Seizure of goods during interstate transport ruled illegal due to premature enforcement before E-way bill implementation

The HC ruled in favor of the petitioner challenging the detention of goods and vehicle during interstate transport. Authorities seized goods for lack of Transit Declaration Form, claiming violation of UPGST Act. The court found the seizure illegal as the E-way bill system was not yet implemented on the incident date (24.03.2018), with notifications taking effect from 01.04.2018. Since IGST was properly charged on the invoice, there was no tax evasion intent. The seizure order and consequential notice were set aside, directing release of goods and vehicle.

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Issues Involved:
1. Legality of the seizure order and consequential notice.
2. Requirement of carrying Transit Declaration Form (TDF) for inter-State transactions.
3. Validity of the notification and circular issued by the State Government.
4. Jurisdiction and authority of State officials in enforcing inter-State trade regulations.

Issue-wise Detailed Analysis:

1. Legality of the Seizure Order and Consequential Notice:
The petitioner challenged the seizure order dated 28.03.2018 and the consequential notice issued under Section 129(3) of the UPGST Act. The court found that the seizure was based on the absence of the Transit Declaration Form (TDF), which was not required under the law for inter-State transactions. The court held that the seizure and penalty imposed were "erroneous and illegal" as there was no intent to evade tax. The court directed the release of the goods and vehicle and ordered the return of any amount paid by the petitioner.

2. Requirement of Carrying Transit Declaration Form (TDF) for Inter-State Transactions:
The petitioner argued that there was no legal requirement to carry TDF for goods crossing through Uttar Pradesh. The court agreed, noting that the relevant date of the incident (24.03.2018) fell before the implementation of the E-way Bill System by the Central Government on 01.04.2018. The court emphasized that the notification by the State Government under Rule 138 of the UPGST Rules was inapplicable for inter-State transactions, making the seizure based on the absence of TDF "clearly illegal."

3. Validity of the Notification and Circular Issued by the State Government:
The petitioner contended that the circular dated 06.02.2018 issued by the State Commissioner was ultra vires to the UPGST Act and Rules. The court found that the notification No. 1014 dated 21.07.2017, which required TDF, had been amended and was no longer applicable after 01.02.2018. The court held that the circular could not revive the amended notification and thus, the requirement to download TDF-I was not legally enforceable after the cut-off date.

4. Jurisdiction and Authority of State Officials in Enforcing Inter-State Trade Regulations:
The court noted that while State Authorities are empowered to enforce provisions of the CGST and IGST Acts, they cannot apply UPGST Act provisions to inter-State trade. The court clarified that only the Central Government has the authority to issue notifications regarding inter-State trade under Section 20(xv) of the IGST Act read with Section 68 of the CGST Act and Rule 138 of the CGST Rules. The court invalidated the State's action, stating that the State Government's notification under Rule 138 of the UPGST Rules was not applicable to inter-State transactions.

Conclusion:
The court allowed the writ petition, setting aside the seizure order and consequential notice. It directed the release of the goods and vehicle and the return of any amount paid by the petitioner. The court emphasized that there was no legal requirement to carry TDF for inter-State transactions on the relevant date, and the State Government's notification was inapplicable. The court also clarified the jurisdictional limits of State officials in enforcing inter-State trade regulations.

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