2017 (12) TMI 202 - HC - GST

Release of detained goods - Jurisdiction of detaining authority - mis-declaration as well as mis-classification of goods - inter-state or intra-state supply - Held that - the specific power invoked in issuing the impugned notice is under the CGST/SGST which is applicable only to the intra-state movement of goods. Admittedly the petitioner has consigned the goods from Tamil Nadu and was transporting it to the 3rd respondent at Pattambi - The issue of misclassification and under valuation has to be gone into by the respective assessing officers and not by the detaining officer. In such circumstances, this Court is not inclined to permit the further detention of the goods. The petitioners shall be permitted release of the goods on the execution of simple bond without sureties as expeditiously as possible - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Misclassification and undervaluation of goods under CGST/SGST Act.
2. Applicability of CGST and SGST to inter-State transportation of goods.
3. Implementation of E-way Bill uploading procedure.
4. Authority of State-appointed officials to implement tax enactments.
5. Detention of goods and release conditions.

Analysis:
1. The petitioner challenged a notice issued by the detaining authority under the CGST/SGST Act due to misclassification and undervaluation of goods. The goods were described under HSN Code 4601 in the invoice but were found to fall under HSN Code 3926 upon verification, leading to a tax rate difference. The detaining authority assumed misclassification without proper verification of market value, directing payment of CGST, SGST, and GST along with a security deposit.

2. The petitioner argued that as the goods were transported inter-State, CGST and SGST were not applicable. They contended that the HSN Code on the invoice was as per the manufacturer and could not be changed after purchase to avoid violating tax statutes. The petitioner also highlighted the deferred implementation of the E-way Bill uploading procedure, supporting their case of inter-State transport by accompanying the goods with an invoice.

3. The Government Pleader insisted on releasing the goods only upon payment of the demanded amounts, emphasizing that the authorities empowered under IGST and CGST/SGST were the same. They argued that supplying goods with an invoice lacking proper description attracted penalties.

4. The court acknowledged the authority of State-appointed officials to implement trade regulations but noted that the notice was issued under CGST/SGST, applicable only to intra-state movement. Since the goods were consigned from one state to another, the court ordered the release of goods without further detention. The misclassification and undervaluation issues were to be addressed by respective assessing officers, not the detaining officer.

5. The writ petition was allowed, directing cooperation between the petitioners and the 3rd respondent in the adjudication proceedings under the IGST Act. The notice was deemed under the IGST Act, with no comments on merits, and parties were left to bear their respective costs.