Allahabad HC Slams Authorities for Seizing Goods Despite Valid GST E-Way Bill

Prostar M Info Systems Limited Vs State of UP and 3 others (Allahabad High Court)

The petitioner challenged two orders issued under Section 129(3) of the GST Act following the detention of goods during transit. The petitioner, a company with GST registration and business locations in Noida and Lucknow, had procured parts from its Noida unit for supply under a purchase order. Although the Lucknow unit issued the invoices, a delivery challan was used to show internal transfer, accompanied by a valid e-way bill. The petitioner inadvertently mentioned its own name and GST number in the “shipping to” section but later corrected this by issuing an invoice and generating an e-invoice.

On 19.12.2023, the Mobile Squad intercepted the goods, alleging that the manual delivery challan lacked an authorized signature and that the shipping address was not an additional declared place of business. A show-cause notice was issued, and the goods were released upon payment. The petitioner’s challenge to the resulting order was rejected by the authorities.

The Court noted that a circular dated 17.01.2024 expressly states that non-declaration of the destination address as an additional place of business cannot justify proceedings under Section 129. The State could not dispute this. The Court held that the presence of a valid e-way bill demonstrated genuineness of the transaction and negated any intention to evade tax. Relying on precedent, the Court concluded that the detention and subsequent proceedings were unwarranted. The impugned orders were quashed, and the writ petition was allowed.