ghc panic on simple program

I am experimenting with Haskell, and am attempting to write a simple maze solver. ghci gives meaningful errors for it, and doesn't crash, but ghc gives

~/haskell/course$ ghc tiltmaze.hs 
[1 of 1] Compiling Main             ( tiltmaze.hs, tiltmaze.o )
ghc: panic! (the 'impossible' happened)
  (GHC version 8.0.2 for x86_64-unknown-linux):
	initTc: unsolved constraints
  WC {wc_insol =
        [W] m'_a5Wy :: t_a5Wx[tau:1] (CHoleCan: m')
        [W] sx'_a5WB :: t_a5WA[tau:1] (CHoleCan: sx')
        [W] sy'_a5WE :: t_a5WD[tau:1] (CHoleCan: sy')}

Please report this as a GHC bug:  http://www.haskell.org/ghc/reportabug

The code is:

import Data.Sequence as Sequence
-- A maze is a grid of empty cells and walls
-- true means wall
data Maze = Seq (Seq Bool)

data Direction = North | South | East | West
directions = [North, South, East, West]

step :: Direction -> Int -> Int -> (Int, Int) 
step d x y
  | North = (x, y-1)
  | South = (x, y+1)
  | East = (x+1, y)
  | West = (x-1, y)

solve :: Maze -> Int -> Int -> Int -> Int -> Bool
solve m sx sy tx ty
  | sx == tx && sy == ty = True
  | otherwise =
    let solved m x y d
          | x' < 0 = False
          | y' < 0 = False 
          | x' >= Sequence.length m  = False
          | y' >= Sequence.length $ m `index` x' = False
          | not ((m `index` x') `index` y') = False
          | otherwise = solve m' x' y' tx ty
              where (x', y') = step d
                    m' = update y False (m `index` x)
      in any (solved m' sx' sy') directions 

Trac metadata

Trac field	Value
Version	8.2.1
Type	Bug
TypeOfFailure	OtherFailure
Priority	normal
Resolution	Unresolved
Component	Compiler
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