The Allahabad High Court held that if the proper e-way bill is presented before the issuance of a seizure order, any discrepancies are resolved, rendering the detention of goods unwarranted. Justice Piyush Agrawalstated that “Once E-way bill was produced before the seizure order could be passed, it would not be said that any contravention of the provision of the Act have been made by the petitioner.” The court’s statement clarified that goods cannot be detained if the e-way bill is submitted prior to the GST authorities passing the seizure order. Get a Copy of GST Inspection, Search & Seizure, Click here M/s Bans Steel, the petitioner is a retail and wholesale distributor of iron and steel, was transporting goods from Punjab, to Bans Steel, Uttar Pradesh, when the vehicle carrying the consignment was intercepted. Although an e-way bill was generated for one invoice, a technical error delayed the generation of the e-way bill for the second invoice. The petitioner rectified this by submitting the e-way bill before the seizure order was passed.

Despite the timely submission, the petitioner faced a tax liability of Rs. 382,168 and an equal penalty, which was upheld by an appellate authority. The petitioner contended that the submission of the e-way bill before the seizure order rendered the proceedings unjustified, citing precedents from similar cases including Shri Surya Traders Vs. Union of India and M/s Havells India Ltd. Vs. State of UP and others. Get a Copy of GST Inspection, Search & Seizure, Click here Conversely, the Additional Chief Standing Counsel ( ACSC ) upheld the impugned order, asserting that the Act and the Rules were violated as the goods were not accompanied by the necessary documents at the time of interception.

The ACSC contended that this absence implied an attempt to evade tax, a stance supported by earlier court rulings in similar cases including M/s Akhilesh Traders Vs. State of UP and others and M/s Hawkins Cooker Limited Vs. State of UP and others. The counsel argued that, since the goods were not accompanied by the proper documents, it was reasonable to presume that the petitioner intended to avoid paying tax, as this presumption was not contested by the petitioner at the time of detention. He clarified that the issue was not a mere technical error, such as an unfilled Part III or a mistake in the e-way bill. Therefore, he requested the dismissal of the current writ petition. Get a Copy of GST Inspection, Search & Seizure, Click here The court considered both submissions and addressed the contentions of the respondent- GST department. The bench clarified that in the case of Hawkins Cooker, the proceedings under Section 129 of the Act were justified as the goods were seized due to a lack of accompanying documents. Similarly, in M/s Akhilesh Traders ( supra ), the absence of both a tax invoice and an e-way bill at the time of detention justified the proceedings under Section 129.

However, in the present case, the consignment contained two separate tax invoices: no. 21 dated 12.7.2019 and no. 22 dated 12.7.2019, corresponding to different dealers, stated the court. The court added that, while there was no dispute regarding tax invoice no. 21, the e-way bill for tax invoice no. 22 was not initially available during detention but was later produced before the seizure order. At no point did the authorities highlight any discrepancies in the e-way bill. Hence, the judgments cited by the ACSC do not apply to the current case, rendering them ineffective for the respondents’ argument. Get a Copy of GST Inspection, Search & Seizure, Click here The court noted that although no e-way bill was produced during the initial inspection, it was provided before the seizure order was finalised. As the authorities found no discrepancies in the e-way bill, the detention of the goods was deemed unwarranted.

In addition, it noted that “The GST authorities have full mechanism as well as power that after detaining the goods, if the same was not accompanying with the proper documents, the authority could have made survey of the business premises of the petitioner to find out the correctness of transaction but the respondent authorities have chosen in their wisdom not doing so.” Therefore, the Single Bench of Allahabad High Court quashed the order imposing a tax liability and penalty on the petitioner, directing the refund of any deposited amount within two months