2018 (5) TMI 367 - HC - GST

Court overturns seizure order and penalty for GST transportation violation

The Court set aside the seizure order and penalty notice issued to a registered company under the GST Act for transporting goods. The Court found that the ... E-way bill - Part B of Form GST EWB-01 - transshipment and change of transporter - assignment and updating of e-way bill by transporter - seizure under Section 129(1) - penalty under Section 129(3) - national e-way bill rules - indemnity bond for release of seized goods and vehicleE-way bill - Part B of Form GST EWB-01 - transshipment and change of transporter - assignment and updating of e-way bill by transporter - seizure under Section 129(1) - penalty under Section 129(3) - Validity of seizure of goods and vehicle and consequential penalty where 'Part B' of the e-way bill was not filled at time of interception during transshipment - HELD THAT: - The Court accepted the petitioner's case that the consignor had duly downloaded and filled Part A of the national e-way bills and that Part B, which records vehicle details, was left blank because the goods were being moved to the transporter's branch for reloading into the vehicles that would carry the consignments to their respective destinations. The judgment relied on the Government clarification (Press Information Bureau, Ministry of Finance, 31 March 2018) which explains that in situations of change of transporter/transshipment only one e-way bill is required: the consignor fills Part A, the first transporter may fill Part B for its leg and on assignment the subsequent transporter may update Part B with its vehicle details when it undertakes the next leg. Given that the vehicle intercepted was conveying the consignment from the consignor to the transporter's branch (a short intra State movement before reloading), and the vehicle details for onward movement were not yet known, the authority's reliance on the absence of Part B to justify seizure and determination of tax and penalty was misplaced. The Court found no reason to disbelieve the petitioner's factual explanation about the transshipment arrangement and held that the departmental action could not be sustained in view of the notifications and the clarified procedure for updating Part B at the appropriate stage.Seizure order dated 16.04.2018 under Section 129(1) and the consequential penalty notice dated 16.04.2018 under Section 129(3) set aside; goods and vehicle ordered released upon furnishing an indemnity bond to cover the proposed tax and penalty.Final Conclusion: The writ petition is allowed: the seizure and penalty orders are quashed and the goods and vehicle are to be released on furnishing an indemnity bond to the extent of the proposed tax and penalty. Issues:Challenge to seizure order and penalty notice under Section 129(1) and 129(3) of the Act respectively.Analysis:The petitioner, a registered company under the GST Act, challenged a seizure order and penalty notice issued under Section 129(1) and 129(3) of the Act respectively. The petitioner company, engaged in transportation of goods, had a branch leased out for loading and unloading goods. The consignor dispatched Flexible Laminates to two registered dealers, one in Telangana and the other in Uttarakhand, for which the petitioner downloaded two national e-way bills. However, the Assistant Commissioner intercepted the goods, citing the blank 'Part B' of the e-way bill, leading to the seizure order and penalty notice.The petitioner argued that the distance between the consignor's place and the transporter's branch was within the 50 km limit exempted from filling 'Part B' of the e-way bill. The petitioner also highlighted notifications amending e-way bill rules and a Press Information Bureau clarification on e-way bill procedures. The petitioner contended that the seizure and penalty were illegal, given the exemption and the government's own clarifications.The Court examined the e-way bill system clarification, emphasizing that 'Part B' of the e-way bill could be filled by the transporter only after the goods reached the transporter's location for reloading. The Court found no reason to disbelieve the petitioner's explanation provided during the inspection. Considering that all parties were registered dealers and the government's clarification allowed filling 'Part B' upon reloading, the Court set aside the seizure order and penalty notice, ordering the release of goods and the vehicle upon furnishing an Indemnity Bond for the proposed tax and penalty.In conclusion, the Court allowed the writ petition, emphasizing the legality of the petitioner's actions under the e-way bill system and the lack of justification for the seizure and penalty imposed by the authorities.