2018 (4) TMI 1076 - HC - GST

Court Invalidates Seizure Order Over Missing E-way Bill, Clarifies GST Acts

M/s Modern Traders Versus State of U.P. And 2 Others

The court set aside the seizure order of goods due to the absence of an e-way bill during inter-state movement by a trading firm. The court clarified the ... Seizure of detained goods - Absence of E-Way bill - contention of petitioner is that without considering the e-way bill-02 which has been furnished immediately within 20 minutes from the time of the detention of the vehicle/goods, the respondent no.3 has illegally passed the seizure order after a gap of four days - Held that: - Rule 138 of the Rules framed under the Central GST provides that till such time e-way bill system is developed and approved by the Council, the Government by notification may specify the documents which are to be carried with the consignment of goods - even if the seizure is treated to be under Section 129(1) of the Central GST, as there was no provision of e-way bill on the relevant date under the Central GST, therefore, the seizure appears to be illegal. Since the petitioner is registered dealer, there is no error at the hands of the petitioner, and therefore, the order of seizure passed under Section 129(1) of the Act as well as the notice issued under Section 129(3) of the Act are hereby set aside. Petition disposed off. Issues:- Seizure of goods due to non-production of e-way bill during inter-state movement- Applicability of UPGST Act, 2017 and IGST Act, 2017 in the case- Legal validity of the seizure order passed under Section 129(1) of the Act- Interpretation of rules regarding e-way bill under UPGST and Central GSTSeizure of Goods:The petitioner, a proprietorship firm engaged in trading of iron and steel, sold goods to a consignee in Delhi and charged IGST. The goods were detained during transit due to the absence of an e-way bill. The petitioner argued that e-way bill was not required for inter-state movement and produced it within 20 minutes of detention. The court noted that both parties were registered dealers, and the seizure was solely based on the absence of the e-way bill, despite proper invoicing and tax payment.Applicability of Acts:The petitioner contended that the transaction fell under IGST for inter-state movement, making UPGST rules irrelevant. The respondent argued that the seizure was under IGST and Central GST, not UPGST, thus the wrong mention of the provision did not invalidate the seizure. The court clarified that UPGST applies to intra-state transactions, while IGST covers inter-state transactions, with Central GST provisions applicable for matters like inspection and seizure.Legal Validity of Seizure Order:The court examined the legality of the seizure order under Section 129(1) of the Act and the subsequent notice under Section 129(3). Considering the peculiar facts, proper invoicing, and the registration status of the petitioner, the court found no error on the petitioner's part. As the e-way bill requirement for inter-state transactions was enforced after the date of the incident, the court set aside the seizure order and directed the Seizing Authority to release the goods and vehicle immediately.Interpretation of E-Way Bill Rules:The court analyzed Rule 138 of the Central GST and UPGST rules regarding e-way bills. While the e-way bill system was enforced from a specific date, it was not mandatory for goods brought from outside the state. As the seizure was related to inter-state movement and there was no provision for e-way bill under Central GST at the time, the court deemed the seizure illegal based on the absence of legal grounds for seizure.In conclusion, the court disposed of the writ petition, setting aside the seizure order and directing the release of the goods and vehicle, emphasizing the correct application of e-way bill rules for inter-state transactions.