The Allahabad High Court has held that the Goods and Services Tax (GST) authorities cannot proceed against a transporter in the absence of any adverse material establishing his involvement in tax evasion. Once the actual owner of the goods is identified and recovery proceedings are undertaken against such owner, mere shortage of goods cannot justify punitive action against the carrier, the Court ruled.
Justice Piyush Agrawal, sitting in a single-judge bench, quashed the appellate order dated 26 October 2021 and allowed the writ petition filed by M/s Anish Transport Company challenging the proceedings initiated against it.
According to case records, a consignment being transported from Dehradun to Delhi was intercepted in Meerut on 25 September 2020. Upon physical verification, 138 cartons were found as against 167 cartons mentioned in the e-way bill. On this basis, the vehicle and goods were seized and an order under Section 129(3) of the GST Act was passed. Subsequently, on 16 October 2020, after the ownership of the goods was established by M/s Balaji Enterprises (consignee) and M/s Pharmaid Health Care, as per the tax invoice, the consignment was released on payment of an amount equivalent to the market value.
The petitioner transporter was represented by Advocate Neeraj Kumar Singh.
Referring to the record, the Court observed:
“The records shows that the authorities below have not recorded any finding against the petitioner, who is a transporter. No finding has been recorded that the transporter, i.e., the petitioner, is engaged in the business of purchase and sale of any goods. Once the consignor come forward with the case that due to human error of the labourer, less goods were loaded at night, the evasion of tax cannot be attributed to the petitioner, who is a transporter.”
The Court made it unequivocal that once the consignor has admitted the shortage and explaining it as a human error during loading, the intent to evade tax cannot be attributed to the transporter.
In one of its key remarks, the Court further held that action against the transporter was arbitrary and illegal:
“Moreover, once the goods have been released to the consignor and in absence of any adverse material being brought on record against the transporter, the vehicle in question cannot be seized and no proceeding can be initiated against the petitioner.”
Consequently, the High Court set aside the impugned appellate order and directed that any amount deposited pursuant to the disputed orders be refunded to the petitioner in accordance with law.
Case: M/S Anish Transport Company vs State of U.P. and 2 others
