2025 (1) TMI 1081 - HC - GST

Detention and seizure of goods and the vehicle by GST officials - validity of notice issued under Section 129(3) of the GST Act - HELD THAT - Considering the Clause 6 of Annexure P-9 i.e. Circular dated 31-12-2018 issued by the Government of India by which owner of goods has been clarified accordingly it shall be decided as per invoice or any other specified document accompanying the goods and instant case Annexure P-2 is an invoice wherein petitioner has been shown as cosigner of the goods which was being transported in truck bearing Registration No. CG 10 AJ 1477 therefore the application is to be allowed. It is directed that the seized goods and truck bearing Registration No. CG 10 AJ 1477 shall be given in the interim custody of the petitioner on the fulillment of conditions imposed - application allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the detention and seizure of goods and the vehicle by GST officials were lawful under the provisions of the Central Goods and Services Tax Act, 2017 ("GST Act").
Whether the notice issued under Section 129(3) of the GST Act was valid, considering the timeline of events.
Whether the petitioner is entitled to the interim release of the detained goods and vehicle.
Whether the penalty imposed on the driver was in accordance with the applicable legal framework and circulars.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Lawfulness of Detention and Seizure

Relevant legal framework and precedents: The detention and seizure of goods and vehicles are governed by Section 129 of the GST Act, which provides the procedure for detention, seizure, and release of goods and conveyances in transit.
Court's interpretation and reasoning: The court noted that the detention was due to the absence of an e-invoice with the driver, which is a requirement under the GST Act.
Key evidence and findings: The petitioner provided an invoice (Annexure P-2) showing them as the consignor of the goods. The driver did not have the e-invoice, leading to the detention.
Application of law to facts: The court considered the invoice as evidence of ownership and the absence of an e-invoice as a procedural lapse that led to the detention.
Treatment of competing arguments: The respondent argued that the detention was valid as the e-invoice was not provided. The petitioner argued that the detention exceeded the permissible period under the GST Act.
Conclusions: The court found that the detention was procedurally flawed due to the timeline and the documentation provided by the petitioner.

Issue 2: Validity of Notice under Section 129(3)

Relevant legal framework and precedents: Section 129(3) of the GST Act mandates issuing a notice within seven days of detention/seizure.
Court's interpretation and reasoning: The court examined the timeline of events and determined that the notice was issued beyond the permissible period.
Key evidence and findings: Goods were detained on 26-11-2024, and the notice was issued on 4-12-2024, which exceeded the seven-day requirement.
Application of law to facts: The court applied the statutory requirement of issuing a notice within seven days to the facts, finding non-compliance.
Treatment of competing arguments: The respondent claimed compliance with the timeline, but the court found otherwise based on the evidence.
Conclusions: The court concluded that the notice was invalid due to the delay, affecting the legality of the detention.

Issue 3: Entitlement to Interim Release

Relevant legal framework and precedents: Section 129 of the GST Act allows for the release of detained goods upon furnishing a security or bank guarantee.
Court's interpretation and reasoning: The court considered the petitioner's compliance with documentation requirements and the procedural lapse by the authorities.
Key evidence and findings: The petitioner provided an invoice showing ownership, and the court referenced a circular clarifying ownership determination.
Application of law to facts: The court applied the provisions for interim release, considering the petitioner's willingness to provide a bank guarantee and security.
Treatment of competing arguments: The respondent's arguments regarding ownership documentation were addressed by the court's reliance on the circular.
Conclusions: The court granted interim release of the goods and vehicle upon fulfillment of specified conditions.

Issue 4: Penalty Imposition on the Driver

Relevant legal framework and precedents: Section 129 of the GST Act and relevant circulars govern penalties for non-compliance in goods transportation.
Court's interpretation and reasoning: The court examined the circular and found that penalties should be directed towards the owner, not the driver.
Key evidence and findings: The penalty was imposed on the driver, contrary to the circular's guidance.
Application of law to facts: The court applied the circular's provisions to determine the appropriate party for penalty imposition.
Treatment of competing arguments: The court favored the petitioner's argument based on the circular's clarity on penalty imposition.
Conclusions: The court found the penalty imposition on the driver to be incorrect.

3. SIGNIFICANT HOLDINGS

Verbatim quotes of crucial legal reasoning: "Having considered the contention of learned counsel for the parties, facts of the case, particularly considering the Clause 6 of Annexure P-9 i.e. Circular dated 31-12-2018, issued by the Government of India, by which owner of goods has been clarified, accordingly it shall be decided as per invoice or any other specified document accompanying the goods."
Core principles established: The court established that procedural compliance with statutory timelines is crucial for the validity of detention and seizure actions. Ownership determination should be based on accompanying documentation as clarified by relevant circulars.
Final determinations on each issue: The court determined that the detention and notice issuance were procedurally flawed, granted interim release of the goods and vehicle, and found the penalty imposition on the driver to be incorrect.

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