EaseValueWhat Happened?
The Calcutta High Court has recently delivered a significant judgment that protects the rights of businesses dealing with perishable goods. The court has set aside directions for auction of seized perishable goods and has permitted non-owners (such as consignees, logistics partners, or custodians) to seek release of these goods under Section 129(1)(b) of the GST law. The judgment also keeps the Comptroller General of GST (CGST) jurisdiction open for further determination of liability. This ruling is a game-changer for businesses in food, pharma, agriculture, and other perishable sectors across India.
Background & Legal Context
What is Section 129(1)(b) of the GST Law?
Section 129(1)(b) of the CGST Act, 2017, provides the power to release seized goods before completion of investigation or adjudication. This section is a critical safeguard for taxpayers and allows the competent officer to release seized goods on:
- Payment of redemption fine (usually 10% of value)
- Furnishing of security/bond as prescribed
- Submission of undertaking
The Problem: Perishable Goods Cannot Wait
Unlike regular goods, perishable items—fruits, vegetables, medicines, dairy, seafood, meat—lose their commercial value within days or weeks. When GST officers seize such goods during raids or inspections, the business faces catastrophic losses even before any adjudication or penalty is decided. The goods may rot, expire, or become completely unsaleable, resulting in 100% financial loss.
The Old Position
Previously, some GST authorities were directing auction of seized perishable goods without considering the right of interested parties (non-owners holding the goods in custody) to seek release. This meant even if you were merely storing or transporting goods on behalf of the actual owner, you could lose them to auction.
What the Calcutta HC Has Now Ruled
The court has clarified that:
- Non-owners (consignees, logistics providers, warehouse operators) have the right to seek release under Section 129(1)(b)
- Auction directions should not be passed immediately without giving such parties a chance to file for release
- The seizure and investigation can continue, but the goods need not languish with the authorities
- CGST retains jurisdiction to determine the actual owner's GST liability later
This judgment applies to cases under both the current GST law and effectively resolves conflicts that arise during AY 2025-26 and AY 2026-27.
What Does This Mean for You?
If You Are a Consignee or Custodian
You now have a clear legal right to apply for release of perishable goods seized by GST authorities, even if you are not the actual owner or liable party. You can file an application under Section 129(1)(b) requesting immediate release on:
- Redemption fine (10% of goods value)
- Bank guarantee or security bond
- Personal undertaking
This protects your business reputation and prevents massive financial losses from spoilage.
If You Are a Logistics/Cold Chain Company
Your goods in transit or storage are now safer. You can immediately move the court for release once seizure occurs, without waiting for GST authorities to complete their investigation against the shipper or consignor.
If You Are the Actual Owner (Supplier/Manufacturer)
You have multiple avenues:
- Seek release directly if you hold the goods
- Instruct your consignee/logistics partner to seek release
- File a representation with the GST officer requesting release based on perishable nature
For Retailers and Wholesale Traders
If your stock is seized—whether vegetables, fruits, dairy, medicines, or pharmaceuticals—you can now immediately apply for release rather than watch inventory perish. The 7-10 day window for spoilage becomes manageable.
Impact on GST Departments
GST authorities must now process Section 129(1)(b) applications for perishables on priority. They cannot simply auction without considering release requests. This changes enforcement practice across all states.
What Should You Do Now?
Step 1: Prepare Documentation
- Keep proof of ownership or custodianship (invoice, bill of lading, warehouse receipt, shipping documents)
- Document the perishable nature with shelf-life dates, storage temperature requirements, and certificates
- Prepare invoices, supply contracts, or consignment orders
Step 2: In Case of Seizure (Immediate Action)
- Do NOT wait for formal seizure memo. Ask the officer for immediate release application procedure
- File Section 129(1)(b) application within 24-48 hours, citing the Calcutta HC judgment
- Attach photographs showing expiry dates, deterioration, or spoilage risk
- Request accelerated hearing citing perishable nature
Step 3: Furnish Security
- Be ready with 10% redemption fine or equivalent bank guarantee
- Consult your GST consultant to calculate the exact amount
- File undertaking and indemnity bond if required
Step 4: Legal Support
- Engage a GST advocate immediately if authorities resist release
- Reference the Calcutta HC judgment in all correspondence
- Request written reasons if release is denied
Step 5: Ongoing Cooperation
- Cooperate fully with GST investigation on the substantive issue
- Release under Section 129(1)(b) does not mean case closure—it only protects the goods
- Be prepared to pay penalties or GST dues if investigation finds violations
Key Takeaways
- Perishable goods can now be released under Section 129(1)(b) even to non-owners like consignees and custodians, per Calcutta HC August 2026 ruling
- No mandatory auction of perishables without giving parties a chance to apply for release with security
- Investigation continues parallel—release does not mean the GST officer loses jurisdiction or cannot determine liability of the actual owner
- Quick action required—apply within 24-48 hours of seizure as perishables spoil rapidly; delay costs more than redemption fine
- Applicable to AY 2025-26 onwards—this judgment sets precedent for all GST seizures of time-sensitive goods across India
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