Transit declaration breach alone cannot sustain seizure and penalty when no tax evasion is alleged and goods are in transit.

Absence of a transit declaration form and an alleged misdescription of goods did not justify seizure and penalty where the consignment was moving through Uttar Pradesh to another State and there was no allegation of unloading or local sale. The Court held that no intention to evade tax had been recorded at the detention or notice stage, and the later assertion of tax evasion in the penalty order was an afterthought. Treating the missing declaration as a technical breach on the facts, the HC found the seizure and penalty orders unsustainable, quashed them, and directed release of the goods and vehicle.

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Issues: Whether penalty and seizure under Section 129 of the U.P. Goods and Services Tax Act, 2017 were sustainable where the goods were in transit through the State, the transit declaration form was absent, and the goods were alleged to be mis-described, but no allegation of tax evasion had been put to the petitioner at the detention or notice stage.

Analysis: The detention order and the penalty notice proceeded only on the absence of the transit declaration form and the alleged discrepancy in description of the goods. No intention to evade tax was recorded at the stage of seizure, and no such case was put to notice in the show-cause proceedings. The later assertion in the penalty order that the petitioner intended to evade tax was treated as an afterthought because the goods were found to have originated outside the State and were being carried to another State through U.P. The Court also treated the non-production of the transit declaration form as a technical breach in the peculiar facts, and held that the alleged misdescription did not justify seizure and penalty when the consignment was otherwise shown to be moving through the State and there was no allegation of unloading or local sale.

Conclusion: The seizure and penalty orders were unsustainable and were quashed; the writ petition was allowed and release of the goods and vehicle was directed.

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