The Allahabad High Court ruled that goods transported with a valid and authentic GST e-way bill cannot be detained or seized. The Court strongly criticised the department for subjecting a registered taxpayer to unnecessary litigation despite full compliance with GST requirements.
The applicant, M/s Prostar M Info Systems Limited, is supplying UPS systems, batteries, and pertinent parts, and has transported goods from its Noida unit to its Lucknow principal place of business for onward delivery to the authorised consignee of TCIL.
The consignment was carried with a delivery challan and a valid e-way bill, which stayed in force during interception. On 19 December 2023, the mobile squad confined the vehicle at Etah based on two reasons: (i) the manual delivery challan was unsigned, and (ii) the destination address was not shown as an additional place of business in the GST registration.
The applicant stated that these were minor clerical lapses and that the movement of the goods was disclosed wholly via a valid e-way bill.
The release of goods emerged only after the payment of tax and penalty. The adjudication authority validated the demand u/s 129(3), and the appellate authority upheld the order, filing the present writ petition.
HC stated that the Commissioner of State GST had issued a circular on 17 January 2024, specifying that proceedings under Section 129 cannot be started solely because the shipping/destination address is not declared as an additional place of business.
Justice Piyush Agarwal held that such circulars are binding on all field officers and failure to comply with them renders the proceedings unsustainable.
The counsel of the state was not able to dispute the same or produce any authority explaining the seizure on that foundation.
Once the goods are carried via a valid, active e-way bill, the department gets to know about the movement of denying any presumption of intent to evade tax, the court cited.
As the documents were genuine and the invoice had been generated, the court held that the applicant is not liable for the fault or breach of the GST Act.
Also, the single breach held that authorities could not detain the goods when a valid GST e-way bill establishes bona fide movement.
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The court mentioned that, “In the case in hand, once the valid document, i.e., e-way bill, was also accompanying the goods, which has not been disputed, the authority concerned ought not to have dragged the petitioner in an unnecessary litigation.”
Subsequently, the court quashed the orders passed via the adjudicating and appellate authorities and permitted the writ petition.
| Case Title | M/s Prostar M Info Systems Limited vs. State of UP and 3 others |
| Case No. | WRIT TAX No. – 1469 of 2024 |
| Counsel for Petitioner | Akashi Agrawal |
| Counsel for Respondent | C.S.C. |
| Allahabad High Court | Read Order |
