Facts of the Case

The petitioner, M/S TCI Freight, a division of Transport Corporation of India Limited, engaged in the business of transportation of goods, was engaged by M/s Havells India Limited, Alwar, Rajasthan to transport goods to Shree Balaji Electric Company, Kanpur, through vehicle no. RJ11GB6185, under e-way bill no.741377409037 generated on 21.10.2023. Due to a clerical error, the challans mentioned the vehicle number as HR55AP5675, though the correct vehicle number was later reflected in a consolidated e-way bill dated 23.10.2023. The vehicle was intercepted for this mismatch, and a penalty of Rs.49,10,520/- was imposed on the petitioner. On the petitioner's reply being rejected, an order dated 03.11.2023 demanded the same amount as a precondition for release of the goods and vehicle. The petitioner sought provisional release under Rule 140(1) of the UPGST Rules, 2017 read with Section 67(6) of the UPGST Act, 2017.

Issues Involved

  1. Whether the petitioner was entitled to provisional release of the detained goods and vehicle on furnishing a bond in Form GST INS-04 and a bank guarantee, notwithstanding the penalty demand for the e-way bill vehicle-number mismatch.
  2. Whether the department could insist on payment of the entire penalty amount as a precondition for release, when the statutory scheme permits provisional release on security.

Petitioner's Arguments

  • The mismatch in vehicle number (HR55AP5675 mentioned in the challans instead of the actual RJ11GB6185) was a bona fide clerical mistake, later corrected in the consolidated e-way bill dated 23.10.2023.
  • There was no finding in the order dated 03.11.2023 that the mistake was made with any object or intent to evade tax.
  • No detention order under Section 129(1) in Form GST MOV-06 had been issued for the goods/vehicle, undermining the basis for insisting on the full penalty before release.
  • Under Rule 140(1) of the UPGST Rules read with Section 67(6) of the UPGST Act, 2017, the petitioner was entitled to seek provisional release of the goods and vehicle by furnishing a bond in Form GST INS-04 together with a bank guarantee as security, rather than paying the penalty upfront.

Respondent's Arguments

  • The Standing Counsel for the State admitted that, under the applicable rules, it was open to a party to claim provisional release of goods and a vehicle on furnishing security in the form of a bank guarantee and a bond in Form GST INS-04, as prayed for by the petitioner.

Court Order/Findings

  • Since the Standing Counsel did not dispute the petitioner's entitlement to provisional release on furnishing the prescribed security, the Court found no reason to withhold the relief sought.
  • The writ petition was allowed, and a mandamus was issued directing the respondent to release the goods and vehicle no. RJ11GB6185 provisionally, on the petitioner furnishing a bond in Form GST INS-04 and security in the form of a bank guarantee, as per Rule 140(1) of the UPGST Rules read with Section 67(6) of the UPGST Act, 2017.

Important Clarification

  • Even where a penalty has been demanded for an e-way bill/vehicle-number discrepancy, a transporter is not compelled to pay the full penalty upfront to secure release of the goods and vehicle; provisional release on a bond in Form GST INS-04 with a bank guarantee remains available under Rule 140(1) read with Section 67(6) of the GST Rules/Act.
  • Absence of a detention order under Section 129(1) in Form GST MOV-06, and absence of any finding of intent to evade tax, strengthens a transporter's claim to provisional release pending adjudication of the penalty dispute.
  • Clerical mismatches between challan and e-way bill vehicle numbers, later corrected in a consolidated e-way bill, are treated as procedural lapses rather than conclusive evidence of tax evasion for the purpose of provisional release.

Sections Involved

  • Section 67(6) of the UPGST Act, 2017 — permits provisional release of seized goods on execution of a bond and furnishing of security in the prescribed manner and form.
  • Rule 140(1) of the UPGST Rules, 2017 — prescribes Form GST INS-04 for the bond and the manner of furnishing security for provisional release.
  • Section 129(1) of the UPGST Act, 2017 — deals with detention/seizure of goods and conveyances in transit for contravention of the Act, ordinarily evidenced by Form GST MOV-06.

Decision – In Favour of

Decided in favour of the Assessee — the writ petition was allowed, and a mandamus was issued directing provisional release of the goods and vehicle on the petitioner furnishing the prescribed bond and bank guarantee.

Related Case Laws

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

Case Details

  • Court: Allahabad High Court
  • Case No.: WRIT TAX No.1302 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Anjani Kumar Mishra, J. and Hon'ble Anish Kumar Gupta, J.
  • Decision Date: 16.11.2023
  • Disposal Nature: Allowed

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