CJ Darcl Logistics Ltd. Vs State of U.P. And 3 Others (Allahabad High Court)
The Allahabad High Court, in the case of Cj Darcl Logistics Ltd. Vs State of U.P. And 3 Others, recently addressed the validity of seizure proceedings initiated under Section 129(3) of the GST Act when an e-way bill expires due to compelling circumstances like a vehicle breakdown, provided there is no evidence suggesting an intent to evade tax. The court ultimately ruled in favor of the petitioner, quashing both the detention and the subsequent appellate orders.
Case Background and Core Issue
The petitioner, Cj Darcl Logistics Ltd., a registered company engaged in the business of goods transportation, challenged the detention and seizure orders dated 25.12.2019 and 25.09.2020. The core contention was that two consignments of HR Coils being transported from Kanpur to Ludhiana, Punjab, were intercepted and seized solely because the accompanying e-way bills had expired during transit. The petitioner maintained that this expiry was not deliberate but resulted from an unavoidable mechanical failure of the transport vehicle.
The goods were loaded in a truck on 7th December 2019, accompanied by all necessary documents, including two tax invoices issued by Tata Steel Ltd. During the journey, the truck developed a breakdown and was towed to a mechanic shop in Loha Mandi, Ghaziabad, for necessary repairs. The repair process took several days, leading to the lapse of the e-way bill validity period.
Arguments Presented
Petitioner’s Case:
The counsel for the petitioner argued that there was a clear absence of any intent for evasion of tax. The goods were fully documented with valid tax invoices, and the delay was caused by a compelling circumstance—the vehicle breakdown. The petitioner submitted supporting evidence, including a bill from the mechanic and assistance records from a crane service, to substantiate the delay. It was also noted that an updated e-way bill was produced before the final seizure order was passed, though it was not accepted by the authorities. The core submission was that punitive action under Section 129, which is linked to tax evasion, cannot be sustained when all facts point to a genuine technical delay.
Respondent’s Stance:
The Additional Chief Standing Counsel, supporting the impugned orders, contested the petitioner’s claim by arguing that the driver had a duty to immediately inform the parties about the breakdown. Furthermore, the authorities contended that the e-way bill ought to have been updated before the vehicle resumed its journey after the repairs, irrespective of the breakdown. This failure to update, according to the State, justified the imposition of penalty proceedings.
Court’s Rationale and Judicial Precedents
The Allahabad High Court carefully reviewed the facts and the submitted evidence. The court noted that it was undisputed that the goods were being transported from Kanpur to Punjab and were intercepted only on the ground of the expired e-way bill.
The crucial point of the court’s analysis centered on the intent to evade tax, which is the fundamental prerequisite for initiating action under Section 129. The court observed that the petitioner had provided supporting materials (mechanic’s bill, etc.) to explain the delay. Critically, the detention and appellate authorities passed their orders without either adequately rebutting or recording a cogent finding against the evidence provided by the petitioner regarding the truck breakdown.
The High Court held that because all other relevant documents accompanying the goods—including tax invoices, quantity, and quality details—were consistent and showed no discrepancy, the intent of tax evasion was not attracted in the present case.
In support of its decision, the Court relied on its established judicial precedents:
These precedents collectively established that proceedings under Section 129(3) of the GST Act cannot be sustained in the absence of any material evidence pertaining to the evasion of tax. The mere technical lapse of an e-way bill, particularly when explained by compelling circumstances and supported by documentation, is insufficient grounds for seizure and penalty.
Conclusion and Final Order
Based on its findings that the impugned orders were passed without properly considering the evidence and failed to establish any intent of tax evasion, the Allahabad High Court ruled that the orders could not be sustained in the eyes of law.
Consequently, the Court quashed the impugned orders and allowed the writ petition. The Court further directed that any amount deposited by the petitioner during the course of the proceedings be refunded in accordance with the law. The judgment reinforces the principle that procedural lapses, where justifiable and not indicative of fraud, should not automatically lead to the severe penal provisions under Section 129.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Mr. Punit Arun holding brief of Mr. Aloke Kumar for the petitioner and Mr. R.S. Pandey, learned ACSC for the State -respondents.
2. By means of present petition, the petitioner is assailing the order dated 25.12.2019 passed by respondent no. 3 and the order dated 25.9.2020 passed by respondent no. 4.
3. Learned counsel for the petitioner submits that the petitioner is a registered company incorporated under the Companies Act having its registered office at Darcel House, Plot No. 55 P, Institutional Area, Sector 44, Gurugram 122003, Haryana and involved in the business of transportation of goods from one place to another place. He submits that on 7.12.2019, the petitioner has booked two consignments of HR Coils from the business premises of Tata Steel Ltd. Kanpur for delivery in the State of Punjab for which H.R. Coil, Tata Steel Limited has issued Tax invoice no. 2116055357 dated 7.12.2019 for the quantity of 21.450 metric ton in the name of Tata Steel Processing Ludhiana, Punjab and Tax invoice No. 2116055358 dated 7.12.2019 for quantity of 22.40 metric ton in the name of Sangeeta Steel Corporation, Ludhiana, Punjab. He submits that for the supply of said goods, two e-way bills were generated from the national portal and the said goods were loaded in Truck No. UP79 T 4783 but during course of journey, the vehicle developed some break down to which same was taken to the place of mechanic situated at Loha Mandi, Ghaziabad by taking assistance from Sharma Crane Service, where the vehicle got repaired by the mechanic namely Rahul Mistri, who issued bill no. 103 dated 12.12.2019. He further submits that during course of repair, the e-way bill was expired to which the driver never informed the parties, thereafter, the goods were on its onward journey was intercepted and seized on the ground that e-way bill was expired, however, before the seizure order could be passed, an updated e-way bill was produced but being not satisfied with the same, the goods were detained and seized and for release of the same, proceedings under Section 129 (3) was initiated in which the impugned order has been passed against which an appeal has been filed which has also been dismissed without considering the material on record.
4. Learned counsel for the petitioner submits that there is no intention for evasion of tax as the goods were accompanying with all the requisite documents but due to compelling circumstances, the vehicle could not cross the boarder / reached the destination and in the meantime, the e-way bills were expired. The said fact was duly supported by the documents but without giving any due weightage to the same, the impugned order has been passed.
5. In support of his submission, learned counsel for the petitioner has relied upon the judgements of this Court in the cases of M/s Shyam Sel and power ltd. Vs. State of UP and others (Neutral Citation NO. 2023: AHC 191074), M/s Harley Foods Products Pvt. Ltd. Vs. State of UP and others (Neutral Citation NO. 2018:AHC:70181:DB and M/s OSR Creation Vs. State of UP and others (Neutral Citation No. 2025:AHC:13336.
6. Per contra, learned Additional Chief Standing Counsel supports the impugned order and submits that if for the sake of argument, the story developed by the petitioner, is accepted then it was the duty of the driver to intimate the parties about the break down of the truck and also if transportation of the goods were delayed for more than 4 days then the parties must have contacted the transporter. He submits that even assuming without admitting that there was a break down of the truck but before start of the vehicle after its repair, the e-way bill ought to have been updated.
7. After hearing learned counsel for the parties, the Court has perused the records.
8. It is not in dispute that the goods were being transported from Kanpur to Punjab and same was intercepted on the ground that e-way bill has been expired. The petitioner has explained the reason for delay to which supporting materials have also been brought on record but without adverting / rebutting the said evidence of truck break down, the impugned orders have been passed. The petitioner has filed supporting evidence of his stand and explained the reason of delay but without recording any cogent finding, the same has been disbelieved though all the relevant documents were accompanied with the goods in question and there was no discrepancy with regard to quality / quantity of the goods. Therefore, the intent of tax evasion is not attracted in the facts of the present case.
9. This Court in the cases of M/s Shyam Sel and Power Ltd. (supra), M/s Harley Foods Products (supra) and M/s OSR Creation (supra) have categorically held that in the absence of any material with regard to evasion of tax, the proceedings under Section 129 (3) cannot be sustained.
10. In view of above, the impugned orders cannot be sustained in the eyes of law and same is hereby quashed.
11. The writ petition is allowed.
12. Any amount deposited by the petitioner shall be refunded to him in accordance with law.
