2018 (4) TMI 807 - HC - GST

Seizure of goods and vehicle during inter-state supply without T.D.F. Form-1 ruled illegal under Rule 138

Satyendra Goods Transport Corp. Thru. Prop. Bhuwan Kohli & A Versus State of U.P. Thru. Prin. Secy. Tax & Registration & Others

The Allahabad HC ruled in favor of the petitioner regarding seizure of goods and vehicle during inter-state supply without T.D.F. Form-1. The court held ... Seizure of goods alongwith vehicle - inter-state supply - genuine and original T.D.F. Form not present - section 129(3) of the U.P. GST Act 2017 - Held that: - on the relevant date i.e. 17.12.2017 there was no requirement of carrying T.D.F. Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the C.G.S.T. Act 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the U.P.G.S.T. Act 2017, which was not applicable, is clearly illegal. Cross-empowerment under section 4 of I.G.S.T. Act 2017 and section 6 of C.G.S.T. Act 2017 merely means that State Authorities empowered under the U.P.G.S.T. Act 2017 can also enforce the provisions of C.G.S.T. Act 2017 or I.G.S.T. Act 2017, but it does not mean that they can apply the provisions of U.P.G.S.T. Act 2017 or Rules made thereunder to cases of inter-State trade in violation of section 20(xv) of I.G.S.T. Act 2017. Petition allowed - decided in favor of petitioner. Issues Involved:1. Availability of statutory remedy of appeal.2. Applicability of Rule 138 of U.P.G.S.T. Rules 2017 and the notification issued thereunder.3. Requirement of carrying T.D.F. Form for inter-state supply of goods.4. Jurisdiction and authority of State officials under U.P.G.S.T. Act 2017 in matters of inter-state trade.5. Legality of seizure and imposition of tax and penalty under section 129 of U.P.G.S.T. Act 2017.Issue-wise Detailed Analysis:1. Availability of statutory remedy of appeal:A preliminary objection was raised by the respondent's counsel regarding the availability of a statutory remedy of appeal before the Addl. Commissioner, Grade II (Appeal) under section 107 of the U.P.G.S.T. Act 2017. However, the petitioner's counsel argued that the very basis for the impugned action was inapplicable, making the preliminary objection untenable.2. Applicability of Rule 138 of U.P.G.S.T. Rules 2017 and the notification issued thereunder:The petitioner contended that the transaction was an inter-state supply of goods covered by the I.G.S.T. Act 2017, and as per section 20(xv) thereof, the provisions of the C.G.S.T. Act 2017 were applicable. The petitioner argued that there was no notification by the Central Government under Rule 138 of the C.G.S.T. Rules 2017 specifying the documents to be carried, making the rule inoperative on the relevant date. The respondent, however, relied on the notification issued under Rule 138 of the U.P.G.S.T. Act 2017, which prescribed the requirement of a T.D.F. Form for inter-state transportation of goods.3. Requirement of carrying T.D.F. Form for inter-state supply of goods:The court noted that on the date of the incident, there was no E-way Bill System in place, nor any notification by the Central Government under Rule 138 of the C.G.S.T. Rules 2017 requiring the carrying of a T.D.F. Form. The court held that the seizure and penalty based on the notification issued under Rule 138 of the U.P.G.S.T. Act 2017 were illegal, as the notification was not applicable to inter-state trade.4. Jurisdiction and authority of State officials under U.P.G.S.T. Act 2017 in matters of inter-state trade:The court clarified that cross-empowerment under section 4 of the I.G.S.T. Act 2017 and section 6 of the C.G.S.T. Act 2017 meant that State Authorities could enforce the provisions of the C.G.S.T. Act 2017 or I.G.S.T. Act 2017, but they could not apply the provisions of the U.P.G.S.T. Act 2017 to inter-state trade. The court emphasized that only the Central Government had the authority to issue notifications regarding documents to be carried in inter-state supply of goods.5. Legality of seizure and imposition of tax and penalty under section 129 of U.P.G.S.T. Act 2017:The court held that section 129 of the U.P.G.S.T. Act 2017 was not applicable to inter-state trade or commerce. The court invalidated the seizure and penalty on the grounds that there was no notification by the Central Government under Rule 138 of the C.G.S.T. Rules 2017, and the notification issued by the State Government under Rule 138 of the U.P.G.S.T. Rules was incorrectly applied. The court also referenced a judgment by the Kerala High Court, which supported the view that the State Government did not have the power to prescribe documents for inter-state trade.In conclusion, the court quashed the impugned actions and directions, rejected the preliminary objection, and ordered the release of the seized goods. The writ petition was allowed in the aforesaid terms.