Court overturns seizure and penalty orders, citing lack of opportunity for petitioner.

The Court set aside the seizure and penalty orders due to the lack of opportunity for the petitioner to explain the tax value discrepancies, ruling that the principles of natural justice were violated. The matter was remitted to respondent no. 4, instructing the petitioner to treat the seizure order as a show cause notice and respond within one week. A fresh order was to be issued based on the reply within the subsequent week, with the vehicle to be released without security. The importance of allowing individuals to be heard before adverse actions based on tax evasion allegations was emphasized.

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Issues:
Challenge to order under Section 129(1) U.P. GST Act and penalty order under Section 129(3) of the Act based on discrepancy in tax values in Tax Invoices.

Analysis:
The petitioner, involved in transporting 'Panmasala' from Delhi to Jharkhand through Uttar Pradesh, faced detention of goods on 27.10.2017 due to the absence of a Transit Declaration Form (TDF). The seizing authority, while passing the seizure order on 28.10.2017, noted a significant discrepancy in the IGST and compensation cess values between the Tax Invoice accompanying the goods and the copy filed by the petitioner. This led to an inference of an intention to evade tax against the petitioner, resulting in a penalty order on 31.10.2017.

The petitioner contended that the detention and seizure were solely due to the absence of the TDF form, with no other grounds disclosed initially. However, the respondent argued that the seizure was justified as the tax evasion intention was evident from the contradictory tax values in the two Tax Invoices. The Court observed that the petitioner was not given an opportunity to explain the discrepancy before the seizure order was passed, violating the principles of natural justice.

Consequently, the Court set aside the orders dated 28.10.2017 and 31.10.2017, remitting the matter to respondent no. 4. The petitioner was directed to treat the seizure order as a show cause notice and provide a reply within one week. Respondent no. 4 was instructed to pass a fresh order based on the reply within a week thereafter. Notably, the vehicle involved was to be released without any security since there were no allegations against it.

In conclusion, the writ petition challenging the orders under Sections 129(1) and 129(3) of the U.P. GST Act was disposed of, emphasizing the importance of providing an opportunity to be heard before adverse actions are taken based on allegations of tax evasion.

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