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2025 (4) TMI 1513 - HC - GSTSeizure of goods in transit - seizure on the ground that the goods were transported via a route different from the one disclosed in the accompanying documents - HELD THAT - It is admitted that the goods were in transit from Meerut to Kanpur but the same were intercepted at Basti on the ground that the goods in question are being transported on a different place than disclosed in the accompanying documents. No other discrepancy whatsoever has been pointed by the authorities at any stage of the proceedings below. Neither any finding has been recorded that the goods in question are different than mentioned in the accompanying documents. Once the authorities have failed to record any finding regarding intention of evasion of tax on the part of the petitioner and therefore no adverse inference can be drawn against the petitioner. Further the record shows that there is no such provision under the GST Act which empower the authorities to seize the goods if the goods in transit were on a different route. Under the GST Act no provision has been made for declaration of the route during the transition of the goods. In absence of any such declaration the goods ought not to have seized. The record further reveals that at the time of detention of the goods the goods in question were in transit along with all the proper documents wherein no discrepancy whatsoever was found by the authorities and therefore once the documents accompanied with the goods in question were found to be genuine in terms of quality and quantity the same ought to not have been seized by the authorities. Petition allowed.
The core legal questions considered by the Court in this matter are:
1. Whether the seizure of goods in transit is justified solely on the ground that the goods were transported via a route different from the one disclosed in the accompanying documents. 2. Whether under the Goods and Services Tax (GST) Act, 2017, there exists any provision mandating the declaration or disclosure of the route taken during transportation of goods in transit. 3. Whether the authorities can draw an adverse inference or presume an intention to evade tax merely because the goods were transported on a route other than the regular or declared route. 4. Whether the genuineness of the accompanying documents and the quality and quantity of goods affect the legality of seizure in the absence of any other discrepancy or evidence of tax evasion. Issue 1: Legality of Seizure Based on Route Deviation The GST Act, 2017 was examined to determine if it empowers authorities to seize goods in transit solely because the goods were transported via a route different from that disclosed in the documents. The Court noted that there is no provision under the GST Act requiring the transporter or selling dealer to declare the route to be taken during transportation. This contrasts with the earlier VAT regime, where such a requirement existed. Relying on precedent from a recent judgment of the same High Court, the Court emphasized that without a statutory mandate to disclose the route, the authorities cannot justify seizure on this ground alone. The Court observed that the legislature, by omitting any route declaration requirement in the GST Act, intended to remove such restrictions. Therefore, the mere fact that the goods were transported on a different or longer route does not constitute a valid ground for seizure. The Court further reasoned that the power of detention and seizure under the GST Act is circumscribed and can only be exercised when the goods are not accompanied by genuine documents or when there is evidence of tax evasion. In this case, the goods were accompanied by all proper documents, and no discrepancy was found in the quality or quantity of goods. Issue 2: Intention to Evade Tax and Adverse Inference The Court considered whether the authorities could infer an intention to evade tax based solely on the route deviation. The record revealed that no finding was recorded by the authorities indicating any intention of evasion on the part of the petitioner. The Court held that in the absence of any cogent material or evidence pointing to tax evasion, no adverse inference can be drawn against the petitioner. The Court also noted that the deviation in route was due to a mistake by the driver, which cannot be equated with an intention to evade tax. Without any discrepancy in accompanying documents or the goods themselves, the seizure was unwarranted. Issue 3: Genuineness of Accompanying Documents and Quality/Quantity of Goods The authorities did not dispute the genuineness of the documents accompanying the goods, nor was there any discrepancy found in the quality or quantity of the goods at the time of detention. The Court underscored that the seizure power under the GST Act hinges on the absence of genuine documents or evidence of tax evasion. Since neither was present, the seizure was illegal. Application of Law to Facts Applying the above legal principles to the facts, the Court found that the goods were in transit from Meerut to Kanpur and were intercepted at Basti because the route taken did not match the one disclosed. However, since the GST Act does not require route disclosure and the documents were genuine, the seizure lacked legal basis. The Court relied on the precedent where it was held that absence of a route declaration provision under the GST Act precludes seizure on such grounds. The Court also rejected the argument that route deviation implied tax evasion, noting the lack of any recorded intention or evidence to that effect. The mistake by the driver in taking a longer route was not a valid ground for seizure. Treatment of Competing Arguments The petitioner argued that seizure was illegal as the GST Act does not mandate route disclosure and the goods were accompanied by proper documents. The respondent State supported the impugned orders, presumably asserting the authority to seize on route deviation grounds. The Court, after analysis, sided with the petitioner, holding that the seizure was not justified under the GST Act. Conclusions The Court concluded that the impugned orders of seizure and detention could not be sustained in law. The absence of any statutory provision requiring route disclosure, the genuineness of accompanying documents, and the lack of any evidence of tax evasion negated the basis for seizure. Accordingly, the orders were quashed, and any amounts deposited pursuant to those orders were ordered to be refunded. Significant Holdings and Core Principles The Court preserved the following crucial legal reasoning verbatim from the precedent: "In the present case there is no specific provision to declare the route which is to be taken for transporting the goods. He submits that in the earlier applicable VAT Act, there was a provision for declaring the route for transportation of the goods. He further submitted that in the absence of any specific provisions under the G.S.T. Act, no adverse inference can be drawn by the authorities without there being any cogent material on record." "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." Core principles established include:
Final determinations:
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