M/S Akash Traders Thru Its Prop. Shri Rakesh Kumar vs. State Of U.P. And 2 Others

Facts

The petitioner, M/s Akash Traders, through its proprietor Shri Rakesh Kumar, filed a writ petition challenging a seizure order dated December 30, 2017, passed under Section 129(1) of the U.P. GST Act. The petitioner was transporting 440 quintals of tax-paid Poplar woods in Vehicle No. U.P.-22-T-9786. The sole ground for seizure cited by the authority was that the size of the wood planks was unequal. The petitioner had produced the E-Way Bill before the court and the authority. No penalty order had been passed against the petitioner at the time of the hearing. The court was presented with the E-Way Bill and the seizure order.

Held

The Court held that the seizure of the goods and vehicle was not justified solely on the ground of unequal plank sizes, especially when the goods were tax-paid and an E-Way Bill was produced. The Court found that the reason for seizure was not substantial enough to warrant the action under Section 129(1) of the U.P. GST Act. The reasoning was that the primary ground for seizure, the unequal plank sizes, was not a sufficient basis for detaining tax-paid goods with a valid E-Way Bill, particularly in the absence of any other violation or a passed penalty order. The ratio decidendi is that a mere observation of minor discrepancies in the physical characteristics of the goods, without any indication of tax evasion or other statutory contravention, cannot form the basis for seizure under Section 129(1). The Court directed the immediate release of the petitioner's vehicle and goods upon the deposit of security equal to the value of the goods shown in the invoice, other than cash or bank guarantee.

Key Issues

1. Whether the seizure of goods and vehicle under Section 129(1) of the U.P. GST Act is justified solely on the ground of unequal plank sizes of the transported wood, when the goods are tax-paid and an E-Way Bill has been produced. Petitioner's Contention: The petitioner argued that the seizure was arbitrary and illegal, as the goods were tax-paid and accompanied by a valid E-Way Bill. The alleged defect of unequal plank sizes did not constitute a violation warranting seizure under Section 129(1) of the Act. They relied on the fact that no penalty order had been passed, implying the grounds for seizure were weak. Respondent's Contention: The respondent, represented by the Standing Counsel, contended that the seizure was made in accordance with the provisions of the Act, citing the unequal plank sizes as a sufficient reason for detention and seizure under Section 129(1). No specific circulars or precedents were mentioned in the judgment for the respondent's argument.