Jindal Pipes Ltd. v. State of U.P  114 taxmann.com 467 (Allahabad)
Service of Order on Driver when the consignor himself appeared as owner is not a valid service of order
Facts: Goodswere being transported from Ghaziabad to Ghazipur, however, E-Way bill, which was prepared by consignor at Ghaziabad from where goods were being transported, distance between Ghaziabad and Ghazipur had been stated as 90 kilometres which was in fact 980 kilometres. On 20.8.2018, when goods after being intercepted by the Mobile Squad Officials at Kanpur were seized under section 129 of UPGST Act, 2017, petitioner deposited due amount under Section 129 and got it’s goods released. When petitioner filed an appeal against order dated 21.8.2018 on 6.3.2019 under section 107 of the Act and by impugned order dated 20.8.2019, appeal was dismissed as having been filed beyond the limitation prescribed, the instant writ petition was filed.
Contention of the Petitioner-. The order was served upon driver of vehicle, Sri Narendra Kumar who was a driver of the transport agency and, therefore, order was neither served on consignee nor on consignor. Learned counsel relied upon a judgment of Allahabad High Court reported in S/S. Patel Hardware v. Commissioner of State 2019 (21) GSTN 145 wherein it has been specifically held that order by which tax was levied and penalty was imposed had to be served upon a person who was likely to be aggrieved by order. It specifically holds that driver was not a “person aggrieved” to whom order ought to have been communicated and, therefore, order definitely was not served upon a person who was likely to be aggrieved and, therefore, learned counsel for the petitioner submits that the appeal which was filed on 6.3.2019 was well within the limitation provided by section 107 of the Act.
Held- Order was served on driver and, therefore, was definitely not served on a person who would have been aggrieved by order and, therefore, service on driver was no service at all. The writ petition was, accordingly, allowed. The appeal shall now be entertained as having been filed within the limitation provided under section 107 of the Act.
Vajid v. State of U.P.  116 taxmann.com 2 (Allahabad)
For release of vehicle without release of goods, burden of proof lies on owner of vehicle to prove that whatever goods were carried in vehicle, were without his knowledge
Facts: Vehicle carrying goods were found to be carried in violation of UPGST Act, 2017. Petitioner was the vehicle owner and appeared before competent authority with a request to release vehicle. Prayer made by petitioner was not accepted by respondents and accordingly and in absence of payment, vehicle could not be released. The amount demanded by the respondents is huge. It cannot be satisfied by the petitioner thus, he is unnecessarily suffering on that count. It is submitted that petitioner was required to prove that whatever goods were carried in vehicle, were without his knowledge. Burden lies on owner of vehicle to prove his innocence however while a counsel appeared on behalf of the petitioner, no proof was produced to show that goods carried in vehicle was without his knowledge. Thus, an order for release of the vehicle could not be passed.
Held: The petitioner alongwith owner of the goods was served with the notice before seizure of the goods. The petitioner is the owner of the vehicle but he failed to prove that he had no knowledge about the goods carried in the vehicle so as to discharge his burden as otherwise envisaged under the Act of 2017. In absence of discharge of burden by the owner of the vehicle, an order for release of vehicle could not be passed and we do not find any illegality in the order.
Ideal Movers (P.) Ltd. v. State Tax Officer  113 taxmann.com 560 (Madras)
Detention of Goods while in movement with Expired E-Way Bill
Facts: Petitioner is a transporter and had been engaged to transport a consignment by Essar Steel India Limited from Kancheepuram District to one Neel Metal Products Ltd. situated at Krishnagiri District. The consignment was accompanied by invoices. An e-way bill had been generated on 12.01.2020 at 7:23 p.m., valid till 16.01.2020. However, lorry had broken down on 13.01.2020 with major gear box damage near Vellore and was thus lying in Vellore at one Lawrence Automotive Private Limited, who vide certificate dated 16.01.2020 confirms this position also stating that the delay in carrying out the repair was on account of the intervening Pongal holidays. After repair, lorry proceeded to deliver goods to destination, however, accompanied by e-way bill that had expired/lapsed on 16.01.2020 itself. The lorry was intercepted at Vellore and detained for non-possession of valid e-way bill.
Observation: It was observed by Hon’ble that there has been some discussions on the phrase owner of the goods coming forward/not coming forward to pay tax and penalty and whether phrase come forward could include an offer by consignor to make payment. However, it was observed by the Court that since clauses (a) and (b) of sub-section (1) commence with phrase on payment, it is not sufficient for consignor to merely make an offer or undertake to remit the tax as in present case, but actually remit payment.
Hon’ble Court further observed that Section 129 is a complete code for purpose of addressing all violations committed in transit leading to detention, seizure and release of goods and brings within its sweep all such contraventions, irrespective of the gravity of the violation itself. This observation is made in response to submission of petitioner that offence in this case is only lapsing of e-way bill, and that too for bonafide reasons, and this offence may not be viewed very harshly. Hon’ble Court in this regard referred to Chapter 16 of Central GST Rules 2017, setting out the E-way Rules in Rule 138. The second proviso under Rule 138(10) permits a transporter to extend the validity of the expired e-way after updating the details in the relevant Form and this benefit would be available in a case such as the present.
Held: The amount to be remitted would, in terms of Section 129(1)(b), be Rs.86,700/- each towards CGST and SGST. As for penalty, petitioner enjoys benefit of Circular no.10 of 2019 dated 31.05.2019 where at para 10, Commissioner has reduced penalty payable in certain circumstances to Rs.5000/-. Thus, upon remittance of taxes of a sum of Rs.86,700/- each towards Central and State Taxes and penalty of Rs.5000/-, the consignment shall be released forthwith.
Shajahan A.M. v. Assistant State Tax Officer  116 taxmann.com 7 (Kerala)
Applicable Tax Rate on Detention of Second Hand Used Motor Cycles
Held: The detained goods and vehicles involved as per impugned proceedings shall be immediately released to petitioner on his furnishing Bank Guarantee for respective values. Hon’ble Court specifically instructed that adjudication officer will ensure that further proceedings pursuant thereto, be adjudicated and finalised after affording reasonable opportunity of being heard to the petitioner without much delay, preferably within a period of 3 to 4 weeks from the date of production of a certified copy of this judgment. While doing so, he will specifically consider and advert to plea made by petitioner that, abovesaid transaction is effected is the 1st transaction entered into by the petitioner, and that he was not having thorough knowledge relating to the fine tuned aspects emanated from the Goods and Service Taxes Act and the Rules framed thereunder, and that a sympathetic consideration may be made in this case.
Further, adjudication officer was asked to consider specific plea made by petitioner that, even otherwise the maximum tax that could be imposed in a case like this could be 12% and not at the rate of 28% as has been ordered in the impugned proceedings, in view of the prescriptions that detained motor cycles are used vehicles and not brand new vehicles, and therefore the tax imposable could be only at the rate of 12% as per the above notification dated 25.1.2018, etc.
Sri Krishna Trader v. State of Gujarat  116 taxmann.com 450 (Gujarat)
Challenge to Validity of Proceedings initiated under Section 130 of CGST Act, 2017
Facts: By an ad-interim order, Hon’ble Court had directed that goods to be released upon writ applicant on depositing an amount of Rs. 2,08,250/-. With this direction, writ applicant availed benefit of an interim-order and got goods released, on payment of requisite amount. The Court was called upon to adjudicate legality and validity of order passed by the authority in GST MOV-11.
There were two grounds raised by department for the purpose of confiscation of goods. First is e-way bill was not generated and second ground was under valuation. In what state of circumstances authority would be justified to invoke section 130 of the Act, for the purpose of confiscation, is now explained in detail in the case of Synergy Fertichem (P.) Ltd. v. State of Gujarat  103 taxmann.com 426/72 GST 641 (Guj.). The relevant Extract of the judgement was as follows:
“99. It is practically impossible to envisage various types of contravention of the provisions of the Act or the Rules for the purpose of detention and seizure of the goods and conveyances in transit. The contravention could be trivial or it may be quite serious sufficient enough to justify the detention and seizure. This litigation is nothing but an outburst on the part of the dealers that practically in all cases of detention and seizure of goods and conveyance, the authorities would straightway invoke section 130 of the Act and thereby would straightway issue notice calling upon the owner of the goods or the owner of the conveyance to show-cause as to why the goods or the conveyance, as the case may be, should not be confiscated. Once such a notice under section 130 of the Act is issued right at the inception, i.e, right at the time of detention and seizure, then the provisions of section 129 of the Act pale into insignificance. The reason why we are saying so is that for the purpose of release of the goods and conveyance detained while in transit for the contravention of the provisions of the Act or the rules, the section provides for release of such goods and conveyance on payment of the applicable tax and penalty or upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) to clause (1) of section 129. Section 129(2) also provides that the provisions of sub-section (6) of section 67 shall mutatis mutandis apply for detention and seizure of goods and conveyances. We quote section 67(6) as under; “67(6) The goods so seized under sub-section(2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be.”
100. Section 129 further provides that the proper officer, detaining or seizing the goods or conveyances, is obliged to issue a notice, specifying the tax and penalty payable and, thereafter, pass an order for payment of such tax and penalty. clause (4) provides that no tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. clause (5) provides that on payment of the amount, referred to in sub-section (1) of the proceedings in respect of the notice, specified in sub-section (3) are deemed to be concluded, and in the last, clause (6) provides that if the tax and penalty is not paid within 14 days of detention or seizure, then further proceedings would be initiated in accordance with the provisions of Section 130.
101. We are of the view that at the time of detention and seizure of goods or conveyance, the first thing the authorities need to look into closely is the nature of the contravention of the provisions of the Act or the Rules. The second step in the process for the authorities to examine closely is whether such contravention of the provisions of the Act or the Rules was with an intent to evade the payment of tax. Section 135 of the Act provides for presumption of culpable mental state but such presumption is available to the department only in the cases of prosecution and not for the purpose of section 130 of the Act. What we are trying to convey is that in a given case, the contravention may be quite trivial or may not be of such a magnitude which by itself would be sufficient to take the view that the contravention was with the necessary intent to evade payment of tax.
102. In such circumstances, referred to above, we propose to take the view that in all cases, without any application of mind and without any justifiable grounds or reasons to believe, the authorities may not be justified to straightway issue a notice of confiscation under section 130 of the Act. For the purpose of issuing a notice of confiscation under section 130 of the Act at the threshold, i.e,. at the stage of section 129 of the Act itself, the case has to be of such a nature that on the face of the entire transaction, the authority concerned is convinced that the contravention was with a definite intent to evade payment of tax. We may give one simple example. The driver of the vehicle is in a position to produce all the relevant documents to the satisfaction of the authority concerned as regards payment of tax etc., but unfortunately, he is not able to produce the e-way bill , which is also one of the important documents so far as the Act, 2017 is concerned. The authenticity of the delivery challan is also not doubted. In such a situation, it would be too much for the authorities to straightway jump to the conclusion that the case is one of confiscation, i.e., the case is of intent to evade payment of tax.
103. We take notice of the fact that practically in all cases, after the detention and seizure of the goods and the conveyance, straightway notice is issued under section 130, and in the said notice, one would find a parrot like chantation ” as the goods were being transported without any valid documents, it is presumed that the goods were being transported for the purposes of evading the tax”. We have also come across notices of confiscation, wherein it has been stated that the the driver of the conveyance is presumed to have contravened the provisions of the Act or the Rules with an intent to evade payment of tax. This, in our opinion, is not justified. The resultant effect of such issue of confiscation notice at the very threshold, without any application of mind or without there being any foundation for the same, renders section 129 of the Act practically otiose. We take cognizance of the fact that once the notice under section 130 of the Act is issued, then the vehicle is not released even if the owner of the goods is ready and willing to pay the tax and the penalty that may be determined under section 129 of the Act. Such approach leads to unnecessary detention of the goods and the conveyance for an indefinite period of time. Therefore, what we are trying to convey is that all cases of contravention of the provisions of the Act or the Rules, by itself, may not attract the consequences of such goods or the conveyance confiscated under section 130 of the Act. Section 130 of the Act is altogether an independent provision which provides for confiscation in cases where it is found that the intention was to evade payment of tax. Confiscation of goods or vehicle is almost penal in character. In other words, it is an aggravated form of action, and the object of such aggravated form of action is to deter the dealers from evading tax.
104. In the aforesaid context, we would like to clarify that we do not propose to lay down, as a proposition of law, or we should not be understood to have taken the view that, in any circumstances, the authorities concerned cannot invoke section 130 of the Act at the threshold, i.e., at the stage of detention and seizure. What we are trying to convey is that for the purpose of invoking section 130 of the Act at the very threshold, the authorities need to make out a very strong case. Merely on suspicion, the authorities may not be justified in invoking section 130 of the Act straightway. If the authorities are of the view that the case is one of invoking Section 130 of the Act at the very threshold, then they need to record their reasons for such belief in writing, and such reasons recorded in writing should, thereafter, be looked into by the superior authority so that the superior authority can take an appropriate decision whether the case is one of straightway invoking section 130 of the Act. Any opinion of the authority to be formed is not subject to objective test. The language of section 130 of the Act leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act or proceed for the purpose of confiscation at the very threshold. But, at the same time, there must be material based on which alone the authority could form its opinion in good faith that it has become necessary to call upon the owner of the goods as well as the owner of the conveyance to show-cause as to why the goods and the conveyance should not be confiscated under section 130 of the Act. The notice for the purpose of confiscation must disclose the materials, upon which, the belief is formed. It could be argued that it is not necessary for the authority under the Act to state reasons for its belief. For the time being, we proceed on the basis of such argument. But, if it is challenged that the notice is bereft of the necessary details or the satisfaction of the authority is imaginary or based on mere suspicion, then the authority must disclose the materials, upon which, his belief was formed as it has been held by the Supreme Court in Sheonath Singh’s case [AIR 1971 SC 2451]. In Sheonath Singh (supra), the Supreme Court held that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court. The formation of the opinion by the authority that the goods and the conveyance are liable to be confiscated should reflect intense application of mind. We are saying so because it is not any or every contravention of the provisions of the Act or the Rules which may be sufficient to arrive at the conclusion that the case is one of an intention to evade payment of tax. In short, the action must be held in good faith and should not be a mere pretence.”
Held: Impugned order of confiscation, in Form GST MOV-11, was quashed and set aside. Matter was remitted to the respondent No.2 for fresh consideration, so far as the issue of confiscation is concerned. While considering the issue a fresh, the respondent No.2 had to bare in mind principles, explained in Synergy Fertichem (P.) Ltd. (supra) and more particularly, observations made in paragraph Nos.99 to 104 of the said judgment.