2018 (2) TMI 608 - HC - GST

Seizure order - Section 129(1) of the Uttar Pradesh Goods and Services Tax Act, 2017 - inter-state transaction - Held that - The U.P.G.S.T. Act makes provision for levy and collection of tax on intrastate supply of goods or services or both i.e. relating to transactions within the State, whereas IGST Act covers interstate transactions. In this view of the matter, the transaction in question is treated to be covered by the IGST Act and the provisions of U.P. G.S.T. Act would not apply - in the matter of seizure under the provisions of IGST Act the provisions of Central G.S.T. Act such as Section 129 would apply mutatis mutandis - the impugned order is to be treated to have been passed under IGST Act read with Section 129 of the Central G.S.T. Act rather than the one passed under U.P.G.S.T. Act. The goods and the vehicle seized are directed to be released on furnishing indemnity bond as well as security other than cash and bank guarantee of the taxable amount of the seized goods.

Summary

Issues:
1. Jurisdiction of seizure under the Uttar Pradesh Goods and Services Tax Act, 2017 (U.P.G.S.T. Act) vs. Integrated Goods and Services Tax Act, 2017 (IGST Act).
2. Classification of goods seized as 'Tasla' or 'Ghamella' and their tax implications.

Analysis:

1. Jurisdiction of seizure under U.P.G.S.T. Act vs. IGST Act:
The petitioner challenged the seizure order dated 13.01.2018 under Section 129(1) of the U.P.G.S.T. Act, claiming that the transaction was inter-state covered by the IGST Act and not liable to be seized under the U.P.G.S.T. Act. The respondent argued that provisions of the Central G.S.T. Act apply to matters covered by the IGST Act, and since analogous provisions exist in both Acts, the seizure was not illegal. The court noted that the U.P.G.S.T. Act pertains to intrastate transactions, while the IGST Act covers interstate transactions. However, Section 20 of the IGST Act mandates the application of Central G.S.T. Act provisions to matters under the IGST Act, including seizure. Therefore, the power of seizure under the IGST Act with the Central G.S.T. Act is analogous to Section 129 of the U.P.G.S.T. Act. Consequently, the court held that the seizure order was passed under the IGST Act read with Section 129 of the Central G.S.T. Act, not the U.P.G.S.T. Act.

2. Classification of seized goods as 'Tasla' or 'Ghamella' and tax implications:
The petitioner contended that the goods were 'Taslas,' exempt from G.S.T., but were seized as 'Ghamellas,' which were taxable. The petitioner argued that 'Ghamella' was also exempt on the relevant date, rendering the seizure illegal. The court directed the respondent to confirm the classification and taxation status of the seized goods. Pending clarification, the court ordered the release of the seized goods and vehicle upon furnishing an indemnity bond and security equivalent to the taxable amount. The matter was listed for admission/final disposal after the specified period for submissions and rejoinder.

In conclusion, the judgment clarified the jurisdictional aspect of seizure under the U.P.G.S.T. Act vis-a-vis the IGST Act and addressed the classification issue of the seized goods for tax implications. The court's decision to release the goods pending further clarification demonstrates a balanced approach to resolving the dispute.