2025 (3) TMI 107 - HC - GST

Detention and seizure of goods due to the expiration of the e-way bill during intra-state stock transfer - HELD THAT - Admittedly the goods were in transit when the same was intercepted on the ground that validity of e-way bill accompanying with the goods was expired. The petitioner at the time of detention / seizure has filed a letter dated 16.3.2021 stating therein that due to mistake of the driver of the vehicle e-way bill was expired without knowledge of the petitioner. In the letter it is specifically stated that the goods in question was despatched to Aligarh as intra-state stock transfer from one unit to another unit. Since the goods in transit were not sold goods but intra-state stock transfer therefore no adverse view should be drawn. Further the mistake of the driver has been disbelieved only on the ground that at the time of making statement the driver did not make statement that he visited his village due to illness of his child and stayed there for three days but on the very first instance letter dated 16.3.2021 was filed before the respondent authority stating therein that due to mistake of the driver the validity of e-way bill was expired and without there being any intimation to the petitioner the driver of the vehicle has started his onward journey after expiry of e-way bill. The said fact has not been disbelieved at any stage. Hon ble the Apex Court in the case of Assistant Commissioner (ST) others Vs. M/s Satyam Shivam Papers Private Limited 2022 (1) TMI 954 - SC ORDER has held that it has precisely been found that there was no intent on the part of the writ petitioners to evade tax and rather the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioners. . Conclusion - The detention and seizure of goods as well as the penalty imposed were not justified in the absence of evidence of tax evasion and compliance with intra-state transfer regulations. Petition allowed.

The issues presented and considered in the judgment are as follows:1. Whether the detention and seizure of goods due to the expiration of the e-way bill during intra-state stock transfer was justified under the GST Act.2. Whether the intent of the petitioner to evade legitimate tax payment was established.3. Whether the penalty imposed on the petitioner was justified in the absence of evidence of tax evasion.Issue-wise detailed analysis:1. Relevant legal framework and precedents:- The petitioner, a private limited company engaged in the business of milk and milk-related products, challenged the detention and seizure of goods during an intra-state stock transfer within Uttar Pradesh.- The petitioner argued that since the goods were being transferred within the state and no discrepancies were found in the accompanying documents, no liability under the GST Act should be imposed.2. Court's interpretation and reasoning:- The Court examined the circumstances leading to the expiration of the e-way bill and the subsequent detention of goods.- The Court noted that the petitioner had explained the situation, attributing the expiration to the driver's mistake without the petitioner's knowledge.- The Court emphasized that no finding was made regarding the petitioner's intent to evade tax, which is crucial for imposing penalties under the GST Act.3. Key evidence and findings:- The petitioner provided documents supporting the intra-state nature of the stock transfer and the absence of intent to evade tax.- The respondent authorities did not establish any deliberate attempt by the petitioner to avoid tax payment.4. Application of law to facts:- The Court applied the principles established in previous judgments, emphasizing the requirement to prove intent to evade tax for penalty imposition under the GST Act.- The Court considered the specific circumstances of the case, where the goods were in transit for an intra-state transfer and no evidence of tax evasion was found.5. Treatment of competing arguments:- The petitioner argued for the quashing of the impugned orders based on the lack of evidence of tax evasion and compliance with intra-state transfer requirements.- The respondent supported the penalty imposed due to the expired e-way bill, highlighting the petitioner's failure to update the bill.Significant holdings:- The Court referred to previous judgments, including M/s Shyam Sel and Power Ltd., M/s Vacmet India Ltd., and the Telangana High Court case of M/s Same Deutz Fahr India Pvt. Ltd., to establish the requirement of proving intent to evade tax for penalty imposition.- The Court concluded that the detention and seizure of goods, as well as the penalty imposed, were not justified in the absence of evidence of tax evasion and compliance with intra-state transfer regulations.- The impugned orders dated 16.3.2021 and 2.7.2022 were quashed, and the writ petition was allowed, with a direction for the refund of any deposited amount by the petitioner.In summary, the judgment focused on the lack of evidence establishing the petitioner's intent to evade tax during an intra-state stock transfer, leading to the quashing of the impugned orders and the refund of any deposited amount by the petitioner.

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