2018 (4) TMI 1074 - HC - GST

Seizure of goods with vehicle - absence of Transit Declaration Form - interstate movement of goods through UP - penalty - Held that - It is clear that the goods have been detained, seized and penalty has been imposed merely because of TDF was absent and the proper officer was himself not satisfied as to the intention to evade tax being present in the facts of the case - There is nothing to dispute the claim made by the assessee that it was effecting the stock transfer of goods from Chennai to Dehradun and therefore, the goods were only passing through the State of U.P. - There is no allegation or intention on the part of the assessee to unload the goods within the State of U.P. - seizure and penalty not sustainable - petition allowed.

Summary

Issues:
Challenge to seizure order and penalty order under Section 129(1) and 129(3) of the U.P. GST Act.
Interpretation of the requirement of Transit Declaration Form (TDF) in inter-state trade transactions.
Determining whether the absence of TDF justifies seizure and penalty imposition.
Analysis:
The petitioner, a trader in computer parts registered in Tamil Nadu and Uttarakhand, challenged a seizure order dated 16.11.2017 and a penalty order dated 23.11.2017 under Section 129(1) and 129(3) of the U.P. GST Act. The petitioner was transporting computer parts from Chennai to Dehradun by stock transfer when the goods were detained in U.P. on 15.11.2017 for lacking a Transit Declaration Form (TDF), despite having valid tax invoices and goods receipts. The petitioner downloaded and submitted the TDF on the same day but the goods were seized the next day, leading to a penalty notice. The penalty was imposed solely for the absence of TDF, without alleging tax evasion or defects in accompanying documents.

The petitioner argued that the seizure and penalty were based on a technical breach without establishing intent to evade tax, especially since inter-state trade under the CGST Act did not mandate TDF. The Standing Counsel contended that the TDF was submitted only after the seizure, but acknowledged its download by the petitioner before the penalty notice. The Standing Counsel failed to demonstrate how the authority inferred tax evasion intent from the situation.

The Court found that the seizure and penalty were unjustified as they were solely due to the absence of TDF, without evidence of tax evasion intent. The petitioner's claim of goods passing through U.P. in an inter-state transfer without intent to unload within the state was undisputed. Consequently, the Court quashed the seizure and penalty orders, directing immediate release of goods and the truck without any security requirement. The writ petition was allowed with no costs imposed.