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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.8941/2019
(@Petition for Special Leave to Appeal (C)  No. 25291/2019)

THE STATE OF UTTAR PRADESH & ORS.                  Appellant(s)
                                VERSUS
M/S KAY PAN FRAGRANCE PVT. LTD.                    Respondent(s)

WITH
CIVIL APPEAL NO.8942/2019
(@SLP(C) No. 25292/2019)

CIVIL APPEAL NO.8944/2019
(@SLP(C) No. 27609/2019)
                             O R D E R
Leave granted.

Heard the learned counsels appearing for the parties.

These appeals throw up common issues for consideration.   The

first set of appeals is filed by the State of U.P., questioning the

interim   order   passed   by   the   High   Court   directing   the   State   to

release the seized goods, subject to deposit of security other than

cash or bank guarantee or in the alternative, indemnity bond equal

to   the   value   of   tax   and   penalty   to   the   satisfaction   of   the

Assessing Authority. It has come on record that similar orders came

to   be   passed   in   several   other   writ   petitions   by   the   High   Court,

details whereof have been mentioned in the affidavit filed by the

State   in   this   Court.   It   was   brought   to   our   notice   that   the   High

Court, after passing the said interim order would then dispose of
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the main Writ Petition as having become infructuous, consequent to

release   of   goods   by   the   appropriate   authority   in   terms   of   the

interim order of the High Court. In the context of that grievance,

this Court had to pass an order on 16.9.2019 which reads thus:­

“Applications   for   exemption   from   filing   certified

copy of the impugned order and official translation are
allowed.

Issue notice on the special leave petition as also
on the prayer for interim relief.

Dasti allowed.

Tag   with   Special   Leave   Petition   (C)   Diary   No.24795

of 2019.

Considering the fact that in the present case goods
have   already   been   released   pursuant   to   the   impugned
order, no interim relief can be granted. 

However, our attention was invited to an order dated
31.01.2019 passed by the High Court in a similar matter
i.e. Writ Tax No.141 of 2019 and couple of other case(s),
wherein the High Court allowed the writ petitioner(s) to
withdraw writ petition(s) after release of goods pursuant
to the interim order, despite the fact that the interim
order passed by it directing release of goods was subject
matter   of   challenge   pending   before   this   Court.   That
cannot   be   countenanced.   For,   the   claim   of   the   State
cannot be made faitaccompli in this manner. 

In future, if such occasion arises including in the
case of writ petitioners in this case, it will be open to
the petitioner(s) (Department) to invite the attention of
High   Court   regarding   the   pending   special   leave   petition
before   this   Court.   We   are   certain   that   the   High   Court
will consider the request for withdrawal of writ petition
appropriately.”

(emphasis in italics supplied)

It is now brought to our notice that after the afore­mentioned

order of this Court, the High Court is disposing of Writ Petitions
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by referring to Section 67 (8) of the Central Goods and Services

Act,   2017   (for   short,   ‘the   Act’)   and   Rule   141   of   the   relevant

Rules. We deem it proper to advert to one such order passed by the

High Court, which is assailed by the assessee in the second set of

appeal filed before this Court.  The said order reads thus:­

“Heard   learned   counsel   for   the   petitioner   and

learned Additional Advocate General for the State.

It has been brought to notice of the Court that the
goods are perishable and hazardous in nature.

Sri Manish Goyal, learned Addl. Advocate General has
submitted  that  the  Central  Goods  and  Services  Tax  Act,
2017  provides  a complete  procedure  for  release  of  such
goods,   as   contained   in   Section   67(8)   of   the   Act   read
with   Rule   141   of   the   relevant   Rules,   which   are   quoted
herein below:­

“Section   67(8).   The   Government   may,   having

regard   to   the   perishable   or   hazardous   nature   of
any goods, depreciation in the value of the goods
with the passage of time, constraints of storage
space   for   the   goods   or   any   other   relevant
considerations,   by   notification,   specify   the
goods or class of goods which shall, as soon as
may be, after its seizure under sub­section (2),
be   disposed   of   by   the   proper   officer   in   such   a
manner, as may be prescribed.

Rule   141.   Procedure   in   respect   of   seized

goods.­(1)   Where   the   goods   or   things   seized   are
of   perishable   or   hazardous   nature,   and   if   the
taxable   person   pays   an   amount   equivalent   to   the
market   price   of   such   goods   or   things   or   the
amount   of   tax,   interest   and   penalty   that   is   or
may   become   payable   by   the   taxable   person,
whichever   is   lower,   such   goods   or,   as   the   case
may be, things shall be released forthwith, by an
order in FORM GST INS­05, on proof of payment.”

Subject   to   compliance   of   the   above   provisions   of

law, the goods so seized may be considered for release
within next one week.

The writ petition is, accordingly, disposed of.”
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In the first place, we find force in the submission canvassed

by the State that a complete mechanism is predicated in the Act and

the   Rules   for   release   and   disposal   of   the   seized   goods   and   for

which   reason,   the   High   Court   ought   to   have   been   loathe   to

entertain the Writ Petitions questioning the seizure of goods and

to issue directions for its release. 

In the second set of appeal filed by the assessee, the relief

claimed   by   way   of   Writ   Petitions   before   the   High   Court   is   as

under:­

(a)  issue   a   suitable   writ,   order   or   direction   in   the

nature   of   certiorari   quashing   the   seizure   order   dated
25.7.2019   passed   by   the   respondent   No.2   and   3   under
Section   67(2)   of   the   Act   and   the   panchnamas   dated
19.7.2019   (Annexure   –   2   &   3)   to   the   writ   petition
respectively.

(b)  issue   a   writ,   order   or   direction   in   the   nature   of

mandamus/prohibition   declaring   the   search   and   seizure
proceedings dated 25.7.2019, to be  void and restraining
the   respondent   authorities   from   taking   any   coercive
action against the petitioner.

(c)  issue   a   writ,   order   or   direction   in   the   nature   of

mandamus   commanding   and   directing   the   respondents   to
release   the   goods   of   the   petitioner   forthwith   without
demanding any security.

(d)   issue any such order and further orders which this
Court   may   deem   fit   and   proper   in   the   facts   and
circumstances of the case.

(e)  Award   the   cost   of   the   Writ   Petition   to   the

petitioner.

It is broadly agreed that similar relief has been claimed in

all the writ petitions filed before the High Court, including the
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one   disposed   of   by   the   High   Court   as   infructuous   or   by   passing

order which is impugned by the assessee in the second set of appeal

referred to above.

For   the   sake   of   consistency,   we   have   no   hesitation   in

observing   that   the   High   Court   in   all   such   cases   ought   to   have

relegated   the   assessees   before   the   appropriate   Authority   for

complying with the  procedure  prescribed in Section  67 of the  Act

read   with   Rules   as   applicable   for   release   (including   provisional

release) of seized goods. 

Section 67 of the Act reads thus:

“Section 67 ­ Power of inspection, search and seizure

67.  (1) Where the proper officer, not below the rank of
Joint Commissioner, has reasons to believe that––
(a) a taxable person has suppressed any transaction
relating to supply of goods or services or both or
the  stock  of  goods  in  hand,  or   has  claimed   input
tax credit in excess of his entitlement under this
Act or has indulged in contravention of any of the
provisions of this Act or the rules made thereunder
to evade tax under this Act; or 

(b)   any   person   engaged   in   the   business   of

transporting   goods   or   an   owner   or   operator   of   a
warehouse or a godown or any other place is keeping
goods which have escaped payment of tax or has kept
his accounts or goods in such a manner as is likely
to cause evasion of tax payable under this Act, he
may   authorize   in   writing   any   other   officer   of
central   tax   to   inspect   any   places   of   business   of
the   taxable   person   or   the   persons   engaged   in   the
business of transporting goods or the owner or the
operator of warehouse or godown or any other place.

(2) Where the proper officer, not below the rank of Joint
Commissioner,   either   pursuant   to   an   inspection   carried
out   under   sub­section   (1)   or   otherwise,   has   reasons   to
believe   that   any   goods   liable   to   confiscation   or   any
documents or books or things, which in his opinion shall
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be useful for or relevant to any proceedings under this
Act,   are   secreted   in   any   place,   he   may   authorize   in
writing   any   other   officer   of   central   tax   to   search   and
seize   or   may   himself   search   and   seize   such   goods,
documents or books or things:

Provided   that   where   it   is   not   practicable   to   seize   any

such goods, the proper officer, or any officer authorized
by him, may serve on the owner or the custodian of the
goods  an  order  that he  shall  not  remove,  part  with, or
otherwise   deal   with   the   goods   except   with   the   previous
permission of such officer: 

Provided further that the documents or books or things so
seized shall be retained by such officer only for so long
as   may   be   necessary   for   their   examination   and   for   any
inquiry or proceedings under this Act.

(3)   The   documents,   books   or   things   referred   to   in   sub­

section   (2)   or   any   other   documents,   books   or   things
produced by a taxable person or any other person, which
have not been relied upon for the issue of notice under
this Act or the rules made thereunder, shall be returned
to such person within a period not exceeding thirty days
of the issue of the said notice.

(4)   The   officer   authorized   under   sub­section   (2)   shall

have   the   power   to   seal   or   break   open   the   door   of   any
premises   or   to   break   open   any  almirah,   electronic
devices,   box,   receptacle   in   which   any   goods,   accounts,
registers or documents of the person are suspected to be
concealed,   where   access   to   such   premises,  almirah,
electronic devices, box or receptacle is denied.

(5)   The   person   from   whose   custody   any   documents   are

seized   under   sub­section   (2)   shall   be   entitled   to   make
copies thereof or take extracts therefrom in the presence
of an  authorized officer at such place and time as such
officer may indicate in this behalf except where making
such copies or taking such extracts may, in the opinion
of   the   proper   officer,   prejudicially   affect   the
investigation.

(6)  The   goods  so   seized   under  sub­section  (2)  shall   be

released,   on   a   provisional   basis,   upon   execution   of   a
bond and furnishing of a security, in such manner and of
such   quantum,   respectively,   as   may   be   prescribed   or   on
payment of applicable tax, interest and penalty payable,
as the case may be.
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(7) Where any goods are seized under sub­section (2) and
no notice in respect thereof is given within six months
of the seizure of the goods, the goods shall be returned
to the person from whose possession they were seized:
Provided that the period of six months may, on sufficient
cause being shown, be extended by the proper officer for
a further period not exceeding six months.

(8) The Government may, having regard to the perishable
or   hazardous   nature   of   any   goods,   depreciation   in   the
value of the goods with the passage of time, constraints
of   storage   space   for   the   goods   or   any   other   relevant
considerations,   by   notification,   specify   the   goods   or
class of goods which shall, as soon as may be after its
seizure   under   subsection   (2),   be   disposed   of   by   the
proper officer in such manner as may be prescribed.

(9)   Where   any   goods,   being   goods   specified   under   sub­

section (8), have been seized by a proper officer, or any
officer authorized by him under sub­section (2), he shall
prepare an inventory of such goods in such manner as may
be prescribed.

(10)   The   provisions   of   the   Code   of   Criminal   Procedure,

1973,   relating   to   search   and   seizure,   shall,   so   far   as
may   be,   apply   to   search   and   seizure   under   this   section
subject   to   the   modification   that   sub­section   (5)   of
section 165 of the said Code shall have effect as if for
the   word   “Magistrate”,   wherever   it   occurs,   the   word
“Commissioner” were substituted.

(11) Where the proper officer has reasons to believe that
any   person   has   evaded   or   is   attempting   to   evade   the
payment of any tax, he may, for reasons to be recorded in
writing,   seize   the   accounts,   registers   or   documents   of
such person produced before him and shall grant a receipt
for the same, and shall retain the same for so long as
may be necessary in connection with any proceedings under
this Act or the rules made thereunder for prosecution.

(12) The Commissioner or an officer authorized by him may
cause  purchase  of  any  goods or  services or  both by  any
person   authorized   by   him   from   the   business   premises   of
any taxable person, to check the issue of tax invoices or
bills of supply by such taxable person, and on return of
goods so purchased by such officer, such taxable person
or   any   person   in   charge   of   the   business   premises   shall
refund   the   amount   so   paid   towards   the   goods   after
cancelling   any   tax   invoice   or   bill   of   supply   issued
earlier.”
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   (emphasis in italics supplied)

The relevant rules for release of seized goods are Rules 140

and 141 and the same read thus:­

“Rule 140 – Bond and security for release of seized
goods

(1)   The   seized   goods   may   be   released   on   a   provisional

basis upon execution of a bond for the value of the goods
in  FORM GST INR­04 and  furnishing of a security in the
form   of   a   bank   guarantee   equivalent   to   the   amount   of
applicable tax, interest and penalty payable.

Explanation.­   For   the   purposes   of   the   rules   under

the   provisions   of   this   Chapter,   the   “applicable   tax”
shall   include   Central   Tax   and   State   Tax   or   Central   Tax
and the Union Territory Tax, as the case may be and the
cess,   if   any,   payable   under   the   Goods   and   Services   Tax
(Compensation to States) Act, 2017 (15 of 2017)

(2)  in case the person to whom the goods were released
provisionally fails to produce the goods at the appointed
date   and   place   indicated   by   the   proper   officer,   the
security shall be encashed and adjusted against the tax,
interest and penalty and fine, if any, payable in respect
of such goods.

Rule 141 – Procedure in respect of seized goods

(1) Where the goods or things seized are of perishable
or   hazardous   nature,   and   if   the   taxable   person   pays   an
amount   equivalent   to   the   market   price   of   such   goods   or
things or the amount of tax, interest and penalty that is
or may become payable by the taxable person, whichever is
lower, such goods or, as the case may be, things shall be
released   forthwith,   by   an   order   in   FORM   GST   INS­05,   on
proof of payment.

(2)  Where   the   taxable   person   fails   to   pay   the   amount

referred to in sub­rule (1) in respect of the said goods
or things, the Commissioner may dispose of such goods or
things and the amount realized thereby shall be adjusted
against the tax, interest, penalty, or any other amount
payable in respect of such goods or things.”
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There is no reason why any other indulgence need be shown to

the   assessees,   who   happen   to   be   the   owners   of   the   seized   goods.

They must take  recourse to  the mechanism already  provided for in

the   Act   and   the   Rules   for   release,   on   a   provisional   basis,   upon

execution of a bond and furnishing of a security,   in such manner

and of such quantum (even upto the total value of goods involved),

respectively,   as   may   be   prescribed   or   on   payment   of   applicable

taxes,   interest   and   penalty   payable,   as   the   case   may   be,   as

predicated   in   Section   67   (6)   of   the   Act.   In   the   interim   orders

passed by the High Court which are subject­matter of assail before

this Court, the High Court has erroneously extricated the assessees

concerned from paying the applicable tax amount in cash, which is

contrary to the said provision.

In our opinion, therefore, the orders passed by the High Court

which   are   contrary   to   the   stated   provisions   shall   not   be   given

effect   to   by   the   authorities.   Instead,   the   authorities   shall

process   the   claims   of   the   concerned   assessee   afresh   as   per   the

express   stipulations   in   Section   67   of   the   Act   read   with   the

relevant   rules   in   that   regard.     In   terms   of   this   order,   the

competent authority shall call upon every assessee to complete the

formality strictly as per the requirements of the stated provisions

disregarding the order passed by the High Court in his case, if the

same deviates from the statutory compliances. That be done within

four weeks without any exception. 
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We reiterate that any order passed by the High Court which is

contrary to the stated   provisions need not be given effect to in

respect   of   all   the   cases   referred   in   the   affidavit   by   the   State

Government  before this  Court  and fresh cases which may  have been

filed   or   likely   to   be   filed   before   the   High   Court   in   connection

with the subject matter of these appeals, by all concerned and are

deemed to have been set aside/modified in terms of this order. 

In view of this order, all the Writ Petitions pending before

the High  Court, list  whereof has  been furnished in  the affidavit

are deemed to have been disposed of accordingly.   We have passed

this   common     order   to   cover   all   cases   of   seizure   during   the

relevant period, to obviate inconsistency in application of Law and

also to do away with multiple appeals required to be filed by the

State/  assessee to  assail the unstatable  orders/directions  passed

by the High Court in subject writ petition(s) referred to in the

affidavit filed by the State before this Court. 

Accordingly, the appeals are disposed of in the afore­stated

terms. All pending applications are also disposed of. 

      .......................J
      (A.M. KHANWILKAR)
  

      .......................J
                    (DINESH MAHESHWARI)
NEW DELHI; 
NOVEMBER 22, 2019.
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ITEM NO.299               COURT NO.7               SECTION XI
               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS
Petition for Special Leave to Appeal (C)  No.25291/2019

(Arising out of impugned final judgment and order dated  01­08­2019
in   WT   No.   866/2019   passed   by   the   High   Court   of   Judicature   at
Allahabad)

THE STATE OF UTTAR PRADESH & ORS.                  Petitioner(s)

                                VERSUS

M/S KAY PAN FRAGRANCE PVT. LTD.                    Respondent(s)

(FOR ADMISSION and I.R. and IA No.162462/2019­EXEMPTION FROM FILING
C/C OF THE IMPUGNED JUDGMENT and IA No.162463/2019­EXEMPTION FROM
FILING O.T.[TO BE TAKEN UP AT THE BOTTOM OF THE LIST])
 
WITH
SLP(C) No. 25292/2019 (XI)
(FOR ADMISSION and I.R. and IA No.162499/2019­EXEMPTION FROM FILING
C/C OF THE IMPUGNED JUDGMENT and IA No.162500/2019­EXEMPTION FROM 
FILING O.T.)
 SLP(C) No. 27609/2019 (XI)
(FOR ADMISSION and IA No.178047/2019­EXEMPTION FROM FILING O.T.)
 
Date : 22­11­2019 These petitions were called on for hearing today.

CORAM : 
         HON'BLE MR. JUSTICE A.M. KHANWILKAR
         HON'BLE MR. JUSTICE DINESH MAHESHWARI

For Petitioner(s)
Mr. S.K. Bagaria, Sr. Adv.
                    Mr. Rupesh Kumar, AOR
Mrs. Pankhuri Shrivastava, Adv.
Mr. Aditya Kumar, Adv.
Ms. Neelam Sharma, Adv.
Mr. Pravesh Bahuguna, Adv.
Ms. Vizokenuo Shua, Adv.
Ms. Vasvi Nagar, Adv.

Ms. Aishwarya Bhati, Sr. Adv.
                    Mr. Bhakti Vardhan Singh, AOR                  
Ms. Megha Agrawal, Adv.
Mr. Surjit Singh, Adv.
Mr. Nitin, Adv.
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Ms. Chitrangda R., Adv.
Mr. Nithin P., Adv.
For Respondent(s)
                    Ms. Anubha Agrawal, AOR                    

          UPON hearing the counsel the Court made the following
                             O R D E R

Special Leave Petition (C) No.25291 of 2019, Special Leave Petition
(C)   No.25292   of   2019   and   Special   Leave   Petition   (C)   No.27609   of
2019:­

Leave granted.

The Appeals are disposed of in terms of the signed order.

All pending applications are also disposed of.

(VISHAL ANAND)                                  (VIDYA NEGI)
COURT MASTER (SH)                             COURT MASTER (NSH)
(Signed Order is placed on the file)
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