HC Upholds Confiscation for Goods Bought from Fake Entity

Case Details: Krishna Enterprise vs. Union of India - [2025] 173 taxmann.com 892 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & D.N. Ray, JJ.
• Abhishekkumar C Malvi & Maulik Vakhariya for the Petitioner.
• Ms Shrunjal Shah, AGP & Ankit Shah for the Respondent.

Facts of the Case

The petitioner, a registered taxpayer under the CGST Act, purchased goods from an undisclosed third-party supplier and was provided an invoice and an e-way bill in the name of ‘Sunrise Enterprise’, an entity which later turned out to be non-existent. The goods, along with the conveyance, were intercepted by the GST authorities during transit. Upon verification, it was discovered that the supplier, ‘Sunrise Enterprise’, was a fictitious entity, confirmed by a physical inspection at the address mentioned in the GST records. Consequently, the authorities initiated proceedings under Section 130 of the CGST Act on the grounds of fraudulent and bogus invoicing. A show cause notice was issued in FORM GST MOV-10, followed by an order for confiscation of both the goods and the conveyance in FORM GST MOV-11. The petitioner, challenging the confiscation order, filed a writ petition before the Gujarat High Court.

High Court Held

The Hon’ble Gujarat High Court held that the goods were rightly liable for confiscation under Section 130 due to the bogus invoicing by the non-existent entity. The Court emphasized that the challenge to the confiscation order should be addressed by the Appellate Authority, not the Writ Court, as an alternate remedy was available under Section 107 of the CGST Act. The writ petition was dismissed, affirming the validity of the confiscation proceedings.