GST Act | No Provision To Disclose Route Of Transportation Of Goods: Allahabad High Court Quashes Demand

The Allahabad High Court has held that unlike the Value Added Tax Act, 2008, there is no specific provision in the Goods and Service Tax Act, 2017 which requires assesses to declare route of transportation/ transit of goods. Therefore, goods cannot be detained for not being transported through the regular route.

A bench comprising of Justice Piyush Agrawal held,

“Under the GST Act, there is no specific provision which bounds the selling dealer to disclose the route to be taken during transportation of goods or while goods are in transit however there was a provision under VAT Act to disclose the route during transportation of goods to reach its final destination. Once the legislature itself in its wisdom has chosen to delete the said provision, this Court opined that the authorities were not correct in passing the seizure order even if the vehicle was not on regular route or on different route.”

Further, the Court held that goods can only be detained or seized if they are not accompanied by genuine documents as provided under the UP Goods and Service Tax Act, 2017 and rules thereunder.

Petitioner is a dealer engaged in trading of Bidi, Matchbox, tobacco, etc. The goods were loaded by suppliers of the petitioner in Mainpuri and Kannauj and were intercepted I transit. Order under Section 129(3) of UP Goods and Service Tax Act, 2017 was passed raising a demand of Rs. 2,36,304.68/- which the petitioner deposited under protest. Appeal filed by the petitioner was dismissed confirming the demand.

Counsel for petitioner contended that goods were accompanied by all documents. Goods were detained on the ground that driver could produce only one tax invoice and E-way bill. Further, it was argued that unlike the VAT Act, GST Act does not require the assesee/dealer to declare the route to be taken by the driver prior to transportation. In absence of any provision to that effect, no adverse inference could be drawn by the Authorities.

The Court observed that the statement of the driver which was being relied on by the Respondent did not mention that goods were being unloaded at Mainpuri itself, instead of the place mentioned in the invoice.

The Court held that there was a specific provision in the VAT Act for disclosing the route of transportation of goods. However, legislature carefully omitted the said provision from the GST Act. Accordingly, the Court held that Authorities erred in detaining the goods on ground that different route was being followed for transportation.

Further, the Court held that “the power of detention as well as seizure can be exercised only when the goods were not accompanying with the genuine documents provided under the Act. The genuineness of the documents has not been disputed at any stage.”

While allowing the writ petition, the Court imposed a cost of Rs. 5000 on the State to be paid to the petitioner.

Case Title: M/S Om Prakash Kuldeep Kumar v. Additional Commissioner Grade-2 And Another 2023 LiveLaw (AB) 378 [WRIT TAX No. - 277 of 2022]

Case Citation: 2023 LiveLaw (AB) 378

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