Allahabad High Court Quashes Seizure of Goods Over Undisclosed Business Address

Court Rules Valid E-Way Bill Sufficient to Demonstrate Genuineness of Transaction Under GST Act

In a significant ruling, the Allahabad High Court has quashed the seizure of goods belonging to M/S Prostar M Info Systems Limited under the Goods and Services Tax (GST) Act. The court found that the seizure, which was based on the non-disclosure of an additional place of business, was unwarranted given that a valid e-way bill accompanied the goods, indicating no intention to evade taxes.

The petitioner, M/S Prostar M Info Systems Limited, had been engaged in delivering batteries, UPS, and supporting parts to a consignee in Lucknow as per a purchase order from M/s Telecommunication Consultant India Limited (TCIL). The goods were transported with invoices raised by the company's Lucknow unit, and an e-way bill was generated, indicating the genuineness of the transaction.

However, the consignment was intercepted by a Mobile Squad at Etah, leading to the goods' detention due to the manual delivery challan lacking a signature and the shipment address not being declared as an additional place of business. Following this, a show cause notice was issued under Section 129(3) of the GST Act, which the petitioner challenged in court.

The court, presided over by Justice Piyush Agrawal, referenced a circular issued by the Commissioner of State GST on January 17, 2024, which states that proceedings under Section 129 cannot be initiated solely because the destination address is not declared as an additional business place. The circular is binding on authorities, thereby invalidating the grounds for the seizure.

The court also referred to previous judgments, including those of the Supreme Court and High Court, which supported the petitioner's stance that a valid e-way bill suffices to demonstrate transaction authenticity, negating any presumption of tax evasion.

In its judgment, the court emphasized that the presence of a valid e-way bill, which had not been canceled, meant that the Department was informed of the goods' movement, dismissing any intent to evade taxes.

Consequently, the court quashed the impugned orders and allowed the writ petition, effectively ruling in favor of M/S Prostar M Info Systems Limited. This decision underscores the importance of adhering to procedural fairness and the binding nature of statutory circulars in GST-related matters.

Bottom Line:

GST Law - Goods cannot be seized merely on the ground that the destination address is not declared as an additional place of business of the party to whom the goods are being sent. E-way bill accompanying the goods indicates genuineness of the transaction, and no intention to evade tax can be attributed.

Statutory provision(s): GST Act, Section 129

M/S Prostar M Info Systems Limited v. State of UP, (Allahabad) : Law Finder Doc Id # 2815069