2018 (2) TMI 195 - HC - GST

Seizure of goods - Tasla - Section 129(1) of the Uttar Pradesh Goods and Services Tax Act, 2017 - Held that - the impugned order of seizure cannot be held to be bad in law only for the reason that the wrong provision of Act has been mentioned while passing the same as the power of seizure is clearly traceable under the relevant Act as well - the impugned order is to be treated to have been passed under IGST Act read with Section 129 of the Central G.S.T. Act rather than the one passed under U.P.G.S.T. Act. The goods and the vehicle seized are directed to be released on furnishing indemnity bond as well as security other than cash and bank guarantee of the taxable amount of the seized goods.

Summary

Issues:
1. Jurisdiction of seizure under the Uttar Pradesh Goods and Services Tax Act, 2017 (U.P.G.S.T. Act) versus the Integrated Goods and Services Tax Act, 2017 (IGST Act).
2. Classification of goods seized as 'Tasla' or 'Ghamella' and their tax implications.

Jurisdiction of Seizure under U.P.G.S.T. Act vs. IGST Act:
The petitioner challenged the seizure order dated 11.01.2018 under Section 129(1) of the U.P.G.S.T. Act, arguing that the transaction was inter-state covered by the IGST Act and not liable to be seized under the U.P.G.S.T. Act. The respondent contended that since the IGST Act and Central G.S.T. Act have analogous provisions like Section 129(1) of the U.P.G.S.T. Act, the seizure was not illegal. The court held that the transaction in question, being inter-state, falls under the IGST Act, making the U.P.G.S.T. Act inapplicable. However, as Section 129 of the U.P.G.S.T. Act has a counterpart in the Central G.S.T. Act, the power of seizure under the IGST Act is analogous to that under Section 129 of the U.P.G.S.T. Act. Therefore, the court concluded that the seizure order was validly passed under the IGST Act read with Section 129 of the Central G.S.T. Act.

Classification of Seized Goods and Tax Implications:
The petitioner argued that the seized goods were 'Tasla' (an exempted item) but were classified as 'Ghamella' (taxable) in the seizure order, making it illegal. The court directed the respondent to verify and file a counter affidavit regarding the classification of the goods within a month. It was crucial to determine whether the seized goods were 'Tasla' or 'Ghamella' and whether 'Ghamella' was exempted from taxation on the date of seizure. The court allowed two weeks for the petitioner to file a rejoinder affidavit and listed the matter for admission or final disposal after the specified period. Meanwhile, the court ordered the release of the seized goods and vehicle upon furnishing an indemnity bond and security equivalent to the taxable amount of the seized goods, excluding cash and bank guarantee.

In conclusion, the judgment clarified the jurisdiction of seizure under the U.P.G.S.T. Act versus the IGST Act and addressed the issue of the classification of seized goods, ensuring a thorough examination of the tax implications and legal validity of the seizure order.