Court rules seizure and penalty for missing e-way bill illegal, mandates only Central Govt can impose such requirements

The court ruled in favor of the petitioner, holding that the seizure and penalty imposed for the absence of an e-way bill were illegal as the requirement for an e-way bill was not in effect at the time of interception. The court invalidated notifications issued under the U.P.G.S.T. Act 2017, stating that only the Central Government had the authority to mandate such requirements for inter-state transactions. The impugned orders were quashed, and the petitioner was granted a refund of any amount paid, with the writ petition allowed.

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Issues Involved:
1. Legality of seizure and penalty imposed due to the absence of an e-way bill.
2. Authority of the State Government to issue e-way bills for inter-state transactions.
3. Applicability of the Central Goods and Services Tax (C.G.S.T.) Act 2017 and Integrated Goods and Services Tax (I.G.S.T.) Act 2017.
4. Validity of the notifications issued under the U.P.G.S.T. Act 2017.

Detailed Analysis:

1. Legality of Seizure and Penalty Imposed Due to Absence of E-Way Bill:
The case involved the interception of a transport vehicle carrying goods without an e-way bill. The petitioner argued that on the date of interception, the e-way bill system was not yet developed or mandated by the Central Government. The court referenced prior judgments, stating that the e-way bill system was only prescribed by the Government of India through a notification dated 7th March 2018, and it became mandatory from 1st April 2018. Therefore, the seizure and penalty imposed on 10th December 2017 were not sustainable in law as there was no legal requirement for an e-way bill at that time.

2. Authority of the State Government to Issue E-Way Bills for Inter-State Transactions:
The court examined whether the State Government had the authority to issue e-way bills for inter-state transactions. It was determined that the State Government of U.P. was not authorized to develop or mandate an e-way bill system for transactions covered under the C.G.S.T. Act 2017. The court emphasized that only the Central Government had the authority to prescribe such documents under Rule 138 of the C.G.S.T. Rules 2017, and any notification by the State Government in this regard was inapplicable.

3. Applicability of the C.G.S.T. Act 2017 and I.G.S.T. Act 2017:
The judgment clarified the applicability of the C.G.S.T. Act 2017 and I.G.S.T. Act 2017 concerning inter-state trade and commerce. It was noted that the provisions of the C.G.S.T. Act 2017 apply to inter-state transactions through section 20(xv) of the I.G.S.T. Act 2017, particularly concerning inspection, search, seizure, and arrest. The court highlighted that the State Authorities under the U.P.G.S.T. Act 2017 were empowered to enforce the C.G.S.T. Act 2017 but could not apply the provisions of the U.P.G.S.T. Act 2017 to inter-state transactions.

4. Validity of the Notifications Issued Under the U.P.G.S.T. Act 2017:
The court invalidated the notifications issued under the U.P.G.S.T. Act 2017 that required carrying a T.D.F. Form for inter-state supply of goods. It was ruled that such notifications were not applicable to inter-state transactions as only the Central Government had the authority to issue such requirements. The court referenced the Kerala High Court's judgment, which supported the view that the State Government lacked the power to mandate documents for inter-state movement of goods under the I.G.S.T. Act 2017.

Conclusion:
The court quashed the impugned orders dated 10.12.2017 and 30.3.2019, ruling that the seizure and penalty were illegal due to the absence of a valid requirement for an e-way bill at the time of interception. The court ordered the refund of any amount paid by the petitioner within one month from the date a certified copy of the order is submitted, without prejudice to any tax liability otherwise imposable under the relevant statutory provisions. The writ petition was allowed in the stated terms.

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