Top Stories [Breaking] Zero Rated Export Goods seized due to Missing GST E-invoice: Madras HC directs Provisional Release Subject to Proof in GSTR [Read Order] The court concluded that the provisional release of the goods should be allowed if the petitioner could provide evidence that the transaction was reported as a zero-rated export in the GSTR-1 return By Navasree A.M – On October 9, 2024 10:15 am – 2 mins read

The Madras High Court allowed the provisional release of zero-rated export goods seized by authorities due to the non-generation of an E-invoice. The vehicle carrying the export goods of zero rated had been detained under Section 129(3) of the GST Act. Justice Mohammed Shaffiq directed the petitioner to provide a copy of the GSTR-1 return as proof that the transaction was a zero-rated export under Section 16 of the Integrated Goods and Services Tax ( IGST ) Act. Upon this proof, the goods would be released. M/s Aqua Excel, the petitioner, challenged a detention order dated August 23, 2024, issued under Section 129(3) of the Central Goods and Services Tax Act, 2017.

The detained goods were intended for export and were eligible for zero-rating under the GST Act. The petitioner argued that any levy of tax or penalty was without jurisdiction because the goods were export-bound and not subject to domestic taxation. Complete Draft Replies of GST ITC Related Notices, Click Here The petitioner had received an export order from M/s Laxana PLC, Colombo, Sri Lanka, worth ₹24,16,604. The goods were transported from Coimbatore to Tuticorin for export under an Export Invoice dated July 31, 2024, and an E-Way Bill dated August 5, 2024. However, during transit, the goods were intercepted by authorities due to the petitioner’s failure to generate an E-invoice. This led to a detention order and a show-cause notice proposing a penalty of 200% of the tax deemed payable on the consignment. The failure to generate the E-invoice was a result of a technical error. An E-invoice was generated the following day, and the authorities were duly notified, explained the Petitioner. It was emphasised that the goods qualified as zero-rated under GST, being meant for export, and that the delayed E-invoice generation was a procedural oversight rather than an attempt to evade taxes.

Therefore, the imposition of a 200% penalty was argued to be unjustified and beyond the authorities’ jurisdiction. Complete Draft Replies of GST ITC Related Notices, Click Here To support their case, the petitioner cited a 2019 government circular that clarified penalties should not be imposed for minor procedural lapses, such as delayed documentation, if valid supporting documents like E-way bills were in place. They also referred to the Foreign Trade Policy of 2023, which emphasises that export consignments should not be detained or seized unless there are significant irregularities.

Mr.R.Suresh Kumar, the Government pleader argued that the petitioner should file a statutory appeal under Section 107 of the GST Act, as established by the precedent in Kramski Stamping and Molding Indis Private Ltd. v. State Tax Officer. In that case, petitioners in similar situations were directed to file an appeal to resolve disputes related to procedural violations. The High Court concluded that the provisional release of the goods should be allowed if the petitioner could provide evidence that the transaction was reported as a zero-rated export in the GSTR-1 return. However, the court clarified that the petitioner still had the right to challenge the detention order by filing an appeal under Section 107 of the GST Act.