2022 (8) TMI 49 - HC - GST

Release of seized goods, subject to payment of deposit with penalty - reason as recorded for passing the seizure order was that the E-way bill system, as introduced by the Central Government under the C.G.S.T., was replaced by the State E-way bills, which had been suspended by the Central Government w.e.f. 02.02.2018 - HELD THAT - The whole basis based upon which the order has been passed that the petitioner was not carrying the E-way bill as are required under the U.P. G.S.T. Rules, looses significance as the petitioner were not liable to be taxed under the U.P. G.S.T. Act being an inter-state supply and further the requirement of E-way bill was recommended to be not enforced till 31st March, 2018, in view of the recommendation of the G.S.T. Council. The demand as raised in the order dated 19.03.2018 and as affirmed vide order dated 06.11.2018 are clearly not sustainable and are hereby set aside - Petition allowed.

Summary

Issues: Challenge to GST Act judgment and order

Analysis:
The petitioner challenged the judgment and order passed by the Adjudicating Authority under the U.P. G.S.T. Act, which required the petitioner to deposit tax and penalty for the release of goods. The petitioner, a registered dealer under G.S.T. laws, had dispatched battery sets to a Government undertaking in Telangana. Despite following the E-way bill requirements, the goods were seized in Lucknow for not carrying the State E-way bill due to confusion regarding E-way bill rules. The petitioner deposited the required amount under protest and filed an appeal, arguing that as an inter-state transfer, U.P. G.S.T. Act did not apply, and the penalty was unjustified. The State Authorities justified the seizure based on a circular reviving E-way bill requirements. The Tax Invoice showed compliance with C.G.S.T. Rules, and the goods were seized while being transported to Raebareli.

Legal Context:
The introduction of G.S.T. in India led to confusion and teething problems for dealers, prompting the G.S.T. Council to postpone the enforcement of E-way bill requirements until 31st March 2018. The Court acknowledged the challenges faced by assesses and the government's efforts to address them. The petitioner's liability under U.P. G.S.T. Act for an inter-state supply was questioned, and the enforcement of E-way bill rules was found to be not applicable until the specified date.

Judgment:
The Court found the demand for tax and penalty unsustainable based on the petitioner's inter-state supply status and the postponement of E-way bill enforcement. The orders requiring payment were set aside, and the petitioner was directed to be refunded the deposited amount. The bank guarantee was to be released accordingly. The writ petition was allowed, providing relief to the petitioner within a specified timeframe.