CASE SUMMARY: AB TRADERS Vs. STATE OF
GUJARAT
Court: High Court of Gujarat
R/Special Civil Application No.: 18391 of 20213
Date: 24.12.2021
Facts of the Case:
In a recent ruling dated December 24,
2021, the High Court of Gujarat at Ahmedabad addressed the matter of AB Traders
versus the State of Gujarat in Special Civil Application No. 18391 of 2021. AB
Traders, a proprietorship registered under the Central/Karnataka Goods and
Services Tax Act, 2017, faced legal action when goods (specifically arecanut)
transported to New Delhi were detained by authorities due to the absence of an
e-way bill. Despite presenting valid tax invoices and transport receipts, the
goods were seized on September 7, 2021.
Submissions by Petitioner:
AB Traders argued that the detention was
unjustified as they had instructed the transporter to await the issuance of
both tax invoices and the e-way bill before commencing the journey. They
further contended that intermittent network outages had delayed the e-way bill
generation. The petitioner repeatedly requested provisional release of the
goods, asserting compliance with tax and penalty payments required under the
GST Act.
Submissions by Respondent:
The State of Gujarat, represented by the
Assistant Government Pleader, argued that the detention was lawful under the
GST Act, citing discrepancies including the alleged suspension of the buyer's
registration and undervaluation of goods. The respondent insisted on the
furnishing of additional security, such as a bank guarantee, despite AB Traders
having already paid the requisite tax and penalty and furnished a bond.
Court's Findings:
The High Court examined Section 67(6) of
the GST Act, which governs the provisional release of seized goods. It noted
that the statute provides two options for provisional release: either through
the execution of a bond and furnishing of security or by payment of applicable
tax, interest, and penalty. The Court referenced its earlier decision in the
case of Western Enterprises vs. State of Gujarat, emphasizing that once a bond
is furnished, no further demand for a bank guarantee should be made.
The Court acknowledged AB Traders'
compliance with statutory obligations and concluded that the demand for
additional security, beyond the bond already furnished, was unwarranted and
contrary to legal provisions. It directed the immediate release of the goods
and conveyance (truck KA-14-C-0878) and prohibited any further insistence on
security.
Summary:
In summary, the High Court of Gujarat's
ruling in AB Traders vs. State of Gujarat underscored the importance of
adherence to statutory provisions governing the release of seized goods under
the GST Act. The decision reaffirmed that once a taxpayer fulfills the
requirements of tax payment, penalty, and bond issuance, no additional security
such as a bank guarantee should be imposed. This judgment serves as a
significant clarification on the procedural aspects of tax enforcement under
GST laws, ensuring fair treatment and compliance with legal standards in
similar cases.
