Satyendra Goods Transport Corp. VS State of Uttar Pradesh

In this case, a writ petition under Article 226 of the Constitution of India has been filed, seeking the quashing of orders related to the seizure of goods under Section 129(1) and the imposition of tax and penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (U.P.G.S.T. Act 2017).

The matter was heard by a panel comprising Sri Pradeep Agarwal, the learned counsel for the petitioner, Sri Rahul Shukla, the learned Additional Chief Standing Counsel representing the opposite parties 1, 3, and 4 (presumably representing the State of Uttar Pradesh), and Dr. Deepti Tripathi, the learned counsel for the opposite party no. 2.

The petitioner challenged the seizure of 220 pieces of Chocolate Display Coolers belonging to M/s Voltas Ltd., which were being transported from Pant Nagar, Rudrapur, Uddham Singh Nagar, in the State of Uttarakhand. The petition seeks a writ of certiorari to quash the orders issued under Section 129(1) and the penalty imposed under Section 129(3) of the U.P.G.S.T. Act 2017.

During the proceedings, a preliminary objection was raised by Sri Rahul Shukla, arguing that the petitioner has an alternative statutory remedy available under Section 107 of the U.P.G.S.T. Act 2017, which allows for an appeal before the Additional Commissioner, Grade II (Appeal). However, the petitioner’s counsel, Sri Pradeep Agarwal, countered this objection by asserting that the legal basis for the impugned action—namely, Rule 138 of the U.P.G.S.T. Rules 2017, the notification issued by the State Government under this rule, and Section 129 of the U.P.G.S.T. Act 2017—was inapplicable in this case. Consequently, he argued that the preliminary objection regarding the availability of an alternative remedy was not tenable.

The core issue revolves around the applicability of certain rules and notifications under the U.P.G.S.T. Act 2017 and the legitimacy of the seizure and penalty orders issued by the authorities, which the petitioner contends are without legal foundation. The outcome of this writ petition would hinge on whether the court finds the petitioner’s arguments regarding the inapplicability of the relevant legal provisions to be persuasive.

In the case at hand, a writ petition was filed under Article 226 of the Constitution of India seeking to quash orders of seizure and imposition of tax and penalty under Section 129 of the U.P. Goods and Services Tax Act, 2017 (U.P.G.S.T. Act). The petition was presented by Sri Pradeep Agarwal, the counsel for the petitioner, against the orders issued by the state authorities, with the respondents being represented by Sri Rahul Shukla, the Additional Chief Standing Counsel, and Dr. Deepti Tripathi.

The petitioner’s primary argument was that the seizure and penalty orders were issued under an inapplicable provision, thereby challenging the legal basis for the actions taken by the tax authorities. Specifically, the petitioner contended that the rules under which the action was taken, including Rule 138 of the U.P.G.S.T. Rules and the corresponding notification, were not applicable in this instance.

The facts of the case revolve around the transportation of 220 pieces of Chocolate Display Coolers by M/s Voltas Ltd. from Uttarakhand to Kolkata, West Bengal. The goods, accompanied by a tax invoice and with the Integrated Goods and Services Tax (I.G.S.T.) duly paid, were intercepted in Lucknow, Uttar Pradesh, during transit. The authorities found that the Transporter Declaration Form (T.D.F.) presented did not correspond to the vehicle or the goods being transported, leading to the seizure of the truck and goods.

Subsequent to the seizure, proceedings were initiated under Section 129 of the U.P.G.S.T. Act against the truck driver, Mohammad Alamgir, and a show-cause notice was issued. Despite the Transporter, M/s T.V.S. Logistics Service Pvt. Ltd., submitting a reply, the authorities passed an order for payment of tax and penalty.

The petitioner’s counsel argued that since the transaction was an inter-State supply, it was governed by the Integrated Goods and Services Tax Act, 2017 (I.G.S.T. Act), and that matters of inspection, search, seizure, and arrest should fall under the Central Goods and Services Tax Act, 2017 (C.G.S.T. Act), as per the provisions of Section 20 of the I.G.S.T. Act.

A preliminary objection was raised by the state’s counsel, arguing that the petitioner had a statutory remedy available through an appeal before the Additional Commissioner under Section 107 of the U.P.G.S.T. Act. However, the petitioner’s counsel maintained that the statutory remedy was inapplicable due to the fundamental legal issues surrounding the seizure order’s validity, thus the writ petition should be entertained directly.

The case thus hinged on the legal applicability of the U.P.G.S.T. Act and related rules to the interstate transaction and whether the petitioner’s arguments justified bypassing the statutory appeal process in favor of direct judicial intervention.

In this case, a writ petition was filed under Article 226 of the Constitution of India, seeking to quash the seizure orders under Section 129(1) and the imposition of tax and penalty under Section 129(3) of the U.P. Goods and Services Tax Act, 2017 (U.P.G.S.T. Act 2017). The petitioners argued that the actions taken were not legally tenable, and therefore, sought relief from the court.

During the hearing, the petitioner’s counsel, Sri Pradeep Agarwal, argued that the seizure and penalty were based on an incorrect application of Rule 138 of the U.P.G.S.T. Rules 2017 and the related notification, as well as Section 129 of the U.P.G.S.T. Act 2017. He contended that these provisions were inapplicable in this case. The preliminary objection raised by the state’s counsel, Sri Rahul Shukla, was that the petitioner had a statutory remedy available under Section 107 of the U.P.G.S.T. Act 2017, which required them to appeal before the Additional Commissioner, Grade II (Appeal). However, the petitioner’s counsel argued that the very basis of the impugned action was flawed, rendering the preliminary objection unsustainable.

The case involved the transportation of 220 pieces of Chocolate Display Coolers by M/s Voltas Ltd. from Uttarakhand to West Bengal. The goods were intercepted in Lucknow, Uttar Pradesh, and the truck, along with the goods, was seized on December 17, 2017, because the Transport Declaration Form (T.D.F.) presented was found to be associated with another vehicle and different goods. Proceedings were initiated under Section 129 of the U.P.G.S.T. Act 2017 against the truck driver, who is the petitioner in this case.

The petitioner’s counsel argued that the goods in question were part of an inter-state supply covered by the Integrated Goods and Services Tax Act, 2017 (I.G.S.T. Act 2017), and as per Section 20(xv) of the I.G.S.T. Act, the provisions of the Central Goods and Services Tax Act, 2017 (C.G.S.T. Act 2017) were applicable regarding inspection, search, seizure, and arrest. He highlighted that under Section 68 of the C.G.S.T. Act, the government could require the person in charge of the conveyance to carry specified documents during the movement of goods. However, at the time of the incident, no notification had been issued by the Central Government specifying the required documents under Rule 138 of the C.G.S.T. Rules 2017, making the rule inoperative. Therefore, the petitioner argued that the invoice and other documents being carried were sufficient, especially since I.G.S.T. had already been paid.

Regarding the alleged fabricated T.D.F. Form, the petitioner’s counsel explained that the truck driver, being uneducated, mistakenly obtained a T.D.F. Form from a cyber-cafe at Rampur with incorrect details due to an error by the cafe owner. He argued that there was no malicious intent, and the T.D.F. Form was not even necessary since this was an inter-state supply.

In contrast, the state’s counsel, Sri Rahul Shukla, argued that under Section 6 of the C.G.S.T. Act 2017, there was a provision for cross-empowerment of State Authorities to function as ‘proper officers’ for the purposes of the C.G.S.T. Act, and a similar provision existed in the U.P.G.S.T. Act 2017. This argument supported the state’s position that the seizure and penalty were justified under the applicable law.

In this case, a writ petition was filed under Article 226 of the Indian Constitution, seeking a writ of certiorari to quash orders of seizure under Section 129(1) and the imposition of tax and penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (U.P.G.S.T. Act 2017).

The petitioner was represented by Sri Pradeep Agarwal, while the state was represented by Sri Rahul Shukla, who raised a preliminary objection regarding the availability of a statutory remedy of appeal under Section 107 of the U.P.G.S.T. Act 2017. However, Agarwal argued that the relevant rules and notifications were inapplicable, rendering the objection untenable.

The facts of the case involve the transportation of 220 pieces of Chocolate Display Coolers from Uttarakhand to West Bengal. The consignment, accompanied by an invoice indicating the payment of Integrated Goods and Services Tax (I.G.S.T.) at 28%, was intercepted in Lucknow on December 17, 2017. During the check, a T.D.F. Form was presented, which was found to be related to a different vehicle and goods. Consequently, the truck and goods were seized for not carrying the correct T.D.F. Form, and proceedings under Section 129 of the U.P.G.S.T. Act 2017 were initiated against the truck driver, Mohammad Alamgir, the second petitioner.

Agarwal contended that the transaction was an inter-state supply of goods, governed by the Integrated Goods and Services Tax Act, 2017 (I.G.S.T. Act 2017), which mandates that provisions of the Central Goods and Services Tax Act, 2017 (C.G.S.T. Act 2017) apply to matters of inspection, search, seizure, and arrest. He further argued that Rule 138 of the Central Goods and Services Tax Rules, 2017 (C.G.S.T. Rules 2017), which requires specific documents to be carried during the transportation of goods, had not been notified by the Central Government at the time, making it inoperative. Therefore, the documents carried, including the invoice, were sufficient, especially since the I.G.S.T. had already been paid.

Regarding the fabricated T.D.F. Form, Agarwal explained that the driver, being uneducated, had mistakenly downloaded an incorrect form from a cyber café. However, this error was not malicious, and the T.D.F. Form was not required for inter-state supply.

On the other hand, Rahul Shukla argued that under Section 6 of the C.G.S.T. Act 2017, state authorities were cross-empowered to function as “proper officers” for the purposes of the C.G.S.T. Act, with a similar provision existing in the U.P.G.S.T. Act 2017. He contended that a notification dated July 21, 2017, under Rule 138 of the U.P.G.S.T. Act 2017 required a T.D.F. Form for transportation of taxable goods valuing Rs. 5000 or more across state borders, and the failure to comply with this requirement justified the seizure and penalty under Section 129 of the U.P.G.S.T. Act 2017.

The court also reviewed the legal background of the Goods and Services Tax (GST) regime, initiated by the Constitution (101st Amendment) Act 2016, which introduced several amendments to the Constitution, including the introduction of Articles 246-A, 269-A, and 279-A, establishing the framework for GST. As per the amended Article 269-A, GST on inter-state trade or commerce is to be levied and collected by the Government of India, with the tax apportioned between the Union and States as recommended by the GST Council. The court acknowledged the legislation passed by both the Parliament and the State of Uttar Pradesh to implement GST, including the I.G.S.T. Act 2017, the C.G.S.T. Act 2017, and the U.P.G.S.T. Act 2017.

This writ petition, filed under Article 226 of the Constitution of India, seeks to quash orders of seizure under Section 129(1) and the imposition of tax and penalty under Section 129(3) of the U.P. Goods and Services Tax Act, 2017 (U.P.G.S.T. Act 2017). The petitioner, represented by Sri Pradeep Agarwal, contests these actions on the grounds that the relevant statutory provisions and rules were not applicable to the case, thus rendering the actions taken by the authorities invalid.

The petitioner’s counsel argued that the incident involved an inter-state supply of goods, which falls under the purview of the Integrated Goods and Services Tax Act, 2017 (I.G.S.T. Act 2017). Consequently, the provisions of the Central Goods and Services Tax Act, 2017 (C.G.S.T. Act 2017) would apply, particularly in matters of inspection, search, seizure, and arrest. The petitioner emphasized that on the date of the incident, no notification had been issued by the Central Government under Rule 138 of the C.G.S.T. Rules 2017, prescribing the documents required for the transportation of goods. Therefore, the petitioner contends that the rule was inoperative, and the transportation documents carried were sufficient, especially since the I.G.S.T. at 28% had already been paid.

The case facts reveal that 220 pieces of Chocolate Display Coolers were being transported from Uttarakhand to West Bengal, with all applicable taxes paid. However, the consignment was intercepted in Uttar Pradesh, where the authorities found discrepancies in the T.D.F. Form carried by the driver. The form was related to a different vehicle and consignment. As a result, the goods and the vehicle were seized, and proceedings under Section 129 of the U.P.G.S.T. Act 2017 were initiated against the truck driver.

The State, represented by Sri Rahul Shukla, raised a preliminary objection regarding the availability of a statutory remedy through an appeal before the Additional Commissioner, Grade II (Appeal) under Section 107 of the U.P.G.S.T. Act 2017. However, the petitioner’s counsel argued that the preliminary objection was not tenable due to the inapplicability of the underlying rules and provisions cited by the authorities.

The State’s counsel further contended that under Section 6 of the C.G.S.T. Act 2017, State Authorities are empowered to act as ‘proper officers’ under both the C.G.S.T. Act and the U.P.G.S.T. Act. Additionally, a notification dated July 21, 2017, under Rule 138 of the U.P.G.S.T. Act 2017, mandated the use of a T.D.F. Form for the transportation of taxable goods valued at Rs. 5000 or more in cases of inter-state trade. Since this requirement was not met, the seizure and penalty actions were justified and in accordance with the law.

The petition also highlighted the legislative background, referring to the Constitution (101st Amendment) Act, 2016, which led to the creation of a new indirect taxation regime, including the I.G.S.T. Act, C.G.S.T. Act, and respective State GST Acts. The amendment and subsequent legislation aimed to streamline the levy and collection of Goods and Services Tax (GST) across India.

The court examined the arguments and the statutory provisions in question, particularly the provisions relating to inspection, search, seizure, and the requirements for documentation during the transportation of goods. The court also noted that the State’s cross-empowerment to act under the C.G.S.T. Act 2017 was consistent with the broader framework established by the GST legislation.

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