A division bench of the Allahabad High Court, while quashing a penalty imposed under the Uttar Pradesh Goods and Services Tax (UPGST) Act, said that a transit State, i.e, Uttar Pradesh, cannot impose penalty on ground of absence of Transit Declaration Form (TDF) since the goods were transported from Rajasthan to Assam and no goods ewre supplied or consumed within U.P.
The petitioner is a dealer from Rajasthan. The UP GST authorities has detained the goods belongs to the petitioner while transporting the same to Assam. On verification, it was noted that the goods were transported without Transit Declaration Form required to be accompanied with such goods in accordance with the notification dated 21.07.2017 under Rule 138 of the U.P. GST, Rule 2017.
Regarding the nature of the good, the authorities refused to admit the details in the tax invoice in which it was mentioned as Palm Oil. According to the detaining authority, the goods were ‘Ujala Shudh Deshi Ghee’. Penalty was imposed on the petitioners for the above mentioned defects.
Before the High Court, the petitioners argued that due to inadvertent mistake on part of the truck driver, transit declaration form had not been downloaded and therefore, it was not found accompanying the goods.
It was further argued that the consignment of the disputed goods in question was of Refined Palm Oil and that both consignment of goods were being transported from Rajasthan to Assam and that no part of the consignment was meant for sale or consumption inside the State of U.P.
On behalf of the Revenue, it was argued that the transaction involved transit of goods through the State of U.P. and the goods should have been accompanied with TDF, over and above the Tax Invoice and other documents of transportation of goods. The Revenue, therefore, contended that the contravention was thus complete and no further fact or intention was required to be established by the revenue to either seize the goods or impose the penalty.
A bench comprising Justice Bharati Sapru and Justice Saumitra Dayal Singh found that at the stage of seizure the detaining authority had not applied his mind, nor formed any opinion as to intention to evade tax. The only allegation made in the seizure order is to the effect that the TDF is absent and that the goods have been mis-described.
“In absence of any allegation or evasion of tax being made against the petitioner at the stage of detention and seizure and even at the stage of issuance of notice of penalty, it is difficult to sustain the penalty.”
“Then, as to absence of TDF, though it amounted to a breach of the Rules, yet, in the entirety of the facts & circumstances of this case, as admitted to the revenue, it does appear that goods were being transported from Rajasthan to Assam. Also, since the goods had reached near the exit point in the State of U.P. and there is no allegation that the goods were being or had been unloaded inside the State of U.P., we are of the opinion that the goods were infact being transported from Rajasthan to Assam as disclosed in the Tax Invoice and other documents found accompanying the goods. The breach was purely technical,” the bench said.
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