Andhra Pradesh HC Declares Detention of Vehicle & Goods in Transit Unlawful Without Initiating Proceedings against Owner u/s 129 of GST Act [Read Order]

The High Court of Andhra Pradesh has declared the detention of vehicle and goods in transit by tax authorities as unlawful when proceedings were not initiated against the owner under Section 129 of the Goods and Services Tax (GST) Act, 2017.

The decision came in response to a writ petition filed by M/s. Arhaan Ferrous and Non-Ferrous Solutions Pvt. Ltd. and T. Srinivasulu challenging the detention of their goods and vehicles while in transit by the Deputy Assistant Commissioner of State Tax.

The petitioners, represented by V. Siddharth Reddy, argued that their goods and vehicles were detained by the tax authorities on the grounds that the seller of the goods, M/s. K S Enterprises had no place of business in Vijayawada, even though they had valid invoices, e-way bills and weighment slips.

The tax authorities had initiated proceedings against the Seller, the 4^th respondent under Section 130 of the Andhra Pradesh Goods and Services Tax (APGST) Act, 2017 proposing to confiscate the goods and vehicles.

The petitioners contended that they were the rightful owners of the goods and had purchased them in a legitimate transaction from the 4^th respondent.

The petitioners further argued that the tax authorities had ignored the documents submitted by the drivers at the time of inspection, including invoices and e-way bills, which demonstrated the authenticity and legitimacy of the transaction.

The main issue before the court was whether the tax authorities could confiscate the goods belonging to the petitioners based on proceedings initiated against the 4^th respondent, who was the original seller of the goods.

The bench made a clear distinction between Sections 129 and 130 of the GST Act. Section 129 deals with the detention, seizure and release of goods and conveyance in transit, while Section 130 pertains to the confiscation of goods or conveyances and the levy of tax and penalty. The bench emphasised that these two sections operate independently and in different contexts.

The bench held that the power to detain goods under Section 129 is primarily aimed at recovering the applicable tax and penalty, whereas Section 130 deals with the divestment of the owner’s title to the goods for contravention of GST provisions.

The bench ruled that the tax authorities had the power to detain the goods under Section 129 while in transit. However, they could not confiscate the goods of the petitioners without initiating separate proceedings against them under Section 129.

The bench noted that the petitioners could participate in the proceedings against the 4^th respondent but their responsibility was limited to establishing the genuineness of their transaction with the 4^th respondent.

The division bench comprising Justice U. Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa held that the tax authorities can initiate proceedings against the petitioners under Section 129 of the GST Act, allowing the petitioners an opportunity to present their case and prove the legitimacy of their transaction.

The bench directed the release of the detained goods upon the 1^st petitioner’s deposit of 25% of their value and the execution of a personal bond for the balance. The vehicles were also to be released upon the execution of personal security bonds for their determined value by the Road Transport Authority.

The ruling aims at ensuring that owners are not unduly penalised when they have legitimate transactions and documentation in place, while also allowing tax authorities to take appropriate action against those in violation of the law.

To Read the full text of the Order CLICK HERE

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