The Allahabad High Court has rejected two writ petitions filed by Shree Maa Trading Company challenging the seizure of goods and imposition of penalty under the GST Act. The case arose when a consignment moving from Delhi to Raipur was intercepted by the Uttar Pradesh authorities at Jhansi in May 2025. The goods were detained as the truck driver failed to produce proper documents at the time of inspection.
Petitioners Arguments
The traders argued that the seizure was illegal as all invoices and papers were present but could not be produced due to a driver's mistake. They contended that the penalty order should have been passed under Section 129(1)(a) of the GST Act, treating them as owners of the goods, rather than under Section 129(1)(b). Their counsel further claimed that the State authorities had no jurisdiction to act under the IGST since no specific notification was issued by the Central Government.
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The petitioners also relied on a Madras High Court ruling in D.K. Enterprises vs. Assistant Deputy Commissioner (2022) to argue that the delay in issuing notices invalidated the proceedings.
The Additional Advocate General, appearing for the State, defended the seizure. He submitted that under Section 4 of the IGST Act, State GST officers are automatically authorized as proper officers and no further notification is required. He pointed out that the show cause notice was issued within the prescribed seven days, making the action legally valid.
The State also highlighted that official verification showed the transactions were bogus, as neither the alleged purchaser nor the seller reflected the entries in their GST returns. Thus, the petitioners’ claim of ownership could not be accepted.
Justice Piyush Agrawal, delivering the order on 21 August 2025, observed:
"Once, at the time of detention or seizure, no specified documents were produced, the proceedings have rightly been initiated under Section 129(1)(b) of the GST Act."
The Court referred to earlier judgments of the Madhya Pradesh High Court and Punjab & Haryana High Court, which had upheld similar actions by State GST authorities. It clarified that only in cases where exceptions are carved out does a notification become necessary.
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The Bench also noted that the petitioners had failed to challenge the factual findings of the authorities, including the conclusion that the transactions were fictitious.
"In absence of any material to prove otherwise, the contention of the petitioner has no force," the Court stated.
Concluding the matter, the High Court ruled that the seizure and penalty were justified under law. Both writ petitions were dismissed, reinforcing the authority of State GST officials to act against tax evasion even in inter-state transactions.
Case Title:- Shree Maa Trading Company and 2 Others vs. State of U.P. and 3 Others
Case No.:- Writ Tax No. 3171 of 2025
