Introduction: In a recent legal battle before the Allahabad High Court, Akbar Ali Transport Services found itself challenging the seizure of its vehicle under Section 129 of the U.P. Goods and Services Tax Act, 2017 (‘GST Act’). The court, in its wisdom, delved into the circumstances surrounding the truck’s interception and subsequent seizure, providing crucial directions to safeguard the transporter’s rights.
Background: The dispute emanated from the interception of a TATA LPT 407 truck with registration number DLILAA-9970 on November 22, 2023. The petitioner, Akbar Ali Transport Services, was aggrieved by the lack of a show cause notice pertaining to the seizure of its vehicle, which was initiated under Section 129 of the GST Act. The court took cognizance of the fact that no specific notice was served on the petitioner before the truck was seized.
Ex-Parte Nature of Penalty Order: The order dated December 2023, referred to as MOV-09, imposed penalties on the transporter in an ex-parte manner. The court noted that this raised concerns about the violation of the petitioner’s right to be heard, a fundamental principle of natural justice. Akbar Ali Transport Services contended that it had not been afforded an opportunity to present its case before the penalty order was issued.
Judicial Observations: The Allahabad High Court recognized the importance of the truck as a valuable asset, essential for the transporter’s livelihood. The court emphasized that the lack of a hearing before the seizure adversely affected the petitioner’s civil rights. In its analysis, the court found that the penalty order did not establish any collusion between the transporter and the importing dealer, M/s Royal India Enterprises.
Court’s Directions: In light of the aforementioned considerations, the court issued specific directions to address the petitioner’s grievances:
1. Treat Penalty Order as Show Cause Notice: The petitioner was directed to treat the penalty order as a show cause notice. Akbar Ali Transport Services was granted the opportunity to furnish a reply to Respondent No. 2 for the sole purpose of obtaining the release of the truck.
2. Due Opportunity of Hearing: The court emphasized the necessity of providing the petitioner with a fair hearing. The respondent was directed to pass an appropriate reasoned order after affording due opportunity of hearing to the petitioner.
3. Reasons for Rejection: If the claim for the release of the truck was rejected, the court mandated that clear reasons for such rejection be provided.
4. Timeline for Resolution: The court set a timeline of one week from the date of compliance by the petitioner for the entire exercise to be completed.
5. Clarification on Release: The court clarified that the release of the truck, if granted, would not impact the seizure of the goods or the penalty proceedings against the dealer, M/s Royal India Enterprises.
Conclusion: The judgment in the case of Akbar Ali Transport Services vs. State of U.P. and Another reflects the judiciary’s commitment to upholding principles of natural justice and ensuring a fair and transparent legal process. The court’s directions aim to balance the interests of the state in enforcing tax regulations with the rights of the transporter, underlining the importance of procedural fairness in such matters.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Utkarsh Tripathi, learned counsel for the petitioner and Sri Ankur Agrawal, learned Standing Counsel for the State.
2. It transpires that the petitioner is aggrieved by the seizure of his vehicle TATA LPT 407 bearing Registration No. DLILAA-9970. The proceedings have arisen under Section 129 of the U.P. Goods and Services Tax Act, 2017 ( hereinafter referred to as the ‘GST Act’) primarily against the goods found loaded on the above truck that was intercepted on 22.11.2023 and consequently show cause notice on MOV-07 was issued to the dealer. In any case, no show cause notice was issued to the petitioner to show cause why the truck in quesiton may not be seized. Thus, it has been submitted that the seizure of the truck arising out of the order dated 12.2023 passed on MOV-09 being the penalty order is wholly ex-parte against the petitioner.
3. By virtue of the statutory law, the petitioner may not be entitled to release of the truck unless he deposits Rs. One lakh as provided under proviso-1 of Section 129 (6) of the Act. In such facts, it appears that the petitioner is entitled to one opportunity of hearing before the authority to furnish his explanation and to establish the fact that there was no connivance of the petitioner or no active role played by the petitioner in the illegality that are attributed to the dealer viz-a-viz the goods being transported on the truck in At present, the penalty order does not appear to bring out any conduct of the petitioner as may indicate or establish collusion between the petitioner and the importing dealer M/s Royal India Enterprises.
4. Truck being the valuable property and a capital asset of the transporter which is utilised to generate revenue/ income, we perceive valuable civil right of the petitioner having being adversely affected exparte. In so far as no opportunity of hearing has been granted to the petitioner before the truck has been seized and since amount of Rs. One lakh has otherwise become due for release of the vehicle, we dispose of the writ petition with the following directions:-
(i) The petitioner may treat the penalty order as the show cause notice and furnish reply to the Respondent No. 2 only for the purpose of obtaining release of the truck.
(ii) Subject to such reply/ application being filed by the petitioner, appropriate reasoned order may be passed by the said respondent after affording due opportunity of hearing to the petitioner.
(iii) If the claim of the petitioner for release of the truck is rejected, due reason for the same may be given. At that stage petitioner may have a right of
(iv) Such exercise may be completed within a period of one week from the date of compliance made by the petitioner.
(v) Last, It is made clear that the release of the truck, if granted would have no bearing on the seizure of the goods and in the penalty proceedings arising there from against the dealer/ M/s Royal India Enterprises.