E-way bill not yet operative: seizure of inter-State goods found unsustainable, with interim release ordered on security.

Inter-State transit of goods under the IGST and CGST framework was treated as governed by the IGST Act read with CGST procedures, while State GST applied to intra-State supplies. Because the E-way bill requirement under Rule 138 of the CGST Rules had not yet come into force on the relevant date, the seizure of the goods and vehicle was found prima facie unsustainable. Given that the goods were perishable, interim release was ordered on furnishing an indemnity bond and security other than cash or bank guarantee for the proposed tax and penalty, with the merits left open.

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Issues: Whether the seizure of goods in inter-State transit could be sustained when the E-way bill requirement under the Central Goods and Services Tax regime had not yet come into force, and whether the seized goods and vehicle should be released pending adjudication.

Analysis: The goods were in transit from outside the State, making the transaction prima facie governed by the Integrated Goods and Services Tax Act, 2017 read with the Central Goods and Services Tax law. The provisions of the State Goods and Services Tax law were treated as applicable to intra-State transactions, while the Integrated Goods and Services Tax law governed inter-State transactions. Section 20 of the Integrated Goods and Services Tax Act, 2017 was noted to extend the Central Goods and Services Tax mechanism to matters relating to inspection, search and seizure. The Court also noted that the E-way bill system under Rule 138 of the Central Goods and Services Tax Rules, 2017 had been enforced only from 1 February 2018, whereas the seizure related to an earlier date. In these circumstances, the seizure appeared prima facie illegal. As the goods were perishable, interim release was considered appropriate.

Conclusion: The goods and vehicle were directed to be released on furnishing an indemnity bond and security other than cash or bank guarantee for the proposed tax and penalty.

Final Conclusion: Interim protection was granted to the petitioner by ordering release of the seized goods and vehicle, while keeping the merits open for further proceedings.

Ratio Decidendi: Where the applicable E-way bill requirement had not yet become operative for the relevant inter-State movement of goods, seizure under the GST regime could not be sustained prima facie and interim release could be ordered on adequate security.

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