Inter-State GST movement requires Central Rule 138 compliance; State notification cannot impose T.D.F. Form-1 absent Central prescription.

Inter-State movement of goods fell within the IGST framework, so document requirements were governed by Section 20 of the IGST Act read with Section 68 of the CGST Act and Rule 138 of the CGST Rules. In the absence of a Central Government notification prescribing T.D.F. Form-1 or an equivalent document, a State notification could not validly impose that carriage requirement on an inter-State consignment. On that basis, the note states that detention, seizure, and the consequential tax and penalty action lacked legal foundation, particularly where the invoice and accompanying documents showed an inter-State transaction and no material indicated tax evasion.

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Issues: (i) Whether, in the absence of a Central Government notification under Rule 138 of the Central Goods and Services Tax Rules, 2017, the goods in inter-State movement could validly be required to carry T.D.F. Form-1 under a State notification; (ii) Whether seizure of the goods and the consequential tax and penalty orders under the State Act were sustainable in law.

Issue (i): Whether, in the absence of a Central Government notification under Rule 138 of the Central Goods and Services Tax Rules, 2017, the goods in inter-State movement could validly be required to carry T.D.F. Form-1 under a State notification.

Analysis: The goods were in inter-State movement and therefore fell within the Integrated Goods and Services Tax regime. In such cases, the inspection and movement requirements are governed by Section 20(xv) of the Integrated Goods and Services Tax Act, 2017, read with Section 68 of the Central Goods and Services Tax Act, 2017 and Rule 138 of the Central Goods and Services Tax Rules, 2017. The power to prescribe the documents to accompany such movement vested in the Central Government. On the relevant date, no Central notification had been brought into force prescribing a T.D.F. Form or any equivalent document for inter-State movement. A State notification under the Uttar Pradesh Rules could not govern inter-State trade.

Conclusion: The requirement to carry T.D.F. Form-1 was not applicable to the inter-State consignment, and the State notification could not sustain the detention.

Issue (ii): Whether seizure of the goods and the consequential tax and penalty orders under the State Act were sustainable in law.

Analysis: The invoice disclosed an inter-State transaction and the record did not show any contrary material. Integrated GST had already been paid, and the documents accompanying the consignment identified the origin and destination of the goods. In the absence of a valid statutory requirement to carry the T.D.F. Form under the Central regime, the foundation for invoking seizure and penalty failed. Mere cross-empowerment of State authorities did not authorize application of an inapplicable State rule to inter-State movement. The Court also found no material indicating intent to evade tax.

Conclusion: The seizure and the tax and penalty orders were illegal and liable to be quashed.

Final Conclusion: The writ petition succeeded, the impugned actions were set aside, and the seized goods were directed to be released forthwith.

Ratio Decidendi: For inter-State movement of goods, document requirements under Rule 138 are governed by the Central GST framework, and a State notification cannot be used to impose a carriage requirement in the absence of a valid Central prescription.

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