Court orders release of seized goods on furnishing security after inordinate delay by tax authorities in issuing notice.

Case Name:

M/s. A.M. Enterprises Vs. State Of U.P.

Writ Tax No.1451 of 2018

Key Takeaways:

- Tax authorities must issue notice and pass orders for release of seized goods promptly as per the GST Act.

- Inordinate delays by tax officers in following due process can lead to judicial intervention for release of seized goods.

- Courts can direct release of seized goods on furnishing of security by the assessee as an interim measure.

Issue:

Whether the tax authorities should release the seized goods and vehicle of the petitioner after an inordinate delay in issuing the mandatory notice under Section 129(3) of the UP GST Act.

Facts:

On 3rd November 2018, the petitioner’s goods in transit were detained at Sardhana, Meerut as they were not accompanied by an e-way bill. As per Section 129(1) of the UP GST Act, the goods were to be released after detention subject to conditions specified. However, the mandatory notice under Section 129(3) for release of goods was not issued for over 12 days. The petitioner then approached the court on 15th November 2018.

Arguments:

Petitioner’s argument:

The site for generating e-way bill was not operative, so the bill could not be generated. However, it was downloaded the next day and produced before authorities.

Tax authorities’ argument:

Not explicitly mentioned in the judgment.

Key Legal Precedents:

The judgment does not cite any specific previous cases as legal precedents. It relies on the provisions of Section 129 of the UP Goods and Services Tax Act, 2017.

Judgement:

- The court noted the inordinate delay by the tax officer in issuing the notice under Section 129(3) for release of detained goods. It directed the respondents (tax authorities) to:

- File a personal affidavit explaining why the notice under Section 129(3) could not be issued immediately after detaining the goods on 3rd November 2018.

- In the meantime, release the petitioner’s goods and vehicle after the petitioner furnishes security other than cash/bank guarantee equivalent to the proposed tax, penalty, and an indemnity bond of the same amount as per Section 129(1)(a).

- The matter was listed for further hearing on 5th December 2018.

FAQs:

Q1: What is an e-way bill, and why is it required?

A1: An e-way bill is a document required for the movement of goods worth above a certain value under the GST regime. It helps track the movement of goods and prevents tax evasion.

Q2: Why did the court intervene in this case?

A2: The court intervened the tax authorities failed to follow the due process laid down in the GST Act by not issuing the mandatory notice for release of seized goods within a reasonable time.

Q3: What legal provision did the court rely on?

A3: The court relied on Section 129 of the UP Goods and Services Tax Act, 2017, which deals with the detention, seizure, and release of goods and conveyances in transit.

Q4: What was the interim order passed by the court?

A4: The court ordered the interim release of the petitioner’s seized goods and vehicle after furnishing the required security, equivalent to the proposed tax, penalty, and an indemnity bond.

Q5: What was the significance of this case?

A5: This case highlighted the importance of tax authorities following the due process prescribed in the law. It also demonstrated that courts can intervene and pass interim orders to protect the interests of assessees in case of undue delays by tax officers.

The goods of the petitioner in transit were intercepted and detained on 3.11.2018 at about 9:22 p.m., at Sardhana Meerut as the goods were not accompanied by the e-way bill.

Section 129 (1) of the U.P. Goods and Service Tax Act, 2017 (in short of the Act) provides that the goods so detained or seized shall be released after detention or seizure subject to the conditions specified.

The aforesaid provision contemplates for immediate release of the detained/seized goods on furnishing security and indemnity bond as may be provided under the order passed under Section 129 (3) of the Act. The

order under Section 129 (3) of the Act was not passed for more than 12 days and thus the goods and the vehicle was unnecessarily kept detained and seized by the respondent without any just and proper cause. The notice under Section 129 (3) of the Act has been issued only after the petitioner has approached this Court and has filed this petition on 15.11.2018.

In view of the above, apparently there is inordinate delay on part of the officer in issuing notice under Section 129 (3) of the Act and in not passing an order under Section 129 (1) of the Act.

In these circumstances, we call upon the respondents to file personal affidavit of Arun Kumar Singh, V Assistant Commissioner (Mobile Squad-3) Meerut to show cause why notice under Section 129 (3) of the Act or the order of release of the goods could not be passed immediately after the goods were detained or seized on 3.11.2018.

The affidavit may be filed within two weeks.

In the meantime as the petitioner who is the registered dealer/owner of the goods, we direct the respondents to release the goods and vehicle on the petitioner's furnishing security other than cash and bank guarantee of the amount equivalent to the proposed tax and penalty and indemnity bond of the same amount in accordance with Section 129 (1) (a) of the Act.

List on 5th December 2018.

Order Date :- 16.11.2018