Court Quashes Seizure Order: E-way Bill Downloaded Before Seizure Validates Transport

Case Name:

M/s. Bhumika Enterprises vs. State of U.P. and 3 Others

Writ Tax No. 564 of 2018

Key Takeaways:

- Downloading an E-way bill before a seizure order can validate the transport of goods.

- Authorities should give opportunities for being heard before passing seizure orders.

- Minor clerical errors in documentation may not justify seizure if other details are correct.

- Proper verification of available documents is crucial before seizing goods.

Issue:

Was the seizure order valid when the E-way bill had been downloaded before the seizure and no opportunity of being heard was given to the assessee

Facts:

- The petitioner, a registered dealer, sold Iron and Steel worth Rs. 6,00,000 to M/s Ram Naresh Ramakant in Fatehpur.

- The goods were being transported from Varanasi to Fatehpur on 26.3.2018.

- The vehicle was intercepted and detained for verification at 9 a.m. on 26.3.2018.

- The E-way bill was downloaded on 26.3.2018 at 11:50 a.m.

- The seizure order was passed on 27.3.2018 at 6 p.m.

- The authorities seized the goods, citing issues with the E-way bill and GSTIN number discrepancies.

Arguments:

Petitioner's Arguments:

- No opportunity of being heard was given before the seizure order.

- The E-way bill was downloaded before the seizure order due to technical issues with the state website.

- The GSTIN number discrepancy was a clerical error, corrected in the E-way bill.

- There was no intention to evade tax, as it was clearly mentioned in the invoice.

State's Arguments:

There was no reason to mention a different dealer's GSTIN in the invoice.

At the time of inspection, no E-way bill was available with the driver.

Key Legal Precedents:

The judgment doesn't explicitly mention any specific legal precedents. However, it refers to Sections 129(1) and 129(3) of the U.P. G.S.T. Act, 2017, which deal with seizure, detention, and show cause notices.

Judgement:

The court allowed the writ petition, quashing both the seizure order dated 27.3.2018 and the show cause notice issued under Section 129(3) of the Act. The court directed the immediate release of the goods to the petitioner, allowing delivery to the consignee. The court's reasoning included:

- The E-way bill was downloaded before the seizure order.

- The tax invoice clearly indicated the charged tax.

- There was no justification for the seizure order given the available documentation.

FAQs:

Q1: Why did the court quash the seizure order?

A1: The court quashed the order because the E-way bill was downloaded before the seizure, and the tax invoice clearly showed the charged tax.

Q2: What was the significance of the E-way bill download timing?

A2: The E-way bill was downloaded on 26.3.2018 at 11:50 a.m., which was before the seizure order passed on 27.3.2018 at 6 p.m., validating the transport.

Q3: Did the GSTIN number discrepancy justify the seizure?

A3: No, the court viewed it as a clerical error that had been corrected in the E-way bill.

Q4: What does this judgment mean for transporters?

A4: It emphasizes the importance of having proper documentation, especially E-way bills, when transporting goods.

Q5: What lesson can tax authorities learn from this case?

A5: Authorities should thoroughly verify all available documents and provide an opportunity for explanation before seizing goods.

Heard Sri Nitin Kesarwani and Sri M.M. Rai, learned counsels for the petitioner, Sri Vinay Kumar Pandey, learned counsel for respondent no.2 and Sri C.B. Tripathi, learned special counsel for the State.

By means of the present writ petition the petitioner has

challenged the seizure order dated 27.3.2018 passed under

Section 129(1) of the U.P. G.S.T. Act, 2017 as well as the show

cause notice issued under Section 129(3) of the said Act dated

27.3.2018 respectively.

The brief facts of the case are that the petitioner is a registered

dealer and has been allotted TIN by the Assessing Authority for

carrying on the business for purchase and sale of Iron and Steel.

The petitioner has affected the sale of Iron and Steel weighing

20 M.Ton for a sum of Rs.6,00,000/- to one M/s Ram Naresh

Ramakant, Bindiki, Fatehpur. The purchaser situated at Bindiki,

Fatehpur is also a registered dealer to whom the petitioner has

raised tax invoice No.60 dated 25.3.2018. The invoice aforesaid

indicates that the goods worth of Rs.6,00,000/- are sold on

which the petitioner has charged the Central G.S.T. @ 9% to

the tune of Rs.54,000/- as also the State G.S.T. @ 9% to the

tune of Rs.54,000/- and the grand total therefore has been

charged to the tune of Rs.7,08,000/-. The said goods were being

transported from Varanasi to Bindiki, Fatehpur and on bypass

road Nawabganj at Allahabad respondent no.4 has intercepted

the vehicle on 26.3.2018 at 9 a.m. and has detained the vehicle

for verification of the goods and documents accompanying the

goods.

The contention of the learned counsel for the petitioner is that

no opportunity of being heard has been afforded to the

petitioner before passing the seizure order dated 27.3.2018

under Section 129(1) of the Act by which the respondent

no.4/seizing authority has seized the goods on the ground that

the tax invoice was kept in a sealed envelope, the goods was

being transported without E-way bill-02, the GSTIN number

written on the tax invoice belongs to another dealer situates at

Allahabad and not the consignee situated at Bindiki, Fatehpur

as also the mobile number.

The submission of the learned counsel for the petitioner is that

while issuing the show cause notice dated 27.3.2018 the Mobile

Squad Authority had indicated for submission of the defence

reply before him on 2.4.2018 and to explain as to why tax being

not realized as also the penalty be imposed. The contention of

the learned counsel for the petitioner is that that due to technical

fault of the State Web-site E-way bill-02 could not be generated

on 25.3.2018 before the movement of the goods from Varanasi

to Fatehpur, however, the same was generated on 26.3.2018 in

the morning which was much before the date of seizure order

which has been admittedly passed on 27.3.2018 at 6 p.m. The

counsel for the petitioner has also submitted that since both the

consignor and consignee are registered with the respective

Assessing Authority and are allotted requisite GSTIN number

therefore there was no reason to disbelieve the contention of the

petitioner. So far as the ground no.3 related to mentioning of the

GSTIN number of dealer of Allahabad instead of Fatehpur, the

counsel for the petitioner has submitted that the said mistake

was a bona fide mistake as such in fact a clerical error and the

same was rectified while downloading E-way bill-02 in which

the correct registration number of consignor M/s Ram Naresh

Ramakant, Bindki, Fatehpur was mentioned. He has further

submitted that there was no occasion to evade the payment of

tax as the tax amounting to the tune of Rs.1,08,000/- as

C.G.S.T. and S.G.S.T. was charged by the petitioner himself

and the same was duly mentioned in the tax invoice separately.

On the other hand, learned counsel for the State has submitted

that there was no occasion to mention the G.S.Tin number of

different dealer in the invoice, though he has accepted that the

same has been correctly mentioned in the E-way bill. The

learned counsel for the State has further submitted that

admittedly at the time of inspection/detention of the vehicle

there was no E-way bill available with the driver of the vehicle.

We have heard learned counsel for the parties and perused the

record.

From perusal of the record we have noticed that the vehicle has

been detained and the goods/vehicle was seized by the

respondent no.4 on 27.3.2018 whereas the time has been

granted for submission of reply and appearance of the person

concerned before the respondent no.4 on the later date. There is

no dispute with regard to quality and quantity of the goods and

further that the invoice issued clearly indicates of charge of

C.G.S.T. and S.G.S.T by the petitioner. We further noticed that

there is no dispute with regard to registration of the seller (the

petitioner) and the purchaser as also that the goods were being

transported from Varanasi to Fatehpur which are detained in

between the aforesaid two places. From perusal of the record

we noticed that the E-way bill-02 has been downloaded/issued

in favour of the petitioner on 26.3.2018 at 11.50 a.m. and

admittedly seizure order has been passed on 27.3.2018 at 6 p.m.

before which the E-way bill-02 has been produced by the

petitioner. The submission of the learned counsel for the State is

that the transaction has been made with one unknown person

therefore there were some lacuna noticed by the seizing

authority. We find no substance in the submission of the learned

counsel for the State. The tax invoice was raised in favour of

the consignee namely M/s Ram Narsh Ramakant, Bindki,

Fatehpur and the same was available with the seizing authority

and we see no reason as to why the seizing authority has not

made any effort to make inquiry from the said dealer/consignee

whose TIN number was mentioned in the tax invoice. We see

that the seizing authority though has mentioned the GSTIN

number of some dealer situates at Allahabad but no details of

the said dealer has been given in the impugned seizure order

nor the details of the mobile number holder.

Since the tax invoice indicating the tax charged and the same

admittedly found during the course of inspection/detention and

E-way bill-02 has been downloaded much before the seizure

order, we see no justification in the impugned seizure order and

therefore, we have no option but to allow the present writ

petition and to set aside the seizure order dated 27.3.2018 as

well as the show cause notice issued under Section 129(3) of

the Act for imposition of penalty.

In view of the aforesaid facts, the present writ petition is

allowed. The seizure order dated 27.3.2018 (Annexure-2 to the

writ petition) is quashed as well as the show cause notice dated

27.3.2018 issued under Section 129(3) of the Act is also

quashed. The respondent no.4 is hereby directed to release the

goods immediately in favour of the petitioner permitting the

petitioner to deliver the same to the consignee.

Order Date :- 3.4.2018

S.S.

(Ashok Kumar, J.) (Krishna Murari, J.)