Improper GST Seizure Overturned: Court Rules Authorities Failed to Verify Transaction Authenticity Despite Valid Tax Invoices

The HC allowed the petition against goods seizure under GST laws, setting aside confiscation orders. The petitioner, transporting goods from Ludhiana to Gwalior below E-way bill threshold, was detained in U.P. Although initial documents were incomplete, the petitioner later produced genuine tax invoices dated 31.07.2021. The court found authorities failed to conduct proper enquiries into the transaction's authenticity, instead relying on presumptions. As a registered dealer who charged IGST, the petitioner had discharged the onus of proving legitimacy. While the initial detention was lawful, subsequent seizure lacked evidentiary basis, resulting in court-ordered immediate release of goods and vehicle.

---

---

Issues:
Challenge to order of First Appeal Authority confirming order of Assistant Commissioner under IGST Act, CGST Act, and UP GST Act regarding seizure and confiscation of goods in transit.

Analysis:
The petitioner claimed to be the owner of goods sold to dealers in Gwalior from Ludhiana, below E-way bill threshold. Goods were stopped in U.P. for checking, part found not covered by documents initially, later produced all documents. Detaining authority assumed goods being imported into U.P. unlawfully due to absence of documents during interception. However, all tax invoices produced by petitioner were genuine, dated 31.07.2021, no enquiry made by revenue authorities to confirm transactions' genuineness or goods' authenticity. Lack of enquiry and reasonable doubt led to continued seizure, confiscation, tax, and penalty demands based on presumptions and conjectures. Petitioner discharged initial onus by producing original tax invoices at show cause notice stage, as a registered dealer, issuance of tax invoice after charging IGST was undoubted evidence of transaction genuineness. Lack of cogent material and evidence led to setting aside of impugned orders and immediate release of goods and vehicle.

In conclusion, while detention was not illegal, subsequent orders of seizure lacked basis in material or evidence. Therefore, the petition was allowed, and the impugned orders were set aside, directing the immediate release of goods and vehicle.

---