HC Quashes Detention of Goods in Transit Absent Intent to Evade Tax

Case Details: Chawla Sugandhi Bhandar vs. State of U.P. - [2025] 179 taxmann.com 239 (Allahabad)

Judiciary and Counsel Details

• Piyush Agrawal, J.
• Praveen Kumar for the Petitioner.
• Ravi Shanker Pandey, Learned Addl. Chief Standing Counsel for the Respondent.

Facts of the Case

The petitioner-assessee, a GST-registered trader of pan masala, transported goods purchased against a tax invoice, GR, and E-way bill. During transit, the truck was intercepted and detained due to the alleged absence of one bag on verification. The petitioner submitted that the bag might have fallen during transit or was missed due to the driver’s mistake. An order was passed against the petitioner under section 129(3) of CGST and Uttar Pradesh GST Act. The petitioner filed an appeal, which was dismissed on a new ground that the vehicle in question was a light commercial vehicle, disregarding the registration certificate (RC). The petitioner contended that the RC showed the vehicle was a truck with an open body, not a light commercial vehicle, and that the appellate authority’s new ground lacked any record-based material or clarification from the transport department. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the detention and seizure of goods, as well as the tax and penalty under section 129(3), were unsustainable in the absence of any intent to evade tax. The Court observed that the appellate authority’s reliance on the light commercial vehicle ground lacked record-based material and contradicted the RC showing the vehicle as a truck. The Court also noted that the petitioner’s explanation regarding the missing bag was credible. Consequently, the impugned orders were quashed, and the writ petition was allowed with a direction to refund any amount already deposited during the pendency of the petition.