Release goods & vehicle when accompanied by E-way bill: Allahabad HC

Western Carrier India Ltd Vs State of U.P (Allahabad High Court)

The Hon’ble Allahabad High Court in M/s. Western Carrier India Ltd v. State of U.P. and 4 Others [WRIT TAX No. – 1020 of 2023 dated September 15, 2023] held that since the assessee’s goods in transit were accompanied by the necessary documents, including an E-Way bill and invoice, the department should have released the goods and vehicle under Section 129 of the Central Goods and Service Act, 2017 (“the CGST Act”).

Facts:

M/s. Western Carrier India Ltd (“the Petitioner”) is engaged in the business of providing carrier services for the transportation of goods. The Petitioner has filed a writ petition praying for the release of the vehicle and goods seized by the Revenue Department (“the Respondent”) as the required amount of the penalty has been paid as per the terms and conditions stipulated in Section 129(1)(a) of the CGST Act.

The Petitioner relying upon the clarification issued in Circular No. 76/50/2018-GST dated December 31, 2018 contended that either the consignor or consignee would be the deemed owner of the goods transported, and the Respondent has erred in imposing penalty on the Petitioner. It was also contended that the Petitioner has the paid amount of penalty and fulfilled the conditions as stipulated in Section 129(1)(b) of the CGST Act.

The Respondent contended that the Petitioner has the right to avail alternative remedy of filing an appeal under Section 107 of the CGST Act for the release of vehicle and goods.

Issue:

Whether the Revenue Department can seize the goods and vehicle even after payment of penalty as per the terms and conditions stated in Section 129(1) of the CGST Act?

Held:

The Hon’ble Allahabad High Court in WRIT TAX No. – 1020 of 2023 held as under –

• Observed that, vide Issue 6 of Circular No. 76/50/2018-GST dated December 31, 2018, either the consigner or the consignee accompanied with relevant documents should be deemed as the owner of the goods. Therefore, the Petitioner is considered as an owner of the goods.
• Directed that, the Respondent to release the goods and vehicle seized in transit under Section 129(1)(a) of the CGST Act, as were accompanied by necessary documents, including an E-Way bill and invoice, etc.

Conclusion: In the case of M/s. Western Carrier India Ltd vs. State of U.P., the Allahabad High Court clarified the applicability of Section 129 of the CGST Act regarding the seizure and release of goods and vehicles. The Court upheld that when goods in transit are accompanied by the necessary documents, such as an E-Way bill and invoice, they should be released under Section 129(1)(a) of the CGST Act. This judgment emphasizes the importance of compliance with circulars issued by the tax authorities and ensures that goods are not unduly seized after penalties have been paid in accordance with the law.

Relevant Provision:

Section 129(1) of the CGST Act

129. Detention, seizure and release of goods and conveyances in transit.—

(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,––

(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in the case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;

 on payment of the applicable tax and penalty equal to fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in the case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty- five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT 

Heard learned counsel for the petitioner, learned Standing Counsel representing State and Sri Gopal Verma learned counsel appearing for respondent nos. 4 & 5.

The petitioner is aggrieved by an order dated 14.08.2023 contained in annexure no.10 to the writ petition whereby the liability has been fixed upon it to pay penalty in terms of Section 129 (1) b of the C.G.S.T. Act, 2017. Further prayer made in the writ is to command the respondents to release the goods and the vehicle seized by respondents by accepting penalty in terms of section 129 (1)(a) of the GST Act.

In addition to other arguments advanced, learned counsel for the petitioner places reliance upon a circular issued by the Board on 31.12.2018 which provides that if the invoice or any other specified document is accompanying the consignment of goods then either the consigner or the consignee should be deemed to be the owner of the goods. Relying upon such circular, it is urged on behalf of the petitioner’s that the petitioner is a carrier and the goods transported by it was accompanied by E-Way bill and invoice etc. The submission is that the authorities in such circumstances have erred in imposing penalty upon the petitioner inasmuch as by virtue of the aforesaid circular the petitioner was liable to be treated as the owner of the goods and consequently the provision of section 129(1)(a) alone could have been invoked.

Learned State counsel submits that in respect of the demand of tax, the petitioner has the remedy of filing an appeal U/s 107 of the Act. So far as the prayer for release the goods and vehicle is concerned, learned State counsel does not dispute the petitioners assertion that the goods in transit were accompanied by requisite documents including E-Way bill and invoice etc. The applicability of the circular dated 31.12.2018 is otherwise not doubted.

The department itself has issued a circular dated 31.12.2018 containing clarification on various issues relating to the applicability of the provision, the department is expected to comply with it. The sixth issue is relevant in the circular for the present purposes and is extracted hereinafter.

In view of the fact that the department does not dispute the petitioner’s assertion that the goods in transit were carrying necessary documents in the form of E-Way bill and invoice etc, we are of the view that the department ought to have considered the petitioner’s prayer for release of goods and vehicle upon compliance of the provisions contained U/s 129 (1) (a) of the Act. A direction accordingly is issued to the respondents to act in terms of the above circular and release the goods upon compliance of the condition stipulated U/s 129(1)(a). All other questions are left open to be examined in statutory appeal to be filed before the appropriate authority.

Accordingly, the writ petition stands disposed of.

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