2025 (11) TMI 1940 - SCH - GST

Transportation of areca nuts consignment questioned over E-Way Bill and weight discrepancies; affidavit ordered and release pending

Declination to release goods arose from an allegedly doubtful e-way bill due to issuance timing before weighment and invoice weight lower than weighment, ... Declination to release the goods as ordered by this Court despite the deposit of the amount - denial for release on the ground that the bond which the petitioner has to furnish for the purpose of release of the goods has to be in accordance with Rule 140 of the CGST Rules, 2017 - HELD THAT:- Prima facie, what weighed with the department is the fact that the time of issuance of E-Way Bill was before the time of weighment of goods in the invoice vide Slip No. 29851 dated 13.05.2025. Over and above, the weight mentioned in the invoice was found to be less than the weight mentioned in the weighment. Thus, the entire E-Way Bill was found to be doubtful - It is in such circumstances, the vehicle was intercepted, and the goods were accordingly seized. The petitioner has manifold contentions to raise. The principal argument is that the petitioner has no idea as regards the alleged violation of the contravention of the provisions of the Act and the Rules, respectively - The Apex Court does not agree with such stance of the petitioner because the notice under Section 129(3) of the Act, 2017 in Form GST MOV-07 along with the Order dated 2.6.2025 in Form GST MOV-09 demanding Tax and Penalty makes the contravention as alleged more than clear. The Apex Court want to know four things from the petitioner: (1) How did the partnership firm procure the consignment of areca nuts? (2) From where did they procure it? (3) For whom did they procure it? and (4) The entire consignment of areca nuts was being transported and was to be delivered at which place? - More importantly, the petitioner needs to explain the discrepancies as mentioned in the notice issued under Section 129 (3) of the Central Goods and Services Tax Act, 2017. Once proper explanation comes on record, the Apex Court shall proceed thereafter to consider the matter further - If it is the case of the petitioner that they had purchased the entire consignment for a particular party and that party was to sell it to a third Party, then what is the amount they had paid at the time of the purchase of the consignment? Necessary informations are required by way of an affidavit to be filed by one of the partners of the partnership firm - Let such affidavit come on record within a period of one week from today. List on 26.11.2025. Issues: (i) Whether the seized consignment of areca nuts and the vehicles should be released in favour of the petitioners despite the department alleging discrepancies and valuation; (ii) Whether release can be effected without the bond/security as required by Rule 140 of the CGST Rules, 2017; (iii) Whether the petitioners must file an affidavit responding to the discrepancies noted in the notice under Section 129(3) of the Central Goods and Services Tax Act, 2017 before further action on release is taken.Issue (i): Whether the seized consignment and vehicles should be released in favour of the petitioners despite departmental objections.Analysis: The Court noted earlier directions for release of the perishable goods and vehicles and recorded that the petitioners deposited Rs.5,98,000/- with the Registry as ordered. The department declined release citing non-compliance with bond/security requirements and raised prima facie discrepancies in weight, timing of e-way bill issuance, and invoice details as per the notice under Section 129(3). The matter was kept for further consideration pending explanation by the petitioners.Conclusion: The Court directed release in principle of the perishable consignment and vehicles subject to compliance with bond/security requirements and after receipt and consideration of the petitioners' affidavit explaining the discrepancies.Issue (ii): Whether the goods can be released without execution of bond in Form GST INS-04 or provision of a bank guarantee as required by Rule 140 of the CGST Rules, 2017.Analysis: Rule 140 prescribes provisional release upon execution of a bond in Form GST INS-04 and furnishing of security by bank guarantee equivalent to applicable tax, interest and penalty. The department maintained that the bond/security in accordance with Rule 140 is mandatory for release, given its valuation and penalty demand. The Court examined the rule text and observed the department's concern about recovery if goods are not produced later.Conclusion: The Court upheld the relevance of Rule 140 and required that release comply with the bond/security regime contemplated therein; release would not be permitted without satisfying the Rule 140 conditions or equivalent security arrangements as appropriate.Issue (iii): Whether the petitioners must file an affidavit addressing the discrepancies noted in the notice under Section 129(3) of the Act before the Court proceeds further on release and related directions.Analysis: The Court identified specific discrepancies recorded in the Section 129(3) notice: mismatch between weighment and invoice quantities, issuance time of the e-way bill prior to weighment, and excess quantity found in the conveyance. Given these prima facie findings, the Court required a factual explanation to be placed on record by one of the partners by way of affidavit so that the department can take instructions and the Court can proceed to consider release and related obligations.Conclusion: The Court ordered the petitioners to file an affidavit within one week addressing the four directed factual questions and the specific discrepancies; only after receipt and consideration of that affidavit will the Court proceed further on release and related directions.Final Conclusion: The Court granted provisional relief in favour of the petitioners limited by compliance with the bond/security regime under Rule 140 and by the filing of a detailed affidavit responding to the notice under Section 129(3); the matter remains pending for further consideration on the basis of the affidavit and compliance with statutory bond/security requirements.Ratio Decidendi: Provisional release of seized goods, including perishable consignments, is permissible subject to execution of a bond in Form GST INS-04 or furnishing of an equivalent bank guarantee as required by Rule 140 of the CGST Rules, 2017, and subject to the production of a satisfactory factual explanation in response to a notice issued under Section 129(3) of the Central Goods and Services Tax Act, 2017.