2024 (7) TMI 1153 - HC - GST

Levy of penalty - transportation of goods - violation of Rule 129 of the SGST Rules, 2017 - HELD THAT - The power of detention as well as seizure can be exercised only when the goods were not accompanying with the genuine documents provided under the Act. The genuineness of the documents has not been disputed at any stage. Observation/allegation has been made that at the time of interception / detention of the goods in question, the driver of the vehicle has only produced tax invoice and e-way bill dated 11.07.2023 and 13.07.2023, but none of the documents as prescribed under the Act has been referred or even brought on record before this Court in support of the said contention. Once the documents accompanying the goods were found to be genuine the goods ought not be have been seized. The impugned order dated 06.03.2024 cannot be sustained in the eyes of law and is hereby quashed - petition allowed.

Summary

Issues:
Challenge to order imposing penalty for violation of GST rules during transportation of goods.

Analysis:
The petitioner, a registered dealer in Uttar Pradesh, transported goods to registered dealers in Auraiya and Etawah. The vehicle carrying the goods was intercepted at Firozabad, leading to a penalty imposition of Rs. 1,22,760 for alleged violation of GST Rules, 2017. The petitioner contended that the interception was unjustified as the goods were accompanied by genuine documents, and there was no prescribed route for transportation. The petitioner argued that the interception was based on a misinterpretation of rules and cited judgments from Gujarat and Telangana High Courts to support the claim that no adverse inference should be drawn without concrete evidence.

The Additional Chief Standing Counsel supported the penalty, stating that the truck driver's statement indicated a deviation from the intended delivery locations mentioned in the documents. However, the Court noted that the driver's statement did not mention unloading at a different location, and there was no specific requirement under the GST Act to declare the transportation route. The Court emphasized that the power of detention or seizure should only be exercised if goods lack genuine accompanying documents, which was not the case here. The Court also highlighted that the authorities erred in passing the seizure order without concrete evidence of tax evasion.

Referring to judgments from Karnataka and Telangana High Courts, the Court emphasized that mere deviations in transportation routes or undervaluation of goods cannot be the sole basis for detention or seizure. As the documents accompanying the goods were found to be genuine, the Court ruled that the penalty imposition was unjustified. Consequently, the Court quashed the order imposing the penalty, allowing the writ petition in favor of the petitioner.