Goods Released by GST Dept in Driver's name Rejecting Consignee’s Proprietor’s Ownership Claim: Allahabad HC declares Order Unsustainable [Read Order]

In a recent ruling, the Allahabad High court declared the order issued under Section 129(3) of UPGST Act unsustainable rejecting the ownership claim of the petitioner, who is the proprietor of the consignee whose goods were detained by the Goods and Services Tax ( GST )  department and issued in the driver’s name.

The petitioner, the proprietor of Vishal Enterprise, had goods detained by the authorities while they were being transported from Delhi to Kolkata. The authorities initially imposed a penalty under Section 129(1)(b) of the Act, alleging that the goods were being transported without proper documentation and ownership details.

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However, the petitioner contended that the goods were rightfully owned by them and that the penalty should have been levied under Section 129(1)(a) instead, as per the clarification issued by the Central Board of Indirect Taxes and Customs ( CBIC ) on 31st December 2018.

Despite this, the GST authorities rejected the petitioner’s ownership claim, citing that the invoice and e-way bills contained the name of the firm, Vishal Enterprise, but lacked specific identification of the petitioner, such as an Aadhaar card or PAN card, to substantiate their claim as the owner of the goods.

The authorities alleged that the goods were being transported through "bogus firms" to evade tax payment.

The bench noted that department’s own document, i.e., registration certificate in form GST REG-06 indicates the name of petitioner’s firm as ‘Vishal Enterprise’ and constitution of business as ‘proprietorship’ and the same status is also reflected on the website of the department on searching through the GISTIN, however, ignoring the same, a factually incorrect finding has been recorded, which has led to depriving the petitioner of the benefit under Section 129(1)(a) of the Act.

Reviewing the matter, Chief Justice Arun Bhansali and Justice Vikas Budhwar, the Allahabad High Court found merit in the petitioner’s argument.

The Court stated that the authorities' refusal to apply the provisions under Section 129(1)(a) of the Act, in line with the CBIC clarification, was erroneous.

The Court pointed out that the authorities had based their decision on the failure to produce evidence of ownership, such as the petitioner’s Aadhaar card or PAN card, despite the fact that the petitioner’s GST registration certificate clearly identified them as the proprietor of Vishal Enterprise.

The registration certificate details clearly reflected that the petitioner was the legal owner of the business, with the business structure being a proprietorship.

Additionally, the website of the department confirmed that the petitioner’s details were properly recorded, including the name "Vishal Chobia" as the proprietor of the firm, and the business was Aadhar authenticated.

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The Court held that, despite these official records, the authorities had unjustifiably ignored these documents and wrongly denied the petitioner’s ownership claim, thereby making the order unsustainable.

Conclusively, setting aside the impugned orders, the Court remanded the matter to the competent authority for fresh proceedings, directing them to pass a new order in compliance with the observations made by the Court and in line with the provisions of Section 129(1)(a) of the GST Act. It directed fresh order analysing to the official records.

To Read the full text of the Order CLICK HERE

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