PETROLIV PETROLEUMS (ANGELS GROUP) v. STATE OF KERALA & ORS.

Introduction

This judgment of the Kerala High Court examines the scope of judicial intervention where a penalty imposed under Section 130 of the CGST Act has already been recovered, but the recovery results from a contractual adjustment made by a third party. The Court distinguished between a statutory tax recovery and a contractual dispute arising out of deduction of amounts payable under a commercial contract.

The Court held that once a penalty has been determined under Section 130 through statutory proceedings, the tax authorities are entitled to retain the recovered amount until the confiscation order is set aside in appeal. Any grievance regarding the deduction of the amount by the contracting authority is essentially a contractual dispute and cannot be adjudicated in a writ petition under Article 226 of the Constitution.