2017 (11) TMI 1032 - HC - GST

Detention and seizure of goods - Section 129(1) of the U.P. GST Act, 2017 - questions of facts - Held that - in the instant case since the factual disputed issues are involved and further that the penalty proceedings are already initiated, as intimated by the counsel for the State, therefore, it would be proper in the interest of justice that the seized goods be released in favour of the petitioners on the payment of an amount of ₹ 1,11,564/- the goods and vehicle be released forthwith on payment of the amount of tax as has been indicated in the SCN dated 26.9.2017 being ₹ 1,11,564/- - petition dismissed - decided against petitioner.

Summary

Issues:
1. Seizure order dated 25.9.2017 and consequential notice dated 26.9.2017 challenged.
2. Detention and seizure of goods under Section 129(1) of the U.P. Goods and Services Tax Act, 2017 disputed.
3. Authority's jurisdiction to seize goods under Integrated Goods and Services Tax Act, 2017 questioned.
4. Dispute over proper implementation of E-Way Bill scheme.
5. Factual disputes regarding quality and quantity of goods found during physical verification.
6. Release of seized goods on payment of demanded tax amount of &8377; 1,11,564/- ordered.
7. Excessive penalty amount of over &8377; 6 lakhs challenged.
8. Direction for appeal against penalty order and time frame for appellate authority to decide the appeal.

Analysis:
1. The petitioners sought relief through a writ petition to quash the seizure order and consequential notice issued by the respondent authority. The petitioners, engaged in transportation business, argued that the detention and seizure of goods were unjustified as the goods were accompanied by necessary documents like Tax Invoices, Bilty, and E-Way Bill. They contended that the actions of the respondent authority were illegal and without jurisdiction.

2. The petitioners emphasized that most goods had a value below &8377; 50,000 and were covered under the Integrated Goods and Services Tax Act, 2017, making the seizure by the U.P. Goods and Services Tax authority inappropriate. They relied on Circular No. 1117 and Rule 138 of U.P. G.S.T. Rules to support their claim that the E-Way Bill scheme implementation was still evolving.

3. The court noted factual disputes during detention, including expired E-Way Bill details and irregularities in goods' quality and quantity upon physical verification. While some goods were released, those lacking proper documentation were seized, leading to a show cause notice for a demanded tax amount of &8377; 1,11,564.

4. In light of the disputed issues and ongoing penalty proceedings, the court directed the release of seized goods upon payment of the demanded tax amount. The court deemed the penalty amount of over &8377; 6 lakhs excessive, advising the petitioners to appeal the penalty order before the First Appellate Authority within two months without the need for upfront penalty payment for appeal consideration.

5. The judgment dismissed the writ petition, ordering the immediate release of goods and the vehicle upon payment of the specified tax amount, with a directive for the appellate authority to expedite the appeal process without requiring penalty deposit for appeal consideration, ensuring justice and due process for the petitioners.