Allahabad HC: Transporter Cannot Be Penalised, When No Intent to Evade Tax and Goods Belong to Consignor:

Allahabad HC: Transporter Cannot Be Penalised, When There Is No Intent to Evade Tax and Goods Belong to Consignor M/s Anish Transport Company, a GST-registered proprietorship engaged in transporting goods, was carrying pharmaceutical items from Dehradun to Delhi on the night of 24/25 September 2020. The vehicle was intercepted at Meerut on 25.09.2020. Physical verification on 26.09.2020 revealed a mismatch: 138 cartons containing 16,295 boxes were found, whereas the e-way bill recorded 167 cartons with 19,685 boxes. Relying on this shortfall, the authorities detained the goods and vehicle under Section 129 of the GST Act. A show-cause notice was issued, and an order under Section 129(3) was passed on 09.10.2020. The goods were then released on 16.10.2020 upon payment of an amount equal to market value. Thereafter, the appeal filed by the transporter was rejected by the appellate authority, leading to the present writ petition. Main Issue: Whether a transporter can be subjected to seizure, penalty, or proceedings under Section 129 of the GST Act when the goods belong to the consignor, all documents are valid, and there is no finding of intent to evade tax by the transporter. HC's Decision: The High Court allowed the writ petition and quashed the impugned order, holding no adverse finding against the transporter. The transporter’s role was limited to the carriage of goods for hire. The release order clearly recorded that the goods belonged to the consignor and were released to them after payment. The consignor explained that fewer cartons were loaded inadvertently by labourers at night. In the absence of contrary evidence, such a factual explanation could not be used to penalise the transporter. Since there was no finding linking the transporter to any evasion attempt, seizure of the vehicle or continuation of proceedings under Section 129 was unjustified. Any amount deposited by the petitioner pursuant to the impugned orders must be refunded in accordance with the law. Thus, the writ petition was allowed, and the impugned order dated 26.10.2021 was quashed. To Read Full Judgment, Download PDF Given Below