Department cannot detain the goods in case of Direct Sales against Purchases.

Case Title: Piyush Steel, D & I Excelus v. State of Gujarat

Court Name: High Court of Gujarat

Petition Number: Special Civil Application No. 15871 of 2020

Category of Dispute: Detention of Goods – Mismatch in E-Way Bill and Invoice

Date of Judgment: 18th December 2020

Relevant Section: Section 129(1) of the CGST Act, 2017

Bench: Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice Ilesh J. Vora

Facts of the Case

1. The petitioner, a proprietary concern engaged in trading TMT bars and registered under GST, received an order from M/s. Shivam Scrap Traders, Ahmedabad (para 2).
2. The petitioner sourced goods from M/s. Osiya Traders, Maharashtra, who generated a tax invoice and e-way bill (para 2).
3. As per “Bill to Ship to” model, the petitioner instructed the Maharashtra vendor to directly ship goods to its Ahmedabad customer. Petitioner also issued its invoice and e-way bill accordingly (para 3-4).
4. The goods were detained by GST authorities on 29-11-2020 due to alleged mismatch: the dispatch location on the invoice showed Bhavnagar, while the e-way bill showed Jalna, Maharashtra (para 4).
5. The petitioner explained the “Bill to Ship to” nature to the authorities at the time of detention and through written submissions (para 7).

Question(s) in Consideration

1. Whether the detention of goods and the vehicle under Section 129(1) was lawful where the “Bill to Ship to” arrangement was declared on the e-way bill (para 1(B)).
2. Whether the minor discrepancy in dispatch location, when declared as per law, amounts to a contravention warranting penalty and detention (para 1(A)-(B)).

Observation of the Court

1. The Court noted that the transaction was in the nature of a “Bill to Ship to” which had been disclosed in the e-way bill (para 7).
2. After being directed by the Court, the State’s counsel took instructions and confirmed that there was no contravention of any provisions of the GST Act or Rules (para 9).
3. The detention was a result of confusion and not due to any deliberate violation (para 9).

Judgment of the Court

1. The writ application was allowed and the detention order under Section 129(1) was set aside (para 10).
2. The Court directed immediate release of both goods and the vehicle (para 10).
3. The AGP was asked to communicate the court’s order promptly to the proper authority (para 10).

Between Fine Lines

• The Court emphasized that a properly documented “Bill to Ship to” transaction, if duly reflected in the e-way bill, does not amount to a contravention under GST law.
• Detention cannot be justified on mere technical discrepancies that do not violate the statute.
• The State’s own admission of no contravention effectively led to quashing the detention.
• Immediate relief was granted without delving further into merits.
• Procedural fairness and proper understanding of “Bill to Ship to” provisions were crucial to the outcome.

Summary of Referred Cases