E-Way Bill Absence Renders Goods Seizure Illegal, Rules High Court

Case Name:

M/s. Fosroc Chemicals (India) (P.) Ltd. Vs. Union of India

Writ Tax No. 636 of 2018

Key Takeaways:

- Seizure of goods in transit from outside the state falls under IGST and Central GST, not state GST.

- Absence of E-Way bill provisions under Central GST at the time of seizure makes the seizure illegal.

- State GST E-Way bill rules apply only to goods in transit within the state, not those from outside.

Issue:

Was the seizure of goods under Section 129(1) of the UP GST Act legal when the goods were in transit from outside the state and there was no provision for E-Way bills under Central GST at the relevant time?

Facts:

- The petitioner's goods were seized on 29.03.2018 under Section 129(1) of the UP GST Act.

- The goods were in transit from outside the state of Uttar Pradesh.

- At the time of seizure, there was no provision for E-Way bills under Central GST.

- UP GST had made E-Way bills mandatory through a notification dated 21.07.2017.

- Central GST introduced E-Way bill requirements effective from 1st February, 2018.

Arguments:

Petitioner's Arguments:

- The seized goods were in transit from outside the state, so the transaction should be covered by IGST and Central GST, not UP GST.

- UP GST provisions, rules, or notifications should not apply to this case.

State's Arguments (presented by Sri Tripathi):

- The seizure order was actually passed under Section 6 of IGST read with Section 129(1) of Central GST.

- Mere wrong mention of the provision on the seizure order doesn't invalidate it.

Key Legal Precedents:

The judgment doesn't mention any specific legal precedents. However, it refers to the following legal provisions:

- Section 129(1) of the UP GST Act, 2017

- Section 6 of the IGST Act

- Section 129(1) of the Central GST Act

- Section 20 of the IGST Act

- Rule 138 of the Central GST Rules

- Rule 138 of the UP GST Rules

Judgement:

The court ruled in favor of the petitioner, stating:

- Even if the seizure is treated under Section 129(1) of Central GST, there was no provision for E-Way bills under Central GST on the relevant date.

- Therefore, prima facie, the seizure appears to be illegal.

- The court ordered the release of the seized goods along with the vehicle, subject to the petitioner furnishing an indemnity bond and security for the proposed tax and penalty.

- The case was listed for admission/final disposal after the filing of a counter affidavit by the state.

FAQs:

Q1: Why was the seizure considered illegal?

A1: The seizure was considered illegal because there was no provision for E-Way bills under Central GST at the time of seizure for goods in transit from outside the state.

Q2: Does the UP GST E-Way bill requirement apply to goods from outside the state?

A2: No, the UP GST E-Way bill requirement only applies to goods in transit within the state of UP, not for goods brought from outside the state.

Q3: When did the Central GST E-Way bill requirement come into effect?

A3: The Central GST E-Way bill requirement came into effect from 1st February, 2018.

Q4: What did the court order regarding the seized goods?

A4: The court ordered the release of the seized goods along with the vehicle, subject to the petitioner furnishing an indemnity bond and security for the proposed tax and penalty.

Q5: Is this judgment final?

A5: No, the court listed the case for admission/final disposal after the filing of a counter affidavit by the state, indicating that further proceedings may follow.

Heard learned counsel for the petitioner and Sri C.B. Tripathi, Special

Counsel for the State of U.P.

The petitioner is aggrieved by the seizure of his goods vide impugned

order dated 29.03.2018 passed under Section 129(1) of the U.P. Goods and

Services Tax Act, 2017 (hereinafter referred to as the U.P.G.S.T.).

The submission is that as admittedly the seized goods were in transit from

outside the State the transaction would be covered by the Integrated Goods

and Services Tax Act, 2017 (I.G.S.T.) read with Central G.S.T. and that the

provisions of the U.P. G.S.T. or its Rules or the notifications issued therein would not apply.

Sri Tripathi, has submitted that actually the order of seizure has been

passed under Section 6 of the I.G.S.T. read with Section 129(1) of the

Central G.S.T. and therefore, mere wrong mention of the provision on the

order of seizure would not invalidate the same.

The provisions of U.P.G.S.T. are applicable to transactions within the State

of U.P. whereas I.G.S.T. covers the interstate transactions.

Section 20 of the I.G.S.T. makes applicable the provisions of Central

G.S.T. in respect to matters relating to inspection, search and seizure under the said Act.

Rule 138 of the Rules framed under the Central G.S.T. provides that till

such time E-Way bill system is developed and approved by the Council,

the Government by notification may specify the documents which are to

be carried with the consignment of goods. In exercise of the said power a

notification has been issued which provides for the carrying of E-Way bill

with the goods in transit but the same is applicable has been enforced

w.e.f. 1st February, 2018 and not before.

Simultaneously, U.P.G.S.T. also contains similar provisions and in exercise

of the power under Rule 138 of the Rules framed under the U.P.G.S.T. by

a notification dated 21.07.2017 has made E-Way bill mandatory but that

may apply only in respect of goods in transit within the State of U.P. and

not for goods brought from outside the State.

Therefore, even if the seizure is treated to be under Section 129(1) of the

Central G.S.T., as there was no provision of E-Way bill on the relevant

date under the Central G.S.T. prima facie the seizure appears to be illegal.

Sri Tripathi, may seek instructions and file counter affidavit within three

weeks.

List along with writ petition no. 87 of 2018 for admission/final disposal

after the filing of the counter affidavit.

In the meantime, the goods seized be released along with the vehicle

subject to the petitioner furnishing indemnity bond and security (other

than cash and bank guarantee) in respect of the proposed tax and penalty

on the value of the goods shown in the documents accompanying the

same.

Order Date :- 13.4.2018