GST Update

Desk of CA. Praveen Sharma – 836 Series (CAPS)

ALLAHABAD HIGH COURT IN THE CASE OF Abhay Prakash Katariar

Case Background:

The petitioner challenged the orders dated 16.07.2022 (by Assistant Commissioner, Mobile Squad-6, GST, Gautam Buddha Nagar) and 21.07.2023 (by Additional Commissioner, State Tax Appeal-3) concerning seizure and penalty of ?3,42,000 under Section 129(3) of the GST Act.

Facts of the Case:

A hydraulic excavator, after completion of repair work, was being transported back with a delivery challan and e-way bill dated 14.07.2022, but the vehicle was intercepted and seized by GST officials.

Department’s Stand:

The Department contended that valid documents were not produced at the time of interception and were submitted later, thus justifying the seizure and penalty.

Petitioner’s Argument:

The petitioner argued that since the excavator was sent for repair, it did not constitute a supply or taxable transaction, as clarified in CBIC Circulars dated 07.07.2017 and 22.11.2017. Therefore, invoking Section 129(3) was erroneous.

Legal Basis Cited:

The petitioner relied on Supreme Court judgments in Dhiren Chemical Industries (2002) and Ratan Melting & Wire Industries (2008), which establish that CBIC circulars are binding on departmental authorities.

Court’s Observation:
The Court noted that government circulars explicitly exclude the movement of cranes or excavators for repair from GST liability, and such transactions cannot be treated as supply.

Key Finding:

Since the movement of the excavator was not a taxable event, the seizure and imposition of penalty were without authority of law.

Final Decision:

The High Court set aside both orders dated 16.07.2022 and 21.07.2023, declaring the seizure and penalty orders invalid. The writ petition was allowed entirely in favor of the petitioner.

LINK:CA. Praveen Sharma on Linkedin

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