2018 Taxo.online 97

WRIT TAX No. – 584 of 2018 dated 05.04.2018





Central Goods & Services Tax Act, 2017

129, 164, 166, 168 and 168

CGST Rules


UPSGST Notification No. KANI-1014/XI-9(52)/17 dated 21.07.2017, UPSGST Notification No. KANI-2-138/XI-9(42)/17, dated 30.01.2018, UPSGST Notification No. KANI-2-155/XI-9(42)/17, dated 31.01.2018, UPSGST Notification No.KANI-177/XI-9(42)/17, dated 06.02.2018, UPSGST Commissioner Circular No. 2899, dated 06.02.2018.

Krishna Murari, Justice & Ashok Kumar, Justice

In favour of assessee

High Court


Represented by: – 

Petitioner: – Suyash Agarwal 

Respondent: – C.S.C., A.S.G.I. 

Order: – 

  1. Heard Sri Suyash Agarwal, learned counsel for the petitioner, Sri C.B. Tripathi, learned Special Counsel for the State and Sri Anant Kumar Tiwari, learned counsel representing the Union of India. 
  1. The instant writ petition has been filed by the petitioner for the following relief;
  1. Issue a writ, order or direction in the nature of certiorari quashing the seizure   memo dated 25.03.2018 passed under Section 129(1) UPGST Act by Respondent no.4. 
  1. Issue a Writ, Order or Direction in the nature of Certiorari quashing the notices   dated 25.03.2018 issued u/s 129(3) of UPGST Act by Respondent No.4. 
  1. Issue writ order or direction in the nature of certiorari quashing Commissioner   Circular No.2899 dated 06.02.2018 being ultra vires to UPGST Act, 2017. 
  1. Issue any other Writ, Order or Direction in favour of the petitioner which this Hon’ble Court deems fit in the facts and circumstances of the case.
  1. Award cost of the petition to the petitioner.
  1. The brief facts of the case are that the petitioner is a company registered under the Companies Act as well as under the provisions of GST Act, situated at Ahmadabad, Gujarat having supplied of printed laminated rolls worth Rs. 7,84,564/- and 4,37,588/- through   two separate   invoices   in which the Integrated Goods and Service Tax (IGST) has been charged @ of 18%. The goods aforesaid proceeded through a Truck No. DL­1GB­7369 under Consignment Note No.A 89423 dated 21.03.2018 which has been issued by the Transporter and the seller of Gujarat has generated Gujarat e­-way bill dated 21.03.2018 in compliance of the provisions of Gujarat GST for outward journey from Ahmedabad to Meerut, U.P. The vehicle loaded with the goods proceeded from Ahmedabad and reached near Baghpat, U.P. at about 3.30 P.M. on 24.03.2018, the same has been intercepted/detained by the respondent no.4, the Assistant Commissioner, State Tax, Mobile Squad, Unit Baghpat and a detention notice has been issued in the name of the truck driver, in which, it has been mentioned that e-­way bill­-01 has not been produced at the time of interception whereas other documents are placed during the course of verification.  
  1. A seizure order dated 25.03.2018 has been passed under Section 129(1) of UPGST Act in the name of the driver of the vehicle by which the authority has estimated the value of goods seized at Rs.10,05,214/­.
  1. The sole ground for seizure of goods and vehicle is mentioned by the respondent no.4 that at the time of interception e-way bill­-01   has   not   been   produced along with other documents, therefore, there is a presumption that the goods are transported inside of State of U.P. with intention to evade payment of tax. The seizing authority has asked the petitioner to deposit the tax and has further proceeded to issue a notice under Section 129(3) of the Act by which the respondent no.4 has directed the petitioner to furnish the Bank guarantee to the value of proposed amount of Rs.11,86,253/­. This demand has been made by the respondent no.4 for release of the seized goods and vehicle. 
  1. Learned counsel for the petitioner has submitted that in exercise of power under Rule 138 of UPGST Rules, 2017 Notification No. KANI-1014/XI-9(52)/17-UPGST Rules-2017-Order(31) 2017 Lucknow dated 21.07.2017 specifying Form e-way bill-01, e-­way bill-­02, e-­way bill-­03 and TDF will be carried for supply/movement/transit of Inter­state/ Intra state goods. He has further submitted that in exercise of power under Section 164 of UPGST Act, 2017 read with Section 21 of UP General Clause Act, the Governor pleased to formulate rules amending UPGST Rules 2017-Order(45)-2017 dated 20.09.2017. At Clause 10 of the said Notification, Rule 138 was substituted. He has submitted that another notification No. 138 dated 30.01.2018 was issued in exercise of power under Section 164 of UPGST Act which provided that serial no.10 and 11 of notification no.1359 dated 20.09.2017 will come into force w.e.f. 01.02.2018. 
  1. Counsel for the petitioner has brought to our notice that after coming into force notification   no.1359 dated 20.09.2017 w.e.f. 01.02.2018, the notification no.1014 dated 21.07.2017 stands superseded by notification no.1359 dated 20.09.2017.  
  1. He has submitted that a notification no.155 dated 31.01.2018 was issued under Section 164 of UPGST Act by which again UPGST Rules were amended. Amendment no.12 provides for amended rule 138 which shall come into effect w.e.f. 01.02.2018. Sub-Rule (13) of Rule 138 provides that e-way bill be generated under this rule or under rule 138 of GST of any State shall be valid in every State and Union Territory.
  1. He further submitted/placed that another notification no.177 dated 06.02.2018 was issued by which the Governor was pleased to rescind notification no. 138 dated 30.01.2018 with effect from the date of issuance of such notification. From perusal of aforesaid notifications, it is apparent that Notification no. 1014 dated 21.07.2017 was superseded by notification no. 1359 dated 20.09.2017 by which UPGST (4th amendment) Rules 2017 was introduced and made effect w.e.f. 01.02.2018 vide notification no. 138 dated 30.01.2018. Accordingly, the initial notification no. 1014 by which e-way bill-01, e-way bill-02, e-way bill-03 and TDF were introduced stand rescinded.
  1. We have noticed that after issuance of notification no.177 dated 06.02.2018; notification no.138 dated 30.01.2018 was rescinded which made effective Notification No.1359 (4th Amendment to GST Rules, 2017) w.e.f. 01.02.2018. Accordingly, notification no.1359 dated 20.09.2017 (4th Amendment to GST Rules 2017) also stand rescinded. 
  1. To sum and substance from the above notifications are that neither Notification no.1014 dated 21.07.2017 nor notification no.1359 dated 20.09.2017 (4th amendment to GST Rules, 2017) was effective after 06.02.2018; as such the various e-way bills and TDF introduced under UPGST lost their validity.
  1. On 06.02.2018 to validate the same, the Commissioner Commercial tax U.P. issued a Circular No. 2899 dated 06.02.2018 by which it made effective notification no.1014 dated 21.07.2017 which was already rescinded by notification no.138 dated 30.01.2018. 
  1. It is pertinent to mention here that Section 166 of UPGST Act empowers the State Government to issue notifications, which shall be laid before state legislature. Similarly Section 164 of the Act also empowers the State Government to formulate rules for carrying out the provisions of the Act. Section 168 of the Act empowers the Commissioner to issue instructions for proper implementation of the Act or rules.
  1. According to the counsel for the petitioner, the Commissioner of State Tax has no power to issue the circular in exercise of power under Section 168 of the Act. The Commissioner, therefore, cannot issue notifications and directions which are not in consonance with the Act and Rule or the notifications. He has further submitted that the Commissioner is not expected to perform the legislature function and issue the instruction or the circular on something contrary to the provision which are available in the Act or Rule. 
  1. Learned counsel for the petitioner, therefore, has submitted that the Commissioner by way of.

Circular dated 06.02.2018 usurped the rule making power of the legislature. He has further submitted that the circular issued by the Commissioner cannot revive the notification. In the present case the Circular no.1014 dated 21.07.2017 which was already amended by another notification No. 1359 dated 20.09.2017, the counsel for the petitioner has challenged the validity of the circular and has submitted that the same is ultra vires to UPGST Act and Rules 2017. 

16.On the contrary, Sri C.B. Tripathi, learned counsel representing the State has submitted that  the circular is nothing but a clarification to all sub­ordinate authorities to act by applying the   notification No.1014 dated 21.07.2017 though is amended but still is applicable. He has further submitted that the present proceedings are summary proceedings, therefore, the petitioner be relegated to deposit the impugned demand and to participate in the penalty proceedings and in case if the petitioner succeeded before the seizing authority, the amount if so deposited in compliance of the seizure/penalty will be refunded.   

  1. We find no substance in the submission of learned counsel for the State. 
  1. On the other hand, we noticed that the notification dated 21.07.2017 has already been amended by the Notification No. 1359 dated 20.09.2017 and on account of aforesaid amendment, the UPGST (4th Amendment) Rules, 2017 was introduced and made effective with effect from 01.02.2018 vide notification No.138 dated 30.01.2018, therefore, in our opinion, the initial notification no.1014 dated 21.07.2017 by which e-­way bill­-01, e-­way bill­-02, e-­way bill-03 and TDF (Transit Declaration Form) was introduced stands rescinded. 
  1. We have noticed that after issuance of notification no. 177 dated 06.02.2018, the notification no. 138 dated 30.01.2018 was rescinded which made effective notification no. 1359 (4th Amendment) to GST Rules, 2017 with effect from 01.02.2018.  
  2. In view of the aforesaid facts the effect and operation of the notification no. 1359 dated 20.09.2017 stands rescinded.
  3. Now coming to the facts of the present case, we noticed that goods were coming from Ahmadabad and are to be delivered at Meerut. Both the parties situated at Ahmadabad and are registered with their respective Assessing Authority. Goods were accompanied with all the requisite documents including Gujarat e-way bill dated 21.03.2018, therefore, there was no ground to hold that the goods were coming in contravention of the provision of GST Act/Rule and the intention of the petitioner was to evade the payment of Tax. 
  1. In view of the facts of the present case, we find that the order of seizure passed by the respondent no.4 is wholly illegal, arbitrary as such, is clearly against the intention of the legislature. We further held that the penalty proceedings initiated against the petitioner are the consequential to the seizure proceedings and once the seizure proceedings are quashed/set aside, the consequential proceedings are also liable to be set aside.  
  1. In view of the aforesaid facts and circumstances of the case, the writ petition is allowed.  

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