Facts of the Case

M/s Aasar Scrap Traders, a proprietorship registered under GST, challenged a detention and penalty order dated 18.08.2022 passed by the Assistant Commissioner, Commercial Tax, Mobile Squad, Basti, and the subsequent appellate order dated 14.07.2023 dismissing its appeal, before the High Court of Judicature at Allahabad. The petitioner had purchased scrap from M/s Jai Durga Scrape Traders, Aligarh, under tax invoice dated 15.08.2022, loaded on a specified truck, and after taking delivery, reloaded the goods for onward sale to SSC Enterprises, Muzaffarnagar, generating a fresh invoice and e-way bill dated 16.08.2022. While in transit on 17.08.2022, the vehicle was intercepted by the Mobile Squad; the driver's statement was recorded in Form GST MOV-01, physical verification conducted in MOV-04, and the goods detained under Section 129 of the GST Act on the ground of alleged wrongful ITC availment. The matter was reserved on 16.09.2025 and decided on 22.09.2025.

Issues Involved

  1. Whether the detention and penalty order under Section 129 was based merely on presumption, surmise and conjecture, as alleged by the petitioner.
  2. Whether the driver's statement recorded at the time of interception, stating that no goods moved from Aligarh to Iglass, should be given more weight than the documentary trail and later explanation offered by the petitioner.

Petitioner's Arguments

  • The goods were seized without any legal basis; all documents, including tax invoices and the e-way bill, were available at the time of interception, and detention on mere presumption was impermissible under the Act.
  • The seizure was made on the premise of alleged wrongful availment of ITC, which the petitioner disputed, relying on the Division Bench ruling in M/s Gobind Tobacco Manufacturing Company vs. State of U.P.

Respondent's Arguments

  • At the time of interception, the driver made a categorical statement that the truck was loaded from morning to evening on 16.08.2022 and that no goods were ever brought from Aligarh to Iglass, directly contradicting the petitioner's documentary version.
  • Relying on M/s Ghata Mehandipur Balaji Grinding Works Pvt. Ltd. vs. CCT, it was submitted that a statement obtained from the driver at the first instance carries more evidentiary sanctity than an explanation furnished later.

Court Order / Findings

  • The Court found it undisputed that the driver had categorically stated at interception that the goods moved directly from the Aligarh bypass to Bulandshahar to Meerut, and that no goods were ever loaded and transported from Aligarh to Iglass, rendering the petitioner's documented route claim unhelpful.
  • Applying the principle from M/s Ghata Mehandipur Balaji Grinding Works, the Court held that the driver's unrebutted first-instance statement carries more sanctity than any explanation furnished later, and since the statement was never challenged as having been obtained under duress or otherwise, the impugned orders could not be said to be arbitrary.
  • Finding no infirmity in the detention, penalty, and appellate orders, the Court held that no interference was called for.
  • The writ petition was accordingly dismissed.

Important Clarification

  • A driver's statement recorded at the time of interception under Section 129 carries significant evidentiary weight and, if unrebutted as having been made under duress, will ordinarily be preferred over a subsequent, more favourable explanation offered by the assessee.
  • Mere possession of tax invoices and an e-way bill for the onward leg of a journey does not overcome a driver's contemporaneous admission that contradicts the claimed transportation route.
  • Courts exercising writ jurisdiction under Article 226 are reluctant to re-appreciate such factual findings once they are based on unchallenged first-instance evidence.

Sections Involved

  • Section 129, CGST/UPGST Act, 2017 - governs detention, seizure and release of goods and conveyances in transit in contravention of the Act.
  • Section 68, CGST/UPGST Act, 2017 - requires documents (invoice and e-way bill) to accompany goods in movement, the basis for interception and verification here.

Decision - In Favour of

Decided in favour of the department. The detention, penalty and appellate orders were upheld, and the writ petition challenging them was dismissed.

Case Details

Court: High Court of Judicature at Allahabad
Case No.: Writ Tax No. 1223 of 2023
Coram: Hon'ble Mr. Justice Piyush Agrawal
Date of Decision: 22.09.2025 (Reserved: 16.09.2025)

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