High Court Quashes GST Seizure for Mere E-Way Bill place-of-dispatch Mismatch; Holds No Tax Evasion Found
High Court Quashes GST Seizure for Mere E-Way Bill place-of-dispatch Mismatch; Holds No Tax Evasion Found
The petitioner, a registered dealer, dispatched goods from Meerut to Deoria against a valid tax invoice, e-way bill and G.R. During transit, the goods were intercepted and a MOV-1 statement was recorded, wherein the truck driver clearly stated that the goods originated from Meerut and were destined for Deoria. The tax invoice also showed Deoria as the place of supply. The sole discrepancy was that the accountant mistakenly mentioned “Varanasi” instead of “Deoria” as the place of dispatch in the e-way bill.
No authority recorded any mismatch or irregularity regarding the quality, quantity, or description of the goods vis-à-vis the accompanying documents. Still, the seizure order was passed, and the petitioner’s appeal was dismissed.
Question Before Court: Whether goods can be detained and penalty imposed under Section 129 of the GST Act solely for a mismatch in the “place of dispatch” in the e-way bill, and no tax-evasion intention recorded; and whether the appellate authority could introduce new grounds beyond the show-cause notice.
HC Ruled: The Court held that the seizure was wholly unjustified. Since the tax invoice, e-way bill and G.R. were all available and matched the goods on physical verification, and the driver’s statement aligned with the invoice showing Deoria as the place of supply, no adverse inference could be drawn from a clerical error in the e-way bill. The Court clarified that proceedings under Section 129 cannot be initiated merely for a place-of-dispatch mismatch when no other defect exists. Beneficial circulars, the Court noted, are binding on authorities and apply even to pending cases. With no finding of tax evasion recorded by any authority, the seizure was held invalid.
The Court further held that the appellate authority had exceeded its jurisdiction under Section 107 by travelling far beyond the show-cause notice and raising entirely new issues without providing the petitioner a chance to rebut. Such an approach, the Court observed, violates the statutory safeguards and principles of natural justice. Therefore, the impugned order was quashed, the writ petition allowed, and any amount deposited was ordered to be refunded within 15 days.
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