2018 (4) TMI 886 - HC - GST

Court orders release of seized goods, questions legality of seizure under Central G.S.T.

The court ruled in favor of the petitioner, directing the release of the seized goods upon the petitioner providing an indemnity bond and security for the ... Seizure order - wrong mention of the provision - case of petitioner is that the seized goods were in transit from outside the State the transaction would be covered by the IGST Act, 2017 read with CGST Acy and that the provisions of the UPGST Act or its Rules or the notifications issued therein would not apply - Held that: - Even if the seizure is treated to be under Section 129(1) of the Central G.S.T., as there was no provision of E-Way bill on the relevant date under the Central G.S.T. prima facie the seizure appears to be illegal - the goods seized be released along with the vehicle subject to the petitioner furnishing indemnity bond and security - petition disposed off. Issues:1. Seizure of goods under the U.P. Goods and Services Tax Act, 2017.2. Applicability of Integrated Goods and Services Tax Act, 2017 to interstate transactions.3. Legal validity of the seizure order under Section 129(1) of the Central G.S.T.4. Requirement of E-Way bill for goods in transit within and outside the State of U.P.Analysis:1. The petitioner challenges the seizure of goods under the U.P. Goods and Services Tax Act, 2017. The petitioner argues that since the goods were in transit from outside the State, the transaction falls under the Integrated Goods and Services Tax Act, 2017 (I.G.S.T.) and not the U.P. G.S.T. The respondent contends that the order of seizure was passed under Section 6 of the I.G.S.T. read with Section 129(1) of the Central G.S.T., emphasizing the applicability of Central G.S.T. provisions in such cases.2. The court notes that the U.P.G.S.T. applies to transactions within the State of U.P., while the I.G.S.T. governs interstate transactions. Section 20 of the I.G.S.T. mandates the application of Central G.S.T. provisions concerning inspection, search, and seizure. The argument regarding the incorrect mention of the provision on the seizure order is raised, asserting that the seizure is valid under the Central G.S.T.3. The judgment highlights the significance of E-Way bills for goods in transit. Rule 138 under Central G.S.T. specifies the necessity of E-Way bills until the E-Way bill system is fully operational. A notification enforcing E-Way bill requirements from a certain date is mentioned. Similarly, the U.P.G.S.T. also mandates E-Way bills for goods in transit within the state but not for goods entering from outside the state.4. The court observes that as of the relevant date, there was no provision for E-Way bills under the Central G.S.T. This raises doubts about the legality of the seizure, even if considered under Section 129(1) of the Central G.S.T. The judgment directs the respondent to provide instructions and file a counter affidavit, scheduling further proceedings after the submission. Meanwhile, the court orders the release of the seized goods upon the petitioner furnishing an indemnity bond and security for the proposed tax and penalty.This detailed analysis of the judgment addresses the issues surrounding the seizure of goods under the U.P. Goods and Services Tax Act, 2017, the applicability of the Integrated Goods and Services Tax Act, 2017 to interstate transactions, the legal validity of the seizure order under the Central G.S.T., and the requirement of E-Way bills for goods in transit within and outside the State of U.P.