Facts of the Case

M/s Sahib Furniture, through its proprietor Kuldeep Kaur, was transporting a consignment of PVC panels and angles from Ludhiana to Kolkata when the truck was intercepted vide an Interception Memo dated 17.12.2017. On physical verification, a discrepancy was noted between the invoiced quantity (11,000 sq. mt.) and the physically verified quantity (4,500 sq. mt.), and it was alleged that no e-way bill (TDF-01 form) had been downloaded for the inter-State movement, and that the consignee, Guru Nanak Institute of Technology, held no GST registration. A show cause notice dated 19.12.2017 followed, and by order dated 27.12.2017 passed under Section 129(3) of the UPGST Act, 2017, tax was assessed on goods valued at Rs.9,70,000/-, with tax quantified at Rs.1,74,600/- and an equal penalty of Rs.1,74,600/- imposed. The petitioner's first appeal was dismissed, upholding the view that the goods were meant for intra-State sale. The writ petition, filed in 2020, was entertained and heard finally because the GST Appellate Tribunal remained unconstituted even by the date of hearing in 2023.

Issues Involved

  1. Whether the detention, tax and penalty order under Section 129(1)/(3) of the UPGST Act was sustainable when founded solely on non-availability of the e-way bill (TDF-01) at the time of interception.
  2. Whether the power under Section 68 of the UPGST Act permitted detention and penalty on that ground alone.
  3. Whether the petitioner, who possessed the e-way bill though not produced or downloaded at interception, was entitled to relief consistent with the Court's earlier rulings on identical facts.

Petitioner's Arguments

  • On the date of interception, the e-way bill was in fact in the petitioner's possession, an aspect already considered by the Court in M/s Godrej and Boyce Manufacturing Company Limited v. State of U.P.
  • The same principle was further applied by the Court in M/s H.B.L. Power Systems Limited v. State of U.P.
  • The impugned orders, founded solely on non-production or non-downloading of the TDF-01 form, could not be sustained in light of these precedents.

Respondent's Arguments

  • Standing Counsel, relying fairly on the State Government's own circular, pointed out that where goods in movement were not accompanied by an e-way bill, the transporter was only to be called upon to upload it.
  • On this basis, counsel effectively conceded that the action taken by the respondents was contrary to the circular issued by the State Government itself.

Court Order/Findings

  • The facts in Godrej and Boyce and H.B.L. Power Systems were squarely applicable, since the detention here too was founded entirely on the missing TDF-01 form.
  • An order of detention and penalty under Section 129 of the UPGST Act cannot be sustained where founded solely on non-accompaniment of the e-way bill, particularly when the department's own circular required only that the e-way bill be uploaded rather than treating its absence as conclusive proof of tax evasion.
  • The power under Section 68 of the UPGST Act is only a power of inspection of goods in movement, not an independent ground for penalty divorced from the statutory requirements properly applied.
  • The orders dated 27.12.2017 and the appellate order dismissing the appeal were quashed; the writ petition was allowed.
  • The respondents were directed to return the amount deposited by the petitioner within two months from production of a certified copy of the order.

Important Clarification

A goods-detention and penalty order under Section 129 of the GST law that rests solely on the ground that the e-way bill was not downloaded or produced at interception cannot be sustained where the department's own circular treats such a lapse as curable by subsequent upload rather than as conclusive proof of evasion.

Sections Involved

  • Section 129, Uttar Pradesh Goods and Services Tax Act, 2017 — governs detention, seizure and release of goods and conveyances in transit.
  • Section 68, Uttar Pradesh Goods and Services Tax Act, 2017 — empowers inspection of goods in movement and requires the e-way bill.

Decision – In Favour of

The decision favours the Assessee. The writ petition was allowed, the detention/tax/penalty order dated 27.12.2017 and the appellate order were quashed, and the department was directed to refund the amount deposited by the petitioner.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: Allahabad High Court (Lucknow Bench)
  • Case No.: WRIT - C No. 1299 of 2020
  • CNR: Not available
  • Coram: Justice Pankaj Bhatia
  • Decision Date: 11.10.2023
  • Disposal Nature: Allowed, orders quashed

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