2018 (2) TMI 663 - HC - GST

Seizure of goods - Section 129(1) of the U.P. Goods and Services Tax Act, 2017 - submission is that as admittedly the seized goods were in transit from outside the State the transaction would be covered by the Integrated Goods and Services Tax Act, 2017 (I.G.S.T.) read with Central G.S.T. - Held that - The provisions of U.P.G.S.T. are applicable to transactions within the State of U.P. whereas I.G.S.T. covers the interstate transactions. Even if the seizure is treated to be under Section 129(1) of the Central G.S.T., as there was no provision of E-Way bill on the relevant date under the Central G.S.T. prima facie the seizure appears to be illegal. As the goods seized are said to be perishable nature the same are directed to be released along with vehicle subject to the petitioner furnishing indemnity bond and security - petition allowed.

Summary

Issues:
1. Seizure of goods under U.P. Goods and Services Tax Act, 2017.
2. Applicability of Integrated Goods and Services Tax Act, 2017 on interstate transactions.
3. Validity of seizure under Section 129(1) of Central G.S.T.
4. Requirement of E-Way bill under Central G.S.T. and U.P.G.S.T.
5. Release of seized goods due to perishable nature.

Analysis:
1. The petitioner challenged the seizure of goods under the U.P. Goods and Services Tax Act, 2017. The petitioner argued that since the goods were in transit from outside the State, the transaction should be governed by the Integrated Goods and Services Tax Act, 2017 (I.G.S.T.) along with Central G.S.T., making the provisions of U.P.G.S.T. inapplicable.

2. The respondent contended that the seizure was conducted under Section 6 of the I.G.S.T. in conjunction with Section 129(1) of Central G.S.T. The distinction between the applicability of U.P.G.S.T. to intrastate transactions and I.G.S.T. to interstate transactions was highlighted.

3. The court noted that Section 20 of the I.G.S.T. incorporates the provisions of Central G.S.T. concerning inspection, search, and seizure. Additionally, Rule 138 under Central G.S.T. mandates the carrying of E-Way bills with goods in transit, with a notification specifying the enforcement date of 1st February, 2018.

4. It was observed that the U.P.G.S.T. also contains similar E-Way bill provisions under Rule 138, applicable to goods in transit within the State of U.P. The absence of E-Way bill provisions under Central G.S.T. on the relevant date raised doubts about the legality of the seizure under Section 129(1) of Central G.S.T.

5. Considering the perishable nature of the seized goods, the court directed their release along with the vehicle upon the petitioner furnishing an indemnity bond and security, excluding cash and bank guarantee, for the proposed tax and penalty on the goods' documented value. The respondent was given two weeks to provide instructions and file a counter affidavit before further proceedings.