E-way bill not mandatory for inter-state transactions before April 1, 2018: High Court

Case Name:

M/s. Modern Traders vs. State of U.P. and 2 Others

Writ Tax No. 576 of 2018

Key Takeaways:

- E-way bills were not mandatory for inter-state transactions before April 1, 2018.

- Mere non-production of an e-way bill doesn't warrant seizure of goods when it wasn't mandated by the Central Government.

- The court distinguished between the applicability of UPGST (for intra-state transactions) and IGST (for inter-state transactions).

- The court emphasized the importance of correctly applying the relevant laws based on the nature of the transaction.

Issue:

Was the seizure of goods and vehicle for non-production of an e-way bill legal for an inter-state transaction that occurred before April 1, 2018?

Facts:

- M/S. Modern Traders, a proprietorship firm, is engaged in trading iron and steel products and is registered under the UPGST Act, 2017.

- On March 24, 2018, the firm sold 10.110 MT of Iron Scrap valued at Rs. 1,67,017/- to M/s R.K. Enterprises in Delhi, charging 18% IGST.

- The goods were being transported from Bulandshahr to Delhi without an e-way bill.

- The vehicle was intercepted and detained by the Assistant Commissioner, Mobile Squad, IVth Unit, Ghaziabad on March 24, 2018, at 5:45 PM.

- The goods and vehicle were seized on March 28, 2018, solely on the ground of not having an e-way bill.

Arguments:

Petitioner's Arguments:

- There was no requirement to carry an e-way bill during inter-state movement of goods at that time.

- The e-way bill was downloaded and produced within 15 minutes of the vehicle's detention.

- The seizure was illegal and an abuse of power.

Respondent's Arguments:

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

- The 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 several relevant laws and rules:

- Section 129(1) and 129(3) of the Central Goods and Services Tax Act, 2017 .

- Section 6 of the Integrated Goods and Services Tax Act (IGST).

- Section 20 of the IGST.

- Rule 138 of the Rules framed under the Central GST.

- Rule 138 of the Rules framed under the UPGST.

Judgement:

- The court set aside the order of seizure passed under Section 129(1) of the Act and the notice issued under Section 129(3) of the Act.

- The court noted that the requirement of an e-way bill for inter-state transactions became mandatory only from April 1, 2018, whereas this case pertained to a transaction before that date.

- The court directed the Seizing Authority to release the goods and vehicle immediately.

FAQs:

Q1: When did e-way bills become mandatory for inter-state transactions?

A1: According to the judgment, e-way bills became mandatory for inter-state transactions from April 1, 2018.

Q2: What was the main reason for the court's decision in this case?

A2: The main reason was that the transaction occurred before e-way bills were made mandatory for inter-state movements, making the seizure illegal.

Q3: What's the difference between UPGST and IGST?

A3: UPGST (Uttar Pradesh Goods and Services Tax) applies to transactions within the state of U.P., while IGST (Integrated Goods and Services Tax) covers inter-state transactions.

Q4: Can goods be seized solely for not having an e-way bill?

A4: Based on this judgment, goods cannot be seized solely for not having an e-way bill if the e-way bill was not mandatory at the time of the transaction.

Q5: What did the court order in this case?

A5: The court ordered the immediate release of the seized goods and vehicle, and set aside the seizure order and notice issued by the authorities.

Heard Sri Nishant Mishra assisted by Sri Vipin Kumar Kushwaha, learned

counsel for the petitioner and Sri C.B. Tripathi, learned Standing Counsel

representing the State- respondents.

The petitioner being a proprietorship firm is engaged in trading of iron and

steel as well as their products and is registered under the provisions of the UPGST Act, 2017 (hereinafter referred to as 'the Act'). The Assessing

Authority has allotted GSTIN no. to the petitioner. The petitioner has sold

10.110 MT of Iron Scrap vide Invoice dated 24.03.2018 for the value of

Rs.1,67,017/- to M/s R.K. Enterprises of Delhi in which the petitioner has

charged IGST (Integrated Goods and Services Tax) @ 18%. The petitioner's unit is situated at Sikandrabad Road, District Bulandshahr from where goods were transported to be delivered to the consignee situated at Delhi. Admittedly, there was no e-way bill during the movement of goods from Bulandshahr to Delhi and while vehicle was crossing Ghaziabad, the same was intercepted/detained by the Assistant Commissioner, Mobile Squad, IVth Unit, Ghaziabad on 24.03.2018 at 5.45 P.M. The objection of the respondent no.3, Assistant Commissioner, Mobile Squad was that since there was no e-way bill-02, which has been prescribed under UPGST Rules, hence the goods are liable to be seized.

The contention of learned counsel for the petitioner is that there is no

requirement to carry the e-way bill during the Inter-state movement of the

goods, therefore, the same has not been handed over to the transporter at

the time of delivery of the goods. It is further contended that the entire

seizure proceedings are not only illegal but clearly is abuse of process of

law as well as misuse of power. Counsel for the petitioner has submitted

that since the respondent no.3 was insisting for seizure on the ground of

non-production of e-way bill, the petitioner has downloaded the e-way

bill-02 on 24.3.2018 itself just after 15 minutes from the time of detention

of the vehicle and has produced the same before the respondent no.3.

The contention of counsel for the petitioner is that without considering the

e-way bill-02 which has been furnished immediately within 20 minutes

from the time of the detention of the vehicle/goods, the respondent no.3

has illegally passed the seizure order after a gap of four days i.e. on

28.3.2018 by which he has seized the goods as well as vehicle in question.

The seizure order indicates that the goods/vehicle has been solely seized

on the ground that goods were being transported without e-way bill-02

which has been prescribed under the UPGST Rules, as such, it is a clear

cut violation of provisions of UPGST Act/Rules framed thereunder.

Immediately after the seizure order passed under Section 129(1) of the

Act, the respondent no.3 has issued the show cause notice under Section

129(3) of the Act dated 28.03.2018. The Seizing Authority directed the

petitioner to appear on 04.04.2018 and explain as to why the tax @ 18%

and equivalent amount of penalty may not be demanded.

The submission of counsel for the petitioner is that as admittedly the

seized goods were in transit for outside the State the transaction would be

covered by the Integrated Goods and Services Tax Act, 2017 (IGST) read

with Central GST and that the provisions of the UPGST 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 IGST read with Section 129(1) of the Central GST and therefore, mere wrong mention of the provision on the order of seizure would not invalidate the same.

The provisions of UPGST are applicable to transactions within the State of

U.P. whereas IGST covers the interstate transactions.

Section 20 of the IGST makes applicable the provisions of Central GST in

respect to matters relating to inspection, search and seizure under the said

Act.

Rule 138 of the Rules framed under the Central GST 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, UPGST also contains similar provisions and in exercise of

the power under Rule 138 of the Rules framed under the UPGST 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 GST, as there was no provision of e-way bill on the relevant date

under the Central GST, therefore, the seizure appears to be illegal.

We have heard counsel for the parties and perused the record.

We have noticed that both the parties namely consignee and consignor are

registered dealers and goods are being transported from Bulandshahr to

Delhi during transhipment the same are detained and seized.

The sole ground of seizure of goods is non-production of e-way bill

whereas there is no dispute with regard to issuance of invoice and charge

of tax by the petitioner.

In view of aforesaid peculiar facts and since the petitioner is registered

dealer, we have seen no error at the hands of the petitioner, and therefore,

the order of seizure passed under Section 129(1) of the Act as well as the

notice issued under Section 129(3) of the Act are hereby set aside. We are

informed and it is not in dispute that the condition of accompanying the e-

way bill with respect of Inter-state Transaction is mandatory with effect

from 01.04.2018, whereas in the present case the transaction is much

before the aforesaid date. In view of the aforesaid facts, we direct the

respondent no.3, the Seizing Authority, to release the goods and vehicle

forthwith.

With the aforesaid observation, the writ petition stands disposed of.

Order Date :- 3.4.2018

A.Kr.

[Ashok Kumar, J.] [Krishna Murari, J.]