The Allahabad High Court judgment in the case of Maruti Enterprises vs. State of U.P. addresses whether the GST authorities of Uttar Pradesh have jurisdiction to detain goods and impose penalties on inter-state transactions when U.P. is merely a transit state. The petitioners challenged penalty orders imposed for not carrying an e-Tax Invoice during the movement of goods from West Bengal to Delhi, with U.P. only being crossed in transit. The Court analyzed the relevant provisions of the GST Acts and Rules, including the concepts of cross-empowerment and the requirements for documents accompanying goods in transit.
The Court held that while U.P. GST authorities can stop and inspect goods in transit, they do not have jurisdiction to impose penalties or detain goods when the origin and destination are outside U.P. and there is no tax incidence in U.P. The only permissible action is to report any deficiencies (such as missing e-Tax Invoice) to the authorities in the originating or destination state. The penalty orders were quashed, and the goods ordered to be released, reinforcing that transit states cannot penalize inter-state consignments unless there is a direct tax implication within their jurisdiction.
Courtesy: AI Summary
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