Gujarat HC orders release of vehicle and goods in transit confiscated for wrong route and under-valuation

The Gujarat High Court passed a verdict that goods in transit cannot be confiscated for reasons such as taking routes other than given in e-way bill or under-valuation under the GST law.

If a taxpayer changes the route without any other change, it cannot be concluded that there is an intention to evade tax. The court further ruled that just an under-valuation of the goods is insufficient to detain the goods and vehicles or confiscate them.

The court issued the order on a writ petition by an areca nut seller and a transport service provider. The petition asked for the release of the goods and the vehicle detained by the GST authorities. A tax commissioner in Ahmedabad has given the confiscation notice.

The officer had confiscated the vehicle and the goods, stating that the truck was blocked while travelling in a distinct direction from the destination. Due to that, authorities concluded that the transporter was taking the goods intending to evade taxes.

Another reason given was that the invoice value of goods that were transported was lower when compared to its actual market value. The court also found a reasonable logic in the petitioner’s arguments that these two reasons cited by the authorities cannot be valid and sole grounds to detain and confiscate the goods in transit.

The order stated that just from the route that the petitioners preferred for delivering the consignment to the destination, one could not infer the intention of the petitioners to evade taxes. The court observed that no material or evidence was placed for the second ground regarding under-valuation before the court.

It further claimed that it is well settled legal standing that under-valuation is not a ground for seizing goods in transit by the inspecting authority. Therefore, the court quashed the confiscation proceedings that the GST authorities initiated. The HC ordered the release of the vehicle and goods at the earliest to be handed over to the petitioners. 

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in.