2018 (5) TMI 75 - HC - GST

Seized Goods Released: E-Way Bill Portal Limitations Invalidate Tax Enforcement Action, Procedural Fairness Prevails

HC found seizure of goods and vehicle unlawful due to transport union restrictions and E-Way Bill portal limitations. Handwritten vehicle numbers did not ... Seizure under Section 191(3) of the UPGST Act, 2017 - E-Way Bill compliance and handwritten vehicle numbers - stock transfer with IGST paid - transport union restriction on vehicle movement - bank guarantee for release of seized goods and vehicle - recovery of any tax shortfall after opportunity of being heardSeizure under Section 191(3) of the UPGST Act, 2017 - E-Way Bill compliance and handwritten vehicle numbers - transport union restriction on vehicle movement - stock transfer with IGST paid - Validity of seizure of goods and vehicle where E-Way Bills contained handwritten subsequent vehicle numbers due to transshipment at Chandigarh caused by transport-union restrictions, in goods moved under stock transfer invoices with IGST paid. - HELD THAT: - The court accepted the petitioner's explanation that vehicles originating in Himachal Pradesh/Punjab were unloaded at Chandigarh and reloaded into another vehicle because transport-union restrictions prevented the original vehicles from proceeding beyond Chandigarh. The E-Way Bill portal did not permit entry of two vehicle numbers for a single transaction, so the subsequent vehicle number was recorded by hand. Given these peculiar operational constraints and the fact that tax at the prescribed rate was charged in the stock transfer invoices, the court found no irregularity attributable to the petitioner or the transporter. The court observed that any question of shortfall of tax can be addressed by the appropriate GST authority by following statutory procedure and after giving the petitioner an opportunity of being heard; such potential tax recovery does not justify continued seizure. The respondent's insistence on a bank guarantee for release was not accepted in the face of the satisfactory explanation and documentation produced by the petitioner.Seized goods and vehicle to be released forthwith in favour of the petitioner; any tax shortfall, if found, may be recovered by the GST authority after due hearing.Final Conclusion: Writ petition allowed; seizure order quashed and the seized goods and vehicle ordered released forthwith, subject to the authority's right to recover any tax shortfall after providing the petitioner an opportunity of hearing. Issues:Challenge against seizure order and notice under UPGST Act, 2017 due to handwritten vehicle numbers on E-Way Bills.Analysis:The petitioner, engaged in manufacturing medicines and mineral water, challenged a seizure order and notice issued under the UPGST Act, 2017. The petitioner's registered office is in Chandigarh with a branch office in Gorakhpur, Uttar Pradesh. Goods were transferred against stock transfer invoices after paying IGST and transported from Himanchal Pradesh to Chandigarh, and then to Gorakhpur using different vehicles due to transport union restrictions. The petitioner generated E-Way Bills for all transactions but faced portal limitations in mentioning two vehicle numbers for one transaction, resulting in handwritten details on E-Way Bills. Despite explanations and relevant documents, the respondent seized goods and vehicle citing handwritten vehicle numbers on E-Way Bills.The High Court noted the transport union's restrictions in Himanchal Pradesh, leading to goods being reloaded onto different vehicles at Chandigarh for onward transportation. Due to portal limitations, the petitioner had to handwrite vehicle details on E-Way Bills for the subsequent vehicle. No irregularity was found on the petitioner's or transport company's part. The tax was charged correctly on stock transfer invoices, and any tax shortfall could be collected by GST Authority after providing a hearing to the petitioner. Consequently, the Court directed the respondent to release the seized goods and vehicle to the petitioner immediately.In conclusion, the High Court disposed of the writ petition, emphasizing the peculiar circumstances faced by the petitioner due to transport union restrictions and portal limitations. The Court upheld the petitioner's actions as lawful and directed the release of seized goods and vehicle, ensuring compliance with tax regulations.