Smt. Usha W/o Shri Tarun Vs Union of India (Rajasthan High Court)
Summary: The Rajasthan High Court dealt with a writ petition challenging a notice dated 03.09.2026 issued under Section 130 of the CGST/RGST Act, 2017 concerning Vehicle No. HR-84-2165 carrying Soyabean Refined Oil. The petitioner, proprietor of M/s Madhav Cotton and Oils Mill, Charkhi Dadri, Haryana, had purchased the goods from M/s Agarwal Rice & Oil Mill, Hindon City, Karauli, under Tax Invoice No. 329 dated 27.08.2026. The vehicle was intercepted at MIA, Alwar, when the driver produced the tax invoice, e-way bill and other transport documents, and the goods corresponded with those documents in description and quantity. The proceedings were principally founded on alleged route deviation, absence of toll/RFID entries, assumptions regarding transit time and previous RFID movements.
The petitioner argued that neither Section 68 nor Rule 138A prescribed a particular route or required passage through specified toll plazas and relied upon Karnataka Traders v. State of Gujarat and M/s Exide Industries Ltd. v. Addl. Commissioner. It was contended that absence of toll/RFID data did not establish a GST contravention or intent to evade tax. During hearing, however, the petitioner confined the relief to release of the goods and vehicle and undertook to furnish a bank guarantee equivalent to the probable tax liability and applicable penalty. The High Court held that the revenue’s interest could be safeguarded through such security without prejudicing the pending proceedings. It consequently directed the competent authority to communicate the required bank guarantee amount and ordered that, upon furnishing the guarantee to its satisfaction, the vehicle and goods loaded therein be released forthwith.
Cases Discussed
- M/s Karnataka Traders v. State of Gujarat, 2022 SCC OnLine Guj 28 – relied upon for the contention that mere route deviation, without cogent material indicating intent to evade tax, does not justify confiscation proceedings under Section 130.
- M/s Exide Industries Ltd. v. Addl. Commissioner, 2024 SCC OnLine All 10631 – relied upon on the issue of route deviation and invocation of Section 130.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The petitioner seeks quashing of the notice dated 03.09.2026 issued under Section 130 of the CGST/RGST Act, 2017, in respect of Vehicle No. HR-84-2165 carrying Soyabean Refined Oil. The notice initiates confiscation proceedings on allegations of route deviation and absence of toll/RFID entries. The petitioner also seeks release of the detained goods and vehicle.
2. The petitioner is the proprietor of M/s Madhav Cotton and Oils Mill, Charkhi Dadri, Haryana. It purchased Soyabean Refined Oil from M/s Agarwal Rice & Oil Mill, Hindon City, Karauli, under Tax Invoice No. 329 dated 27.08.2026.
2.1 On 27.08.2026 at about 10:05 PM, the vehicle carrying the consignment was intercepted at MIA, Alwar. At the time of interception, the driver produced the tax invoice, e-way bill and other transport documents. The goods were found to correspond with the documents in description and quantity. There is no allegation that the accompanying documents or the underlying transaction were forged, fabricated or otherwise non-genuine.
2.2 The proceedings were initiated principally on the allegation that the vehicle had deviated from the expected route and that toll/RFID entries were unavailable. The authorities also relied upon assumptions concerning transit time and the vehicle’s previous RFID movements.
2.3 The petitioner contends that neither the CGST/RGST Act nor the Rules prescribe a particular route for transportation of goods, require passage through specified toll plazas, or mandate generation of toll/RFID data. Despite the petitioner’s objections, the driver’s affidavit and supporting documents, the detention was continued. Orders dated 27.08.2026 and 03.09.2026 were passed, followed by the impugned show-cause notice dated 03.09.2026 and a reminder dated 04.09.2026 proposing action under Section 130.
2.4 Aggrieved thereby, the petitioner has approached this Court challenging the legality and jurisdiction of the proceedings and seeking release of the goods and vehicle.
3. Learned counsel for the petitioner submits that the impugned notice and the temporary registration order dated 03.09.2026 are without jurisdiction and contrary to the CGST/RGST Act. It is submitted that the conditions for invocation of Section 130 are not satisfied.
3.1 It is contended that neither Section 68 nor Rule 138A prescribes a designated route for transport of goods. Reliance is placed on M/s Karnataka Traders v. State of Gujarat, 2022 SCC OnLine Guj 28, and M/s Exide Industries Ltd. v. Addl. Commissioner, 2024 SCC OnLine All 10631, wherein it was held that a mere route deviation, absent cogent material indicating an intent to evade tax, does not justify confiscation proceedings under Section 130.
3.2 Counsel further submits that all statutory documents, including the tax invoice, bilty/G.R. and e-way bill, were available at the time of interception. The consignment matched the description and quantity stated therein. The consignor and consignee are registered taxable persons, and GST was duly charged under the invoice.
3.3 It is urged that the absence of toll/RFID data, by itself, neither establishes contravention of GST law nor proves intent to evade tax. Reliance on earlier e-way bills or previous RFID movements of the vehicle is stated to be collateral and incapable of proving any breach in relation to the present consignment. According to the petitioner, the allegation of evasion rests solely upon conjecture regarding the route and transit time.
3.4 It is also submitted that the authorities did not take into account the fact that the tax had been charged and all relevant particulars were available. No notice was issued to the consignor or consignee, while proceedings were initiated against the driver. Counsel submits that confiscation under Section 130, which entails serious civil and commercial consequences, cannot be sustained in the absence of a foundational GST contravention and material establishing the requisite intent. Continued detention, it is urged, is causing substantial commercial prejudice.
4. Learned counsel for the respondents opposes the petition and submits that the proceedings have been initiated in accordance with law on the basis of the material available on record.
5. During the hearing, learned counsel for the petitioner, on instructions, confined the relief to release of the goods and vehicle. The petitioner undertakes to furnish a bank guarantee equivalent to the probable tax liability and applicable penalty, subject to which the goods and vehicle may be released.
5.1 It is submitted that the revenue’s interest can thus be adequately secured. The vehicle is depreciating while lying in the custody of the Department, which is also burdened with its parking and maintenance. The goods, being edible oil, may deteriorate if retained without proper supervision and storage.
6. Having considered the submissions, we are of the view that the revenue’s interest can be safeguarded by requiring the petitioner to furnish a bank guarantee, without prejudicing the pending proceedings before the competent authority. The petitioner is, therefore, entitled to release of the vehicle and the goods, subject to such security.
7. Accordingly, upon the petitioner approaching the competent authority with a copy of this order, the competent authority shall forthwith communicat the amount for which the bank guarantee is required. Upon furnishing a bank guarantee to the satisfaction of the competent authority, the vehicle and the goods loaded therein shall be released forthwith.
8. The petition stands disposed of in the above terms.
9. Pending applications, if any, shall stand disposed of.
