UPGST | Truck Is Capital Asset Of Transporter, Seizure Without Notice Affects Civil Rights: Allahabad High Court

The Allahabad High Court has held that the seizure of a vehicle transporting goods affects the civil rights of the transporter as the truck is a capital asset of the transporter. The Court held that the transporter ought to be afforded an opportunity of hearing before passing any penalty order against him.

While observing that the vehicle carrying the goods could be released under proviso-1 of Section 129 (6) of the UP Goods and Service Tax Act, 2017 on payment of Rs. 1 Lakh, the bench comprising of Justice Saumitra Dayal Singh and Justice Manjive Shukla held

“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.”

Petitioner's vehicle was seized while transporting goods of a dealer, M/s Royal India Enterprises. Proceedings were initiated under Section 129 of the UP GST Act 2017 and a show cause notice on MOV-07 was issued to the dealer and consequently, MOV-9 (penalty order) was passed.

Counsel for the petitioner argued that no show cause notice was issued to the petitioner to show cause as to why the truck in question may not be seized. Consequently, the penalty order against the petitioner was ex-parte.

The Court observed that under law, the petitioner will only be entitled to release of the truck if he deposits Rs. 1 Lakh as provided under proviso-1 of Section 129 (6) of the Act.

The Court held that the petitioner is entitled to the opportunity of hearing to present his case and to establish that there was no collusion between the transporter and the dealer.

“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 question.”

Since the penalty order did not indicate nor establish collusion between the transporter and dealer, the Court directed that the penalty order be treated as a show cause notice by the petitioner for obtaining the release of the truck.

The Court directed that subject to the reply being furnished by the petitioner, he may granted the opportunity of hearing.

“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,” observed the Court.

Case Title: Akbar Ali Transport Services vs. State of U.P. and Another 2024 LiveLaw (AB) 25 [WRIT TAX No. - 1524 of 2023]

Citation: 2024 LiveLaw (AB) 25 

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