Penalty order quashed for Rule 129 violation as goods had genuine documents during transportation

The Allahabad HC quashed a penalty order for alleged violation of Rule 129 of SGST Rules, 2017 during goods transportation. The court held that detention and seizure powers can only be exercised when goods lack genuine accompanying documents. Since the genuineness of documents (tax invoice and e-way bill) was undisputed and authorities failed to specify which prescribed documents were missing, the seizure was unjustified. The impugned order dated 06.03.2024 was quashed and petition allowed.

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Issues:
Challenge to order imposing penalty for violation of GST rules during transportation of goods.

Analysis:
The petitioner, a registered dealer in Uttar Pradesh, transported goods to registered dealers in Auraiya and Etawah. The vehicle carrying the goods was intercepted at Firozabad, leading to a penalty imposition of Rs. 1,22,760 for alleged violation of GST Rules, 2017. The petitioner contended that the interception was unjustified as the goods were accompanied by genuine documents, and there was no prescribed route for transportation. The petitioner argued that the interception was based on a misinterpretation of rules and cited judgments from Gujarat and Telangana High Courts to support the claim that no adverse inference should be drawn without concrete evidence.

The Additional Chief Standing Counsel supported the penalty, stating that the truck driver's statement indicated a deviation from the intended delivery locations mentioned in the documents. However, the Court noted that the driver's statement did not mention unloading at a different location, and there was no specific requirement under the GST Act to declare the transportation route. The Court emphasized that the power of detention or seizure should only be exercised if goods lack genuine accompanying documents, which was not the case here. The Court also highlighted that the authorities erred in passing the seizure order without concrete evidence of tax evasion.

Referring to judgments from Karnataka and Telangana High Courts, the Court emphasized that mere deviations in transportation routes or undervaluation of goods cannot be the sole basis for detention or seizure. As the documents accompanying the goods were found to be genuine, the Court ruled that the penalty imposition was unjustified. Consequently, the Court quashed the order imposing the penalty, allowing the writ petition in favor of the petitioner.

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