t Compel Assessee To Pay 10% Value Of Exempted Goods Under R. 6(3) Of CENVAT Credit Rules, 2004: CESTAT

Release of Detained Areca Nuts As It Is Perishible In Nature: Calcutta High Court

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