The Madras High Court has provided significant relief to a dealer in second-hand electronics whose goods worth ₹58.28 lakhs were ordered confiscated — with a redemption fine of ₹46.84 lakhs and additional penalties exceeding ₹22 lakhs — for the sole reason that they were stored at a godown that was not registered as an additional place of business. Justice C. Saravanan, in M/s Shri Mahalakshmi Metal Mart (WP No. 26417/2022, decided 11.03.2026), held that where stock purchased under proper invoices is intact and not liquidated, confiscation under Section 130 is unjustified and a general penalty under Section 125 is the appropriate remedy for a registration compliance failure.
The petitioner had purchased damaged electronic goods at auction in Kerala and stored them at a godown in Bargur, Krishnagiri. The premises was not registered as an additional place of business. Inspection revealed 18,319 units valued at ₹27.50 lakhs (inflated to ₹58.28 lakhs by the department). The original authority ordered confiscation, imposed a redemption fine of ₹46.84 lakhs, confirmed a tax demand of ₹11.43 lakhs, and imposed twin penalties of ₹1.14 lakhs under Section 73(9) and ₹11.43 lakhs under Section 122. The appellate authority affirmed the order in its entirety. The High Court quashed the confiscation and redemption fine, directed a general penalty of ₹25,000 under each GST enactment (₹50,000 total), and ordered redetermination of tax on goods actually sold. This ruling will provide comfort to businesses that face disproportionate confiscation proceedings for procedural defaults.
2026-juristway.com-1169-HC(Madras)-GST | High Court of Madras | WP No. 26417 of 2022 | 11.03.2026