Facts of the Case

The petitioner, owner of truck registration no. HR 55 S 1171, engaged in the business of leasing trucks, had given the vehicle on hire to M/s Aruna Chaleswara Transport Company for carrying goods from Delhi to Vijayawada. While passing through Uttar Pradesh, the truck was intercepted on 06.10.2020 by the Assistant Commissioner (Mobile Squad), Commercial Tax, Agra, who found goods in excess of those covered by invoices and issued an order of detention dated 14.10.2020 in Form GST MOV-06. Confiscation proceedings under Section 130 of the CGST/UPGST Act, 2017 followed, and a notice in Form GST MOV-10 dated 23.12.2020 was issued fixing a hearing date of 28.11.2020—a date preceding the notice itself. Without affording any hearing, an order of confiscation dated 29.11.2020 was passed in Form GST MOV-11. The petitioner's first appeal was dismissed on 28.06.2021. A prior writ petition (Writ Tax No. 650 of 2021) succeeded on 15.11.2021, with the Court quashing both the confiscation and appellate orders as vitiated by a defective, backdated show cause notice and breach of natural justice, leaving liberty to issue a fresh notice. Despite this, the department neither issued a fresh notice nor released the truck, prompting the present writ petition seeking its release.

Issues Involved

  1. Whether the truck could continue to be detained after the confiscation order authorising its detention had already been quashed.
  2. Whether the petitioner was entitled to compensation for financial loss caused by continued unauthorised detention.

Petitioner's Arguments

  • With the confiscation order dated 29.11.2020 and the appellate order dated 28.06.2021 already quashed by this Court's judgment dated 15.11.2021, no order of confiscation survived in law.
  • Despite the quashing, the department had neither issued a fresh show cause notice nor released the truck, resulting in continued illegal detention for about 18 months.
  • The petitioner was suffering recurring financial loss of about Rs. 5,000/- per day on account of driver salary, bank EMI, taxes and insurance on the detained vehicle.
  • Sought a mandamus directing release of the truck along with costs.

Respondent's Arguments

  • Learned Standing Counsel produced written instructions of the respondent dated 15.03.2022 confirming that no fresh notice had been issued to the petitioner pursuant to the liberty granted in the earlier judgment.
  • The instructions revealed that the department's own mobile squad office had, over several months, repeatedly sought from higher authorities a portal facility to issue a fresh notice, but no such facility had been made available.

Court Order / Findings

  • Once the confiscation order dated 29.11.2020 and the first appellate order were quashed by the earlier judgment dated 15.11.2021, the confiscation stood eclipsed from the date of its issuance; no order of confiscation existed in the eyes of law.
  • The truck was consequently being detained arbitrarily, illegally and unauthorisedly for nearly 18 months, resulting in harassment to the petitioner.
  • Relying on Lucknow Development Authority v. M.K. Gupta, (1994) 1 SCC 243, and N. Nagendra Rao & Co. v. State of Andhra Pradesh, (1994) 6 SCC 205, the Court held that abuse of power causing harassment attracts compensation.
  • Directed the Commissioner of Commercial Tax, U.P., to determine the petitioner's financial loss (claimed at Rs. 5,000/- per day) within three weeks after hearing the petitioner, and to pay it within the following week.
  • Directed forthwith release of the truck and imposed a cost of Rs. 5,000/- on the respondents, payable to the High Court Legal Services Committee.

Important Clarification

  • Where a confiscation order under Section 130 of the CGST/UPGST Act has been judicially quashed, it stands eclipsed from the date of its issuance, and continued detention of the goods or conveyance thereafter is without authority of law.
  • Public authorities that fail to comply with directions in an earlier writ judgment, causing continued harassment to a party, expose the department to liability for compensation and costs, independent of any fresh proceedings the authority may still be entitled to initiate.

Sections Involved

  • Section 130, CGST Act, 2017 / UPGST Act, 2017 — confiscation of goods or conveyances and levy of penalty, including the mandatory hearing requirement under sub-section (4).

Decision – In Favour of

Decided in favour of the Assessee — the writ petition was allowed with cost; the truck was ordered to be released forthwith, and compensation for the period of illegal detention was directed to be determined and paid.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

Court: High Court of Judicature at Allahabad
Case No.: Writ Tax No. 406 of 2022
Coram: Hon'ble Surya Prakash Kesarwani, J. and Hon'ble Jayant Banerji, J.
Parties: M/S Calcutta South Transport Co. vs State of U.P. and Another

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