2021 (11) TMI 720 - HC - GST

Seizure of goods during inter-state transportation quashed as UP e-way bill requirement legally unfounded

M/s Biharilal Chhaterpal Thru Prop. Ramesh Kumar Gupta Versus State Of U.P. Thru Prin. Secy. Tax And Registration And Ors.

The Allahabad HC allowed the petition challenging seizure of goods during inter-state transportation. The court held that for inter-state transportation, ... Maintainability of appeal - non-constitution of the G.S.T. Tribunal - appeal is prescribed under the U.P.G.S.T. Act 2017 before the G.S.T. Tribunal under section 112 of the said Act, but the petition was entertained - inter-state transportation of goods - HELD THAT:- Considering the fact that it was a inter-State transportation of goods, the U.P.G.S.T. Act 2017 did not apply and it is the I.G.S.T. Act 2017 and by virtue of section 20(15) of the said I.G.S.T. Act 2017 it was the C.G.S.T. Act 2017 which would apply in respect of matters covered by the I.G.S.T. Act 2017 on the subject of inspection, search, seizure and arrest. It being an inter-State transfer of goods there was no requirement of carrying the U.P. State e-way bill. For all these reasons the insistence by the State authorities that the petitioner's vehicle was not carrying the U.P. E-way bill is without any factual and legal basis. The goods were being transported alongwith the taxinvoice etc., therefore, it was not a fraudulent transaction and there is nothing on record to show otherwise. Moreover, as already stated vide Annexure-2 I.G.S.T. at the rate of 18% had already been paid. In the instant case goods being transported were interceipted on 19.2.2018, when there was no system of e-way bill in place under C.G.S.T. Act 2017 and U.P.G.S.T. was not applicable - In the judgment in M/S. SHAURYA ENTERPRISES VERSUS STATE OF U.P. AND 02 OTHERS [2018 (10) TMI 1237 - ALLAHABAD HIGH COURT] the Division Bench has categorically held that admittedly till 31.3.2018 it was not mandatory to download e-way bill from the official portal. The court further observed that it found substance in the submission of the learned counsel for the petitioner that only with effect from 1.4.2018 the requirement of downloading of e-way bill was compulsory. Petition allowed. Issues Involved:1. Challenge to the orders passed under Section 129(3) of the U.P.G.S.T. Act 2017.2. Applicability of U.P.G.S.T. Act 2017 versus I.G.S.T. Act 2017 for inter-state transportation.3. Requirement of carrying U.P. State e-way bill.4. Validity of the impugned action based on the absence of a notification by the Central Government under Rule 138 of C.G.S.T. Rules 2017.5. Refund of the amount deposited as tax and penalty.Detailed Analysis:1. Challenge to the orders passed under Section 129(3) of the U.P.G.S.T. Act 2017:The petitioner challenged the orders dated 30.3.2019 and the order passed by the Asstt. Commissioner (Mobile Squad III), Commercial Tax, Lucknow, under Section 129(3) of the U.P.G.S.T. Act 2017. The court entertained the petition due to the non-constitution of the G.S.T. Tribunal, which otherwise would have been the appellate authority under Section 112 of the U.P.G.S.T. Act 2017.2. Applicability of U.P.G.S.T. Act 2017 versus I.G.S.T. Act 2017 for inter-state transportation:The court noted that the goods were being transported from Raipur, Chhattisgarh to Sitapur, U.P., which constituted inter-state transportation. Therefore, the applicable law was the I.G.S.T. Act 2017, not the U.P.G.S.T. Act 2017. Section 20(xv) of the I.G.S.T. Act 2017 incorporates the provisions of the C.G.S.T. Act 2017 for inspection, search, seizure, and arrest.3. Requirement of carrying U.P. State e-way bill:The authorities below held that the petitioner was not carrying the U.P. e-way bill at the time of interception. However, the court found that the national e-way bill and other relevant documents were being carried, and the state e-way bill was generated and handed over shortly after the interception. The court concluded that there was no requirement for the U.P. State e-way bill for inter-state transportation as per the applicable laws.4. Validity of the impugned action based on the absence of a notification by the Central Government under Rule 138 of C.G.S.T. Rules 2017:The court observed that Rule 138 of the C.G.S.T. Rules 2017, which prescribes the documents to be carried during the movement of goods, was not applicable until the e-way bill system was developed and approved by the G.S.T. Council. The court invalidated the impugned action on the grounds that the State authorities incorrectly applied the U.P.G.S.T. Rules, which were not applicable to inter-state transportation.5. Refund of the amount deposited as tax and penalty:The court noted that the I.G.S.T. at the rate of 18% had already been paid by the petitioner, and there was no intent to evade tax. Consequently, the court quashed the orders dated 30.3.2019 and 26.2.2018, directing the authorities to refund the amount deposited by the petitioner as tax and penalty under the U.P.G.S.T. Act 2017 within two months.Conclusion:The writ petition was allowed, and the court directed the refund of the amount deposited as tax and penalty, emphasizing that the U.P.G.S.T. Act 2017 did not apply to inter-state transportation, and the insistence on carrying the U.P. State e-way bill was without legal basis. The court relied on precedents, including the Division Bench judgment in Satyendra Goods Transport Corp. v. State of U.P., which held that the U.P.G.S.T. Act 2017 is not applicable to inter-state trade.