Improper seizure of goods in intra-state supply quashed by High Court

Case Name:

Singh Tyres Vs. State of U.P. And Another

Writ Tax No. 552 of 2018

Key Takeaways:

- Intra-state supply of goods with proper documentation should not be subject to arbitrary seizure.

- Tax authorities must follow proper procedures and timelines when issuing seizure notices and orders.

- E-way bills can be generated even after goods are intercepted, but before the deadline for document submission.

- Courts can intervene to protect taxpayers from procedural irregularities and apparent malafide intentions of tax officers.

Issue:

Was the seizure and detention of goods during intra-state supply, when accompanied by requisite documents, legal and justified?

Facts:

- Singh Tyres, a registered proprietorship firm, deals in tyres and tubes.

- They purchased goods from Apollo Tyres Ltd., Kanpur (U.P.) for transportation from Allahabad to Mirzapur within Uttar Pradesh.

- On 27.03.2018 at 7:30 am, the Assistant Commissioner (Incharge), Commercial Tax, Mobile Squad, Unit-1, Mirzapur, U.P. intercepted the goods.

- A notice/detention memo under Section 129(1) of the CGST Act, 2017 was issued, citing the absence of an e-way bill.

- The petitioner was directed to appear on 28.03.2018 at 11:00 am with relevant documents.

- The petitioner downloaded the e-way bill on 27.03.2018 at 9:39 pm from the official department portal.

- Despite setting a date for document submission, the proper officer passed a seizure order on 27.03.2018 itself, without mentioning the time.

Arguments:

Petitioner's arguments:

- They were unaware of the e-way bill requirement for intra-state transportation in U.P.

- They downloaded and produced the e-way bill before the given deadline.

- The seizure order was passed before the date given for document submission, which is illegal.

Respondent's arguments:

The judgment doesn't explicitly state the respondent's arguments, but it can be inferred that they justified the seizure based on the initial absence of an e-way bill during transportation.

Key Legal Precedents:

The judgment doesn't mention any specific legal precedents. However, it refers to Sections 129(1) and 129(3) of the CGST Act, 2017, which deal with detention, seizure, and release of goods and conveyances in transit.

Judgement:

- The High Court allowed the writ petition and quashed the seizure order dated 27.03.2018 and the consequential notice issued under Section 129(3) of the CGST Act, 2017.

- The court found that the seizure order was passed ignoring the fact that time was given to the petitioner to appear and produce relevant documents.

- The court noted that no time was mentioned in the seizure order, unlike in the initial notice, indicating ill intention on the part of the proper officer.

- The court directed the respondent to release the goods and vehicle forthwith.

- The judgment was delivered on 2.4.2018.

FAQs:

Q1: Why did the court quash the seizure order?

A1: The court quashed the order because it was passed before the deadline given to the petitioner for document submission, and there were procedural irregularities indicating malafide intentions.

Q2: Is an e-way bill necessary for intra-state transportation of goods in Uttar Pradesh?

A2: Yes, the case indicates that an e-way bill is required for intra-state transportation in U.P.

Q3: Can an e-way bill be generated after goods are intercepted?

A3: Yes, in this case, the petitioner was allowed to generate and submit the e-way bill after interception, as long as it was before the given deadline.

Q4: What sections of the CGST Act were relevant in this case?

A4: Sections 129(1) and 129(3) of the CGST Act, 2017, which deal with detention, seizure, and release of goods and conveyances in transit, were relevant to this case.

Q5: What does this judgment mean for businesses transporting goods within a state?

A5: This judgment emphasizes the importance of proper documentation and highlights that tax authorities must follow due process when detaining or seizing goods, even if initial documentation is incomplete.

Heard Sri Amit Mahajan and Sri Niraj Kumar Singh, learned counsel for the petitioner and Sri C.B. Tripathi, learned Special counsel for the State respondents.

The petitioner is a registered proprietorship firm and is engaged in trading of various kind of tyres and tubes. The petitioner has purchased tyres and tubes from Apollo Tyres Ltd., Kanpur (U.P.).

The claim of the petitioner is that the petitioner, who is consignor, is a registered dealer under G.S.T. -Goods and Service Tax Act, 2017 (hereinafter referred to as the 'Act') and TIN number has been allotted by the assessing authority to the petitioner for the aforesaid business. The petitioner/consignor has received an order from a party, which is also registered, for supply of certain tyres and tubes. In pursuance of the purchase order received, the consignment was booked by the petitioner

for transportation from Allahabad to Mirzapur. It is claimed by the petitioner that requisite documents were accompanied during the course of movements of the goods, however, the Assistant Commissioner (Incharge), Commercial Tax, Mobile Squad, Unit-1, Mirzapur, U.P. has intercepted the goods on 27.03.2018 and has issued a notice/detention memo under Section 129(1) of the Act. In the said notice while mentioning the date respondent no. 2 has also mentioned time being 7-30 a.m.

The petitioner was directed to appear before the respondent no. 2 on 28.03.2018 at 11-00 a.m. in his office. According to the petitioner, he was not aware about the requirement of E-Way Bill for the purposes of transportation of goods from one place to another place within the State of U.P..

The claim of the petitioner is that he has down loaded the E-Way Bill on 27.03.2018 from the official department portal. The said E-Way Bill has been down loaded on 27.03.2018 at 9-39 p.m. The claim of the petitioner is that the said E-Way Bill has been duly produced by the petitioner before the respondent no. 2, however, respondent no. 2 has illegally proceeded to pass

impugned seizure order ignoring the relevant fact that he himself has directed the petitioner to appear and file his reply before him on 28.03.2018 at 11-00 a.m. whereas the impugned seizure order has been passed on 27.03.2018, hence the same is illegal and is liable to be quashed.

Having heard learned counsel for the parties and after going through the materials on record, we are of the opinion that the impugned seizure order cannot sustain in the eyes of law as the same has been passed ignoring the fact that the time and date has been given by the respondent no. 2 to the petitioner for appearance and for production of the relevant documents on 28.03.2018, whereas the order has been passed on a day before the date allowed by the respondent no. 2. We have also noticed that while passing the impugned order dated 27.03.2018 no time has been mentioned by the respondent no. 2 whereas while issuing notice/detention memo he has specifically mentioned the time. This clearly goes to show the ill intention on the part

of the respondent no. 2.

From perusal of the record, we find that the goods were transported from one place to another within the State of U.P. and were accompanied by the requisite documents and requisite E-Way Bill has also been produced by the petitioner before the respondent no. 2 before the date fixed for reply. In view of the aforesaid fact, we have no other option but to allow the present

writ petition and to quash the seizure order as well as consequential notice issued under Section 129(3) of the Act.

In view of above, the seizure order dated 27.03.2018 passed by the respondent no. 2 as well as consequential notice issued under Section 129(3) of the Act are quashed.

The respondent no. 2 is hereby directed to release the goods and the vehicle forthwith.

In the result, writ petition is allowed.

Order Date : 2.4.2018