Confiscation order passed on the same day as the show cause notice — which itself granted seven days to reply — is a patent violation of natural justice; payment to secure release of detained goods is not an admission of the allegations: GSTAT Rajkot

The Tribunal held that an opportunity of hearing granted in the notice and then foreclosed by passing the final order on the same day is no opportunity at all, and that a person who deposits the amount to secure immediate release of detained goods retains the right to contest the demand and seek refund.

The Goods and Services Tax Appellate Tribunal, Rajkot Bench, has set aside a confiscation order and penalties totalling ₹19,06,672 imposed under Section 130 of the CGST Act on a wire manufacturer whose goods were intercepted near a buyer's premises without a separate invoice and e-way bill for the onward supply, holding that the order was passed in patent violation of natural justice [M/s Shree Wires v. Deputy Commissioner of State Tax (Appeal) and the State Tax Officer, Mobile Squad, Bhavnagar].

The appellant's goods — 30.28 MT of MS Round in Coil valued at ₹14,01,964 — were being transported from Chhattisgarh to the appellant in Rajkot but were intercepted near the premises of M/s Motabhai Steel in Amreli, which was not en route to Rajkot. The goods were accompanied by the primary supplier's invoice and e-way bill for the Chhattisgarh-to-Rajkot leg, but no invoice or e-way bill had been generated for the onward supply from the appellant to M/s Motabhai Steel. The appellant generated its own invoice and e-way bill approximately 67 minutes after interception. The goods were detained under Section 129(1) on 22 April 2025. On 25 April 2025, the adjudicating authority issued a show cause notice in Form MOV-10 under Section 130 granting seven days to reply and directing personal appearance at 12:30 PM on the same day. Without waiting for any reply and without receiving any written representation, the adjudicating authority passed the confiscation order in Form MOV-11 on the very same day — 25 April 2025.

The Bench of Pramod Kumar Rai (Judicial Member) and Kishori Lal (Technical Member) held that the violation of natural justice went to the root of the matter. The MOV-10 notice itself granted seven days to respond, so the reply period would run until 2 May 2025. Passing the order on 25 April 2025 — before the time allowed for filing a reply had expired — rendered the opportunity illusory. Section 130(4) read with Section 126(3) requires an effective opportunity of being heard before any confiscation order is passed, and a notice directing personal appearance at 12:30 PM on the very date of its issuance is no opportunity. The Tribunal specifically rejected the First Appellate Authority's finding that the appellant had "appeared and made submissions" and that its "participation and subsequent payment" showed that a hearing had been afforded, holding that this finding was contrary to the MOV-11 order itself, which recorded that no objections were filed and referred to no submission of the appellant.

Critically, the Tribunal held that payment of the demand to secure release of detained goods and conveyance cannot be treated as acquiescence, as an admission of the allegations, or as a waiver of the right to be heard. A person may deposit the amount to secure immediate release while retaining the right to contest the demand and seek refund. The matter was remanded for fresh adjudication with a direction for sufficient opportunity, including time to file a written reply with supporting documents and a personal hearing. The Tribunal did not express any opinion on the merits, keeping all issues open.

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