GST: HC Declines to Modify Interim Order in Perishable Goods Seizure Case

The matter arose after the tax authorities seized goods that were clearly perishable in nature. The taxpayer had earlier approached the Court and secured interim relief, which allowed the release of the goods subject to certain conditions. Later, the department returned to the Court seeking a change in that order. Their stand was that the security provided by the taxpayer should not be limited to the alleged tax dues alone, but should also cover the possible penalty.

The taxpayer opposed this, stressing the practical difficulty involved. Since the goods were perishable, any further delay would only lead to their deterioration and eventual loss. It was argued that, at this stage, securing the tax amount itself was more than sufficient, and insisting on additional security for penalty would be excessive.

Issue Raised: Whether, for release of perishable goods, the taxpayer must also secure the penalty amount.

HC Ruling: The Gauhati High Court chose not to disturb the core of its earlier interim order. It noted that in situations involving perishable goods, the immediate priority is to protect the alleged tax dues, rather than insist on securing penalties at the interim stage. The Court found that the existing conditions already struck a reasonable balance and were enough to safeguard the Revenue’s interests.

Thus, it did allow a minor correction—directing that the bank guarantee be issued in the proper name of the competent authority. Importantly, the Court also made it clear that the department’s right to recover any penalty, if ultimately found payable, would remain unaffected.

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