Trader Wins Challenge Against Tax Seizure, Highlighting Procedural Fairness and Absence of Deliberate Tax Evasion Intent

HC quashed seizure and penalty orders against trader transporting computer parts inter-state. Despite temporary TDF absence, court found no evidence of tax evasion intent. Goods and truck were ordered released without security, emphasizing procedural technicalities cannot justify punitive actions when no substantive tax violation occurred.

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Issues:
Challenge to seizure order and penalty order under Section 129(1) and 129(3) of the U.P. GST Act.
Interpretation of the requirement of Transit Declaration Form (TDF) in inter-state trade transactions.
Determining whether the absence of TDF justifies seizure and penalty imposition.
Analysis:
The petitioner, a trader in computer parts registered in Tamil Nadu and Uttarakhand, challenged a seizure order dated 16.11.2017 and a penalty order dated 23.11.2017 under Section 129(1) and 129(3) of the U.P. GST Act. The petitioner was transporting computer parts from Chennai to Dehradun by stock transfer when the goods were detained in U.P. on 15.11.2017 for lacking a Transit Declaration Form (TDF), despite having valid tax invoices and goods receipts. The petitioner downloaded and submitted the TDF on the same day but the goods were seized the next day, leading to a penalty notice. The penalty was imposed solely for the absence of TDF, without alleging tax evasion or defects in accompanying documents.

The petitioner argued that the seizure and penalty were based on a technical breach without establishing intent to evade tax, especially since inter-state trade under the CGST Act did not mandate TDF. The Standing Counsel contended that the TDF was submitted only after the seizure, but acknowledged its download by the petitioner before the penalty notice. The Standing Counsel failed to demonstrate how the authority inferred tax evasion intent from the situation.

The Court found that the seizure and penalty were unjustified as they were solely due to the absence of TDF, without evidence of tax evasion intent. The petitioner's claim of goods passing through U.P. in an inter-state transfer without intent to unload within the state was undisputed. Consequently, the Court quashed the seizure and penalty orders, directing immediate release of goods and the truck without any security requirement. The writ petition was allowed with no costs imposed.

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