HC sets aside goods seizure orders under Section 129(1)(b) JGST Act for expired E-Way bill violations

The HC set aside orders passed by the State Tax Officer and Appellate Authority regarding goods seizure under Section 129(1)(b) of JGST Act, 2017 for expired E-Way bill. The court found both authorities failed to examine petitioner's GPS tracking report defense and other contentions raised in reply to show-cause notice. The orders violated principles of natural justice by not applying proper mind to petitioner's explanations and defenses. The matter was remanded to State Tax Officer for fresh consideration of all pleas including those based on amended Rule 138(3) of JGST Rules, 2017. Petition allowed by way of remand.

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Issues Involved:
1. Legality of the penalty imposed under Section 129(1)(b) of CGST Act.
2. Validity of seizure and detention of goods.
3. Consideration of GPS tracking report and other evidences.
4. Applicability of amended Rule 138(3) of JGST Rules, 2017.
5. Allegation of mismatch in the quantity of goods with invoices.
6. Violation of principles of natural justice.

Issue-wise Detailed Analysis:

1. Legality of the Penalty Imposed Under Section 129(1)(b) of CGST Act:
The petitioner challenged the penalty of Rs. 8,25,828/- imposed by the State Tax Officer under Section 129(1)(b) of the CGST Act. The penalty was confirmed by the Joint Commissioner of State (Appeal), Jamshedpur Division. The penalty was imposed due to the expiry of the E-Way bill during the transportation of goods. It was argued that the penalty was imposed without proper verification of the facts and evidence provided by the petitioner, including the GPS report.

2. Validity of Seizure and Detention of Goods:
The petitioner sought a declaration that the entire exercise of seizure and detention of goods was illegal and without jurisdiction. The vehicle carrying goods was intercepted on 6th July 2018, and a show-cause notice was issued on 7th July 2018, alleging transportation without a valid E-Way bill. The petitioner contended that the goods had reached the destination within the validity period of the E-Way bill but were temporarily taken back due to space constraints at the warehouse.

3. Consideration of GPS Tracking Report and Other Evidences:
The petitioner provided a GPS tracking report showing that the vehicle had reached the ITC warehouse before the expiry of the E-Way bill and remained stationary at a nearby location due to space constraints. The State Tax Officer and the appellate authority failed to consider this evidence. The court noted that the impugned orders did not reflect due consideration of the GPS tracking report, which vitiated the orders on factual grounds.

4. Applicability of Amended Rule 138(3) of JGST Rules, 2017:
The petitioner argued that under the amended Rule 138(3) of JGST Rules, 2017, effective from 7th March 2018, an E-Way bill was not required for transportation within a distance of 50 Kms within the state. This amendment was not considered by the State Tax Officer or the appellate authority while imposing the penalty. The court directed the State Tax Officer to consider this plea in accordance with the law.

5. Allegation of Mismatch in the Quantity of Goods with Invoices:
The respondent's counter-affidavit alleged a mismatch between the quantity of goods and the invoices. However, the court found that this allegation was not substantiated by the physical verification report. The court noted that the physical verification report did not indicate any mismatch, thereby discrediting the respondent's contention.

6. Violation of Principles of Natural Justice:
The court observed that the impugned orders were passed without proper application of mind and without addressing the contentions raised by the petitioner, including the GPS tracking report. This constituted a violation of the principles of natural justice. The court emphasized that the orders were issued without considering the petitioner's defense, leading to an unjust imposition of penalty.

Conclusion:
The court set aside the orders passed by the State Tax Officer and the appellate authority, citing a lack of proper consideration of evidence and violation of principles of natural justice. The matter was remanded to the State Tax Officer for reconsideration in light of the petitioner's pleas and the amended Rule 138(3) of JGST Rules, 2017. The court also directed the return of the Bank Guarantee furnished by the petitioner if not encashed. The writ petition was allowed, and the court clarified that its observations should not prejudice the fresh decision by the State Tax Officer.

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