In a case with far-reaching implications for deregistered dealers, the Kerala High Court upheld the confiscation of goods transported without proper documents, even though the taxpayer’s GST registration had been cancelled prior to the transaction. Sarath B.S., who formerly dealt in paints and hardware, sold unsold and near-expiry stock to another registered dealer after cancellation. The goods were transported without e-way bills or invoices and were detained by enforcement officers.

The petitioner argued that since he was no longer registered under GST, the compliance obligations did not apply. However, the Court rejected this contention, noting that a sale was still effected for consideration, thereby falling within the scope of supply under Section 7 of the CGST Act. The transaction thus attracted compliance under the law, irrespective of registration status.

Justice Gopinath P. observed that permitting deregistered dealers to avoid documentation would defeat the object of GST enforcement and create a legal vacuum for post-deregistration supplies. The Court further pointed out inconsistencies in the petitioner’s explanations, weakening his defense.

The decision underscores that GST compliance obligations—especially those linked to documentation and transport—extend beyond registration status and apply to any taxable transaction. The ruling is significant in curbing unregulated trade practices under the guise of deregistration and upholding the integrity of movement control under GST.

Case: Sarath B.S. v. State of Kerala, decided on 29.10.2024 by Kerala High Court