A Claim of Lack of Authority Must Be Supported by Law and Facts
GST confiscation proceedings can disrupt a business. Goods and vehicles may be confiscated, penalties and fines may become payable, and deliveries may be delayed. The officer’s legal authority and the taxpayer’s opportunity to defend the case therefore require careful examination. However, serious consequences alone do not justify bypassing the statutory appeal. Merely describing an order as “without jurisdiction” or alleging an unfair hearing is not enough. The taxpayer must identify the defect and explain, with reference to the law and records, why the High Court should intervene directly.
This issue arose in M/s Shreeji Steel v. State Tax Officer (1), Kutch Mobile Squad, 2026-VIL-1141-GUJ, decided on 01.10.2026. The Gujarat High Court at Ahmedabad, comprising Hon’ble Mr Justice A.S. Supehia and Hon’ble Ms Justice Vaibhavi D. Nanavati, decided R/Special Civil Application No. 10249 of 2026. The taxpayer challenged fresh confiscation proceedings following an earlier remand. It alleged that the officer lacked authorisation under Rule 138B, that the same officer had issued the notice and decided the case, and that relied-upon documents had not been supplied. The question was whether the records supported these objections and justified direct writ intervention despite the appeal available under Section 107.
The dispute concerned cast-iron waste and scrap purchased from M/s A.S. Construction, Gandhidham, under an invoice dated 12.02.2025, for direct delivery to M/s A.K. Tools Industries. Interception on 13.02.2025 led to verification, detention and confiscation proceedings. The earlier notices and orders were set aside, and reconsideration was directed. The authorities then issued a fresh notice dated 15.01.2026 and a confiscation order dated 02.03.2026. Defects in the earlier proceedings did not automatically invalidate the fresh proceedings. The later notice, disclosure of documents, hearing opportunity and final order had to be examined to determine whether the required safeguards had been followed
An Officer Needs Proper Authority to Verify a Vehicle
Rule 138B of the CGST Rules, 2017 requires proper authorisation for checking vehicles carrying goods. Under sub-rule (1), the Commissioner, or an officer empowered by him, may authorise an officer to stop a vehicle and verify its e-way bill. Sub-rule (3) requires physical verification by a duly authorised officer. Its proviso allows another officer who receives specific information about tax evasion to physically verify the particular vehicle after obtaining the required approval. Suspicion of evasion therefore provides a reason to investigate; it does not replace the need for legal authority.
The petitioner relied upon Hukum Chand Shyam Lal v. Union of India and Others, (1976) 2 SCC 128 . The principle is simple: when the law prescribes who may exercise a power and how, those requirements must be followed. For example, information that a truck carries goods under false documents may justify verification. However, the officer must still obtain the authorisation or approval required under Rule 138B. Neither administrative convenience nor strong suspicion can make an otherwise unauthorised action lawful.
In Shreeji Steel , the records showed that the Commissioner had authorised the officer who physically verified the vehicle. The objection failed because authorisation existed, not because it was unnecessary. However, authority to stop and verify a vehicle does not automatically confer authority to detain or confiscate it or the goods. Each subsequent action must satisfy its own legal requirements and be taken by an officer competent to exercise that power. Lawful verification alone cannot establish the legality of every action that follows.
Fresh Proceedings Require Disclosure and a Fair Opportunity to Reply
When an earlier order is set aside and the matter is remanded for reconsideration, the authority must conduct fresh proceedings in accordance with the judicial directions. In M/S Panchi Traders v. State of Gujarat, 2025 (12) TMI 941, Special Civil Application No. 9250 of 2020 and allied matters, decided on 11.12.2025, the earlier notices and orders in Forms GST MOV- 10 and MOV- 11 were set aside, and the matters were remanded. This did not automatically extinguish the Department' s right to examine the alleged contraventions. A fresh order could still be passed after following the law and providing the required safeguards. However, remand does not permit the authority to simply repeat its earlier conclusion. It must disclose the material relied upon, allow the taxpayer to answer the allegations, and consider the defence before deciding the matter afresh.
In the present case of Shreeji Steel, the fresh notice was accompanied by the supplier spot- visit documents and the driver's statement. The registration- cancellation documents were also supplied. A personal hearing was offered on 22.01.2026, but the petitioner did not attend. It subsequently submitted a written reply dated 09.02.2026, which was considered before the fresh order was passed. The verification and detention documents had also been supplied to the person in charge of the conveyance. These circumstances did not establish that the petitioner had been denied an opportunity to defend its case. A fair opportunity requires disclosure and consideration of the defence; it does not require the authority to accept that defence. An unfavourable decision, therefore, does not by itself establish a breach of natural justice.
The difference is easily understood through an example. If the Department alleges that a supplier was not operating from its registered premises and relies upon an inspection report that it does not supply, the taxpayer may be unable to challenge what was inspected, when the visit occurred, or what the report actually recorded. That concerns the fairness of the proceedings. If the report is supplied but the taxpayer argues that it is inaccurate or does not prove that the particular transaction was fictitious, the dispute concerns the evidence and the correctness of the resulting order. The taxpayer may pursue that challenge through the statutory appeal. An allegation of non-disclosure should therefore identify the missing document, the allegation based on it, and how its absence prevented an effective reply. In this case, the record did not establish such a denial.
A Bias Objection Requires More Than Disagreement with the Decision
The petitioner objected that the same officer had issued the show-cause notice and passed the adjudication order. It relied upon Ashok Kumar Yadav v. State of Haryana, (1985) 4 SCC 417, which explains the importance of impartial decision-making. A taxpayer need not always prove that actual bias affected the final result; circumstances creating a reasonable apprehension of bias may also require examination. However, that apprehension must rest on identifiable circumstances, not merely on an unfavourable decision. For example, a complaint that the officer rejected the taxpayer’s explanation concerns the correctness of the decision. Evidence suggesting that the officer had already decided the outcome before considering the reply raises a different concern about impartiality. Authorisation to act and the grant of a hearing do not, by themselves, answer every possible objection of bias.
The petitioner also cited Swastik Plastics v. Commissioner of DGST, [2023] 156 taxmann.com 316 (Delhi) . There, the officer who conducted the investigation, search and seizure also passed the adjudication order. The Delhi High Court initially expressed a preliminary concern about the likelihood of bias. Subsequently, revised departmental guidelines were placed before it, and the adjudication order was set aside, with fresh proceedings directed under those guidelines. The officer’s role in the investigation and the applicable guidelines were therefore important to the outcome. The decision should not be understood simply as requiring different officers to sign every notice and final order. Issuing a notice and conducting an investigation are not necessarily the same function; the officer's actual responsibilities and the governing legal framework must be examined.
In the present case of Shreeji Steel, the High Court did not separately develop a general rule on whether an investigating officer could also adjudicate the matter. It concluded that the authorities cited by the petitioner did not justify a different outcome on the facts before it. The petitioner also relied on G.R. Infra Projects Limited, Ratlam v. State of Madhya Pradesh and Others, 2026-VIL-86-SC, Civil Appeal No. 11277 of 2026, decided on 19.08.2026, to support its objection regarding the non-supply of documents. The judgment did not separately analyse that decision's legal principles. The rejection of the petitioner’s objections must therefore be understood in the context of this case’s particular record. It cannot be presented as general approval of adjudication by an investigating officer or as permission to withhold material necessary for an effective defence.
A Writ Petition Cannot Replace an Appeal Without an Established Exception
The normal remedy against an adverse GST adjudication order is an appeal under Section 107 of the CGT Act, 2017. In Assistant Commissioner of State Tax v. Commercial Steel Limited, (2021) 130 taxmann.com 180 (SC); 2021 SCC OnLine SC 884, relied upon by the Department, the Supreme Court clarified that the availability of an appeal does not bar the High Court from exercising jurisdiction under Article 226. However, direct intervention ordinarily requires exceptional grounds, such as a breach of fundamental rights, denial of natural justice, action beyond the officer’s jurisdiction, or a challenge to the validity of the governing law. The High Court’s power to intervene and the taxpayer’s justification for seeking intervention are separate questions. Merely describing an order as “without jurisdiction” or alleging “violation of natural justice” is insufficient. The taxpayer must identify the particular defect and establish it from the record.
The Department also relied upon Powerline Air Express v. Principal Commissioner of Central Goods and Services Tax, [2026] 185 taxmann.com 255 (Delhi)-- 2026-VIL-278-DEL. The passages adopted in Shreeji Steel explain that complaints about service of notices, supply of documents, consideration of replies, and reasons given in an order may require detailed examination of the proceedings. The appellate authority can compare the notice, correspondence, service records, evidence, taxpayer’s reply, and final order to determine whether the complaint is justified. An objection does not fall outside the appeal process merely because it concerns procedural fairness. The Supreme Court, by its order dated 02.04.2026 in SLP (Civil) No. 11496 of 2026, declined to interfere with the Delhi High Court’s decision and disposed of the petition with clarification, expressly stating that it had not expressed any opinion on the merits of the matter. Accordingly, that order should not be presented as an endorsement of every legal conclusion in the Delhi High Court’s judgment.
This approach does not mean that a genuine denial of natural justice can never justify a writ petition. It requires distinguishing an established denial of an effective opportunity to defend from a disagreement about how the evidence was evaluated. For example, a taxpayer may argue that an inspection report does not prove fictitious trading, that delivery records were wrongly rejected, or that the reasons given do not support confiscation. These may be substantial grounds of appeal without necessarily proving that the officer lacked authority to decide the matter. In the present case of Shreeji Steel, the findings concerning fake dealers and invoices formed part of the disputed adjudication order. They must not be read as a general rule that cancellation of a supplier’s registration automatically proves that every purchase from that supplier was fictitious. The decision concerned the appropriate forum for challenging the order on the record before the Court, not an automatic test for declaring transactions false.
The Confiscation Order Could Still Be Challenged in Appeal
Dismissal of the writ petition did not end the petitioner’s right to challenge the confiscation order. The High Court left the petitioner to pursue an appeal under Section 107 of the CGST Act, 2017, where it could question the evidence, findings and legal basis of the order. The dismissal did not mean that every departmental finding was correct. It meant that the objections raised did not justify direct writ intervention instead of the statutory appeal.
Proper authorisation under Rule 138B, disclosure of relied-upon material and a fair opportunity to respond remained necessary safeguards. Their alleged breach was not established on the record, so the petitioner had to pursue its challenge through the appellate process. The judgment preserved that remedy but did not extend the appeal deadline or waive pre-deposit or any other mandatory filing requirement
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