M/S K.L Industries vs. State Of U.P. And 2 Others

Held

The Court held that the detention and seizure of the goods and vehicle were not justified. The Court found that the E-way bill was generated and downloaded by the petitioner much before the detention and seizure of the goods and vehicle, and it disclosed all the necessary information. The Court also noted the confusion that existed regarding the requirement of an E-way bill for intra-State transactions, as indicated by the order passed by the Commissioner of State Tax, U.P. Goods & Service Tax. In light of these facts, the Court found no irregularity in the transaction. Consequently, the seizure order and the penalty notice issued under Section 129(1) and 129(3) of the Act, along with the consequential proceedings, were set aside. The Court directed the release of the goods and vehicle in favor of the petitioner forthwith.

Facts

The petitioner, M/s K.L. Industries, sold 15.330 MT of Iron Scrap to M/s Siani Alloys Ltd., Muzaffar Nagar, charging CGST & SGST at 9% each. The goods were loaded onto Vehicle No. UP17T-6277. Due to confusion regarding the requirement of an E-way bill for intra-State transactions, stemming from an order by the Commissioner of State Tax, U.P., the petitioner believed no E-way bill was necessary. The vehicle was intercepted and detained on April 23, 2018, by the Assistant Commissioner, State Tax, Mobile Squad, Khatauli Unit, solely for the absence of an E-way bill. The petitioner immediately generated and furnished an E-way bill under Rule 138 of the CGST Rules at 10:03 AM on the same day. The goods were subsequently seized under Section 129(1) of the UPGST Act. The Court noted that the E-way bill was downloaded before the detention and seizure.

Key Issues

1. Whether the detention and seizure of goods and vehicle under Section 129(1) of the UPGST Act were justified solely on the ground of the absence of an E-way bill at the time of interception, when the E-way bill was subsequently generated and furnished before seizure, and there was confusion regarding its requirement for intra-State transactions. Petitioner's arguments: The petitioner contended that the detention and seizure were illegal because an E-way bill was generated and provided before the seizure. They also argued that there was a genuine confusion regarding the E-way bill requirement for intra-State transactions due to an order passed by the Commissioner of State Tax, U.P. Goods & Service Tax. The petitioner relied on the fact that all necessary information was disclosed in the E-way bill, which was downloaded before the vehicle was seized. Respondent's arguments: The respondent (State) argued for the legality of the detention and seizure based on the non-compliance with E-way bill requirements at the time of interception.