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Allahabad High Court Quashes GST Seizure, Rules Non-Declaration of Destination Address Not a Valid Ground with E-Way Bill

Allahabad, India – In a significant ruling providing relief to businesses, the Allahabad High Court has held that goods cannot be seized under Section 129 of the GST Act merely because the destination address is not declared as an additional place of business, provided the consignment is accompanied by a valid e-way bill.

Justice Piyush Agrawal, while allowing the writ petition filed by M/S Prostar M Info Systems Limited, quashed the seizure order dated December 22, 2023, and the subsequent appellate order dated June 7, 2024, terming the litigation "unnecessary."

Case Background

The petitioner, M/S Prostar M Info Systems Limited, received a purchase order from M/s Telecommunication Consultant India Limited (TCIL) to deliver batteries and UPS parts to a consignee in Lucknow. The goods were transferred from the petitioner's Noida unit to Lucknow, accompanied by a delivery challan and a valid e-way bill.

On December 19, 2023, the consignment was intercepted by the Mobile Squad at Etah. Authorities detained the goods on two primary grounds: the manual delivery challan was not signed by an official of the petitioner, and the shipping address mentioned in the documents was not registered as an additional place of business for the company. A show-cause notice under Section 129 (3) of the GST Act was issued, and the petitioner, needing the goods urgently, paid the demanded amount to secure their release before challenging the orders.

Arguments Presented

The petitioner's counsel, Shri Akashi Agrawal, argued that the seizure was unjustified. He contended that the presence of a valid e-way bill, which was generated and uploaded to the department's portal, demonstrated the genuineness of the transaction and negated any intent to evade tax. The counsel highlighted that a minor clerical error of mentioning their own name in the "shipping to" section was later corrected via an invoice. Crucially, he relied on the precedent set by the Allahabad High Court in M/s Sleevco Traders Vs. Additional Commissioner , a judgment later affirmed by the Supreme Court.

On the other hand, Shri Ravi Shankar Pandey, representing the State, defended the seizure, arguing that the non-declaration of the destination as an additional place of business was a valid reason to initiate proceedings under the GST Act .

Court's Analysis and Ruling

The Court found the State's arguments untenable and sided with the petitioner. Justice Agrawal pointed out a critical flaw in the department's action, referencing a circular issued by the Commissioner of State GST on January 17, 2024. This circular explicitly states that proceedings under Section 129 of the GST Act cannot be initiated on the ground that the destination address is not declared as an additional place of business. The Court noted that this circular is binding on the tax authorities.

The judgment emphasized that the core purpose of the e-way bill is to inform the department about the movement of goods, and its validity was not in dispute. The Court observed:

> "Once the goods in question is duly accompanying by e-way bill, which clearly demonstrates the genuineness of the documents and during validity of the said e-way bill, which has not been cancelled, the Department is well aware of the movement of the said goods in question and therefore, no intention to evade payment of tax can be attributed to the petitioner."

Reinforcing its decision, the Court cited its own judgment in M/s Sleevco Traders (supra) , which held that if valid documents like an e-way bill accompany the goods and there is no discrepancy in the goods themselves, minor procedural issues cannot be construed as a contravention of the Act intended to evade tax.

Final Decision

Concluding that the authorities ought not to have dragged the petitioner into "unnecessary litigation" when a valid e-way bill was present, the Court quashed the impugned orders. The decision serves as a crucial reminder to tax authorities to differentiate between procedural lapses and actual intent to evade tax, particularly when transparent documentation like an e-way bill is available.