High Court sets aside UPGST Act seizure order, emphasizing taxpayer compliance

The High Court allowed the writ petition, setting aside the seizure order and show cause notice issued under the UPGST Act, 2017. The court emphasized the petitioner's compliance efforts, timely submission of the E-way bill, and the genuine nature of the transaction. It ruled in favor of the petitioner, highlighting the significance of considering taxpayer compliance and the timing of regulatory changes in tax laws when assessing penalties and seizures.

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Issues:
Challenge to seizure order under UPGST Act, 2017 and show cause notice for proposed penalty.

Analysis:
The petitioner, a registered proprietorship firm dealing in iron and steel items, challenged a seizure order and show cause notice issued under the UPGST Act, 2017. The goods in question were purchased from a seller in Chattisgarh and being transported to the petitioner's place of business in U.P. The truck carrying the goods was intercepted in U.P. by a tax officer who was not satisfied with the accompanying documents, specifically the absence of an E-way bill. The officer estimated the value of the goods and seized them. The petitioner argued that the E-way bill requirement had been waived off until 31st March, 2018, and they had downloaded the E-way bill immediately after the interception, demonstrating compliance. The petitioner contended that the seizure was unjustified, as all other requirements were met, and there was no intention to evade tax. The petitioner also challenged the proposed penalty in the show cause notice.

The Standing Counsel argued that the E-way bill was not present during the interception and was only filed later as an afterthought. However, the court noted that the goods were being sold by a registered dealer, and all necessary taxes were paid and documented. The E-way bill was generated promptly after the interception, providing all required details. The court found it perplexing that despite the compliance with tax regulations and the timely submission of the E-way bill, the goods were seized and a penalty was proposed. The court emphasized that until 31st March, 2018, downloading the E-way bill was not mandatory, and the transaction appeared genuine. Therefore, the court set aside the seizure order and show cause notice, ruling in favor of the petitioner.

In conclusion, the High Court, comprising Mr. Krishna Murari and Mr. Ashok Kumar, JJ., allowed the writ petition, setting aside the seizure order and show cause notice issued under the UPGST Act, 2017. The judgment highlighted the importance of considering compliance efforts by taxpayers and the timing of regulatory changes in tax laws while assessing penalties and seizures.

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