Goods Accompanied by Genuine GST E-Way Bill Cannot Be Seized: Allahabad HC Criticises Authorities for Forcing Avoidable Litigation [Read Order]

The Allahabad High Court has held that goods accompanied by a valid and genuine GST ( Goods and Services Tax ) e-way bill cannot be detained or seized, and criticised the department for dragging a registered taxpayer into “unnecessary litigation” despite complete compliance.

The petitioner-company, M/s Prostar M Info Systems Limited, engaged in supplying UPS systems, batteries and related parts, had transported goods from its Noida unit to its Lucknow principal place of business for onward delivery to TCIL’s authorised consignee.

The consignment was accompanied by a delivery challan and a valid e-way bill, which remained in force at the time of interception. However, on 19 December 2023, the mobile squad detained the vehicle at Etah on two grounds: (i) the manual delivery challan was unsigned, and (ii) the destination address was not shown as an additional place of business in the GST registration.

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The petitioner argued that these were minor clerical lapses and that the movement of goods was fully disclosed through a valid e-way bill.

The goods were eventually released only after payment of tax and penalty. The adjudicating authority confirmed the demand under Section 129(3), and the appellate authority upheld the order, filing the present writ petition.

The High Court noted that the Commissioner of State GST had already issued a circular dated 17 January 2024, clarifying that proceedings under Section 129 cannot be initiated merely because the shipping/destination address is not declared as an additional place of business.

JusticePiyush Agarwal held that such circulars are binding on all field officers and failure to follow them renders the proceedings unsustainable.

The State’s counsel was unable to dispute this or produce any authority justifying seizure on that ground.

Additionally, the Court said that once goods are accompanied by a valid, active e-way bill, their movement stands fully disclosed to the department, negating any presumption of intent to evade tax.

Since the documents were genuine and the e-invoice had also been generated, the Court held that no fault or contravention of GST Act could be attributed to the petitioner.

Furthermore, the single bench held that authorities cannot detain goods when a valid e-way bill clearly establishes bona fide movement.

“In the case in hand, once the valid document, i.e., e-way bill, was also accompanying the goods, which has not been disputed, the authority concerned ought not to have dragged the petitioner in an unnecessary litigation” , said the court.

Accordingly, the Court quashed the orders passed by the adjudicating and appellate authorities and allowed the writ petition.

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