Goods in Transit cannot be seized as per GST Law if no inquiry made: HC

The Andhra Pradesh High Court has held that goods and services tax (GST) authorities cannot seize commodities in transit without first conducting an investigation into the transaction’s validity, even if the original supplier is not registered for GST.

The case involves a merchant who purchased iron scrap from a company in Vijayawada, Andhra Pradesh, and then sold it to another company in Telangana’s Medak district.

The goods were being transported by truck when they were seized and detained by GST officials. The detention was justified because the original supplier in Vijayawada did not have a GST registration because it had been suspended.

While the merchant claimed that the authorities purposely ignored the documentation presented by the driver during the inspection, the authorities said that the driver had failed to submit the purchase invoice or demonstrate the manner of payment for the purchase price.

Although GST officers have the authority to commence proceedings against the initial supplier, the court concluded that they cannot seize the trader’s goods simply because they were purchased from a firm with a suspended registration. The official, however, can open an investigation against both the trader and the driver, giving them the opportunity to present their case, the court said.