Facts of the Case

M/s Bahubali Trading Co. had a consignment of Mentha Oil (Bill No. DC/MM/27 dated 17.06.2023), being transported by vehicle UP 41 AT 1722 from Masauli to Fatehpur (both in Barabanki district) on a stock-transfer basis between the same entity's additional and principal places of business, detained under Section 129 of the CGST Act, 2017. The Assistant Commissioner (Mobile Squad), State Tax, Barabanki, passed an order dated 20.06.2023 and issued a consequential show-cause notice for tax and penalty on the same date. The petitioner challenged both the detention order and the show-cause notice before the Allahabad High Court (Lucknow Bench) and sought interim release of the goods and vehicle.

Issues Involved

  1. Whether the detention/seizure of the goods and vehicle under Section 129 was justified when the goods were said to be moving on a stock-transfer basis, without any sale or tax evasion.
  2. Whether the goods and vehicle should be released provisionally pending adjudication.

Petitioner's Arguments

  • There was no evasion of tax since the goods were being transported on a stock-transfer basis between the petitioner's own places of business.
  • Prolonged detention risked deterioration of the Mentha Oil and unnecessary immobilisation of the transport vehicle; the goods and vehicle should be released provisionally.

Respondent's Arguments

  • The State Standing Counsel submitted that the goods and vehicle could be released if the petitioner satisfied the conditions specified under Section 129 of the CGST Act, 2017.

Court Order / Findings

  • The Division Bench (Justice Rajesh Singh Chauhan and Justice Shree Prakash Singh) found that the petitioner had a prima facie case that the seizure was in derogation of law, and accordingly granted liberty to file an application for provisional release before the adjudicating authority within seven days, raising all available pleas.
  • Any such application was directed to be considered and disposed of within seven days of receipt, with the order communicated to the petitioner forthwith.
  • The Court did not itself decide whether the seizure was legally justified or whether the movement was genuinely a stock transfer; it left this to the adjudicating authority.

Important Clarification

This order does not decide whether the Section 129 detention was lawful or whether the goods were genuinely moving as a stock transfer — it only expedites the process for seeking provisional release. Transporters and businesses facing similar detentions should note that courts commonly direct a fast-tracked provisional-release application rather than deciding the underlying tax-evasion allegation themselves.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Section 129 (detention, seizure and release of goods and conveyances in transit).

Decision – In Favour of

Disposed of without a decision on merits — the petitioner obtained only an expedited procedure for seeking provisional release; the correctness of the detention itself was left for the adjudicating authority to decide.

Case Details

Court: High Court of Judicature at Allahabad, Lucknow Bench
Case No.: WRIT TAX No. 153 of 2023
Neutral Citation: 2023:AHC-LKO:41952-DB
Coram: Justice Rajesh Singh Chauhan and Justice Shree Prakash Singh
Date of Order: 28.06.2023

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