Route Deviation Case: Allahabad HC Quashes Penalty in Landmark Decision

• The case is being heard by Justice Piyush Agrawal.

• The case involves a Writ Tax due to the non-functioning of the GST Tribunal in Uttar Pradesh.

• The petitioner is challenging an order issued on 17-8-2021 by respondent no. 1 under Section 129(3) of the UP GST Act, 2017. The petitioner is a registered dealer involved in trading of Bidi, Matchbox, Tobacco, etc.

• The petitioner received orders for supplying Bidi and Matchbox from two different parties. The petitioner prepared tax invoices and E-way bills for these transactions. The goods were loaded onto a truck for transportation. During transit, the goods were intercepted, and a seizure/detention order was issued under GST MOV-06.

• The petitioner contested this order but was unsuccessful. Hence, this writ petition.

• The petitioner's counsel argues that the goods were accompanied by genuine documents, and the interception and seizure were unjustified. The truck driver's statement does not support the claims made by the authorities.

• The Additional Chief Standing Counsel supports the impugned orders and alleges that the truck driver's statement contradicts the accompanying documents.

• The court has reviewed the case records.

• The goods were sold with genuine documents (tax invoices and E-way bills). The driver's statement was alleged to indicate that the goods were to be unloaded at a different location, but the statement itself does not support this.

• There is no specific provision under the GST Act requiring the disclosure of the route for transporting goods. Such a provision existed under the previous VAT Act but was removed in the GST Act. The authorities were incorrect in seizing the goods based on the route deviation.

• Detention and seizure powers can only be exercised if the goods lack genuine accompanying documents. In this case, the authenticity of the documents was never in question.

• It was alleged that only one tax invoice and E-way bill were presented, but no supporting evidence was provided.

• The Karnataka High Court and Telangana High Court have ruled that mechanical detention of goods in transit cannot be based solely on the direction chosen for delivery or undervaluation.

• The petitioner's writ petition is allowed, and the impugned order is quashed.

• The petitioner is awarded a cost of Rs. 5,000 to be paid by the state within 15 days and recoverable from the erring officer.

• The amount previously deposited by the petitioner is to be refunded within one month upon the production of a certified copy of the order.

• The case is listed for review in three months in a chamber to ensure compliance with the court's order. Om Prakash Kuldeep Kumar vs. Additional Commissioner Grade-2