Facts of the Case

The petitioner, Premium Traders, a trader dealing in iron and steel, sold 10,090 kg of TMT bar valued at Rs.4,16,717/- to M/s. Umar Enterprises, Ghaziabad, under invoice No.747 dated 04.03.2022. Both the petitioner and the buyer are registered dealers. The consignment was not accompanied by an e-Way Bill during transit and was intercepted, resulting in an interception memo in FORM GST MOV-02 dated 04.03.2022. A detention order under Section 129(1) of the CGST/UPGST Act, 2017 dated 05.03.2022 was issued in FORM GST MOV-06, but in the name of the driver, Sachin Kumar, rather than the petitioner. The goods were detained on three grounds — absence of an e-Way Bill, alleged under-valuation, and absence of GSTIN on the invoice. An undated notice under Section 129(3) was issued, again in the driver's name via a temporary login ID unknown to the petitioner, without fixing any date for reply or hearing. The petitioner nevertheless filed a reply dated 16.03.2022, explaining that the GSTIN had printed faintly due to low cartridge ink and furnishing a clear copy of the invoice. The respondent no.3 passed an order dated 14.03.2022 under Section 129(1)(b), reiterating the original grounds and recording that no reply was filed, disregarding the petitioner's explanation.

Issues Involved

  1. Whether the detention order dated 14.03.2022 passed under Section 129(1)(b) of the CGST/UPGST Act, 2017 could be sustained when it was passed without considering the petitioner's reply and without affording an opportunity of hearing.
  2. Whether issuance of notices and passing of orders against a driver's temporary login ID, without the petitioner's knowledge, vitiated the proceedings.

Petitioner's Arguments

  • The invoice accompanying the goods was genuine and issued by the petitioner, and the GSTIN was merely faintly printed due to low ink, not absent; a clear copy was furnished on interception.
  • Notices and the detention order were issued in the name of the driver, Sachin Kumar, through a temporary ID whose password was never shared with the petitioner, denying him a real opportunity to respond.
  • Despite filing a reply dated 16.03.2022 explaining the discrepancies, the respondent passed the order recording that no reply had been submitted, without considering it.

Respondent's Arguments

  • The standing counsel, on instructions from respondent no.3, merely reiterated the order already passed under Section 129(1)(b) of the Act, without addressing the petitioner's specific grievance that his reply had not been considered.

Court Order/Findings

  • It was admitted by the respondents that the invoice accompanying the goods was in fact issued by the petitioner.
  • The respondent no.3 committed a manifest error of law in not affording any opportunity of hearing to the petitioner despite the latter's persuasion, rendering the order passed in breach of principles of natural justice.
  • The impugned order dated 14.03.2022 under Section 129(1)(b) of the CGST/UPGST Act, 2017 was quashed.
  • The matter was remitted to respondent no.3 to pass a fresh order in accordance with law after considering the petitioner's reply dated 16.03.2022, within two weeks from submission of a certified copy of the order along with the reply, after affording a reasonable opportunity of hearing.
  • The Court clarified that it had not expressed any opinion on the merits of the petitioner's case.

Important Clarification

  • Where a Section 129(3) order is passed without considering a reply actually filed by the assessee and without affording a hearing, it amounts to a breach of natural justice warranting quashing, irrespective of the underlying merits of the detention grounds.
  • Conducting Section 129 proceedings against a driver's temporary login credentials unknown to the consignor undermines the assessee's ability to participate meaningfully in the proceedings.

Sections Involved

  • Section 129, CGST/UPGST Act, 2017 — detention, seizure and release of goods and conveyances in transit.
  • Section 129(1)(b), CGST/UPGST Act, 2017 — provision under which the impugned detention order was passed.
  • Section 129(3), CGST/UPGST Act, 2017 — requires notice specifying tax and penalty payable before an order is passed.

Decision – In Favour of

Disposed of in favour of the Assessee on the ground of breach of natural justice — the detention order dated 14.03.2022 was quashed and the matter remitted for a fresh decision within two weeks after hearing the petitioner. The Court expressly did not adjudicate the merits of the detention grounds (absence of e-Way Bill, under-valuation and the GSTIN discrepancy), which remain open before the respondent authority.

Related Case Laws

No related case laws are available on this site at present.

Case Details

  • Court: Allahabad High Court
  • Case No.: Writ Tax No. 582 of 2022
  • Coram: Hon'ble Surya Prakash Kesarwani, J. and Hon'ble Jayant Banerji, J.
  • Order Date: 20.04.2022

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.