Incomplete challan with goods sent to job worker justified seizure of goods by GST Authorities

When challan was not duly filled along with goods sent for job worker, detention and seizure of goods u/s 129 of the GST Act was not arbitrary.

In a recent judgment, Hon’ble Allahabad High Court has held that when various descriptions as required under Rule 55 were not mentioned in the challan with goods sent to job worker, it demonstrates the contravention of Rules, therefore, the proceeding of detention and seizure of goods under Section 129 of the GST Act cannot be said to be arbitrary.

ABCAUS Case Law Citation:
4458 (2025) (03) abcaus.in HC

In the instant case, the Petitioner/assessee had challenged the order passed by the Additional Commissioner, GST under Section 129 (3) of UP G.S.T. Act.

The Petitioner was a registered firm having GSTIN No. The Petitioner, during the course of business, placed an order of iron steel from a dealer within the State of U.P.

A Tax Invoice was generated and the goods were transported in a vehicle but on its onward journey, the goods were intercepted by the Mobile Squad and on physical verification, it was found that place of unloading was mismatched, therefore, the goods was seized and detained u/s 129 of the Act. A show cause notice was issued demanding penalty. The goods were released on deposit of said amount. Order was issued imposing tax as well as the penalty. The petitioner had challenged the said order in appeal, which was dismissed by the Appellate Authority.

Before the Hon’ble High Court, the Petitioner contended that the goods in question were accompanying with the proper documents however instead of getting the goods unloaded at its business premisses, the same was sent at the place of job worker. It was submitted that since the goods were unloaded at the job worker place of business along with all documents, there was no violation of the Act and entire proceeding initiated against the petitioner was arbitrary and liable to be set aside. In support of his submissions, learned counsel for the petitioner has relied upon the judgement of the High Court.

On the other hand, the authorities submitted that goods can be detained and order under Section 129 of the Act can be passed, if there is any contravention of the provisions of the Act. In the present case, there was contravention of the provisions of Rule 45 and 55 of the GST Rules, which contemplate that if the goods were to be sent for job worker, then duly filled challan is mandatory. In the present case, there was a clear cut violation of the Rules, therefore, the seizure and penalty proceedings were justified in accordance with Act and Rules.

The Hon’ble High Court observed that Rule 45 contains conditions and restrictions in respect of inputs and capital goods sent to the job worker. Similarly, Rule 55 provides conditions for transportation of goods without issue of invoice.

The Hon’ble High Court observed that a bare reading of the aforesaid rules, it appears that there was requirement for issuing a challan for the goods send to job work. Rule 55 provides that challan should be issued or in duplicate and duly filled in prescribed format.

The Hon’ble High Court noted that the photocopy of challan issued by the petitioner showed that various descriptions as required under Rule 55 of the Rules were not mentioned on it and the same was incomplete.

The Hon’ble High Court opined that once various requirements as contemplated under the Rules were not complied with, which demonstrates the contravention of Rules 55, therefore, the proceeding under Section 129 of the GST Act cannot be said to be arbitrary.

Accordingly, the Writ was dismissed.

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