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2018 (11) TMI 1503 - HC - GSTJurisdiction - scope of adjudication proceedings - detention of goods - Ground Betel Nuts (Arecanuts) - dispute with regard to rate of tax and classification of the goods - case of petitioner is that dispute about the rate of tax is not a matter for adjudication in a proceeding under Section 68 or 129 of the GST Act. Held that - The classification or the alleged misbranding of the product-even the alleged tax variation, not evasion though-cannot be considered here - the writ s province is restricted. It is, indeed, for the assessing authorities to adjudicate on the issue. The case falls within the adjudicatory ambit of both J.K. Synthetics Limited and RAMS VERSUS SALES TAX OFFICER - in J.K. Synthetics Limited 1994 (5) TMI 233 - SUPREME COURT , where it was finally held that if the assessee pays the tax, which according to him is due based on the information supplied in his return, there would be no default on his part to meet his statutory obligation. Therefore, it would be difficult to hold that the tax payable by him is not paid and that he is liable for consequences. In the case of Rams 1993 (3) TMI 324 - KERALA HIGH COURT , it was held that the inspecting authority may entertain a suspicion that there is an attempt to evade tax. But if the records he seizes truly reflect the transaction and the assessee s explanation accords with his past conduct, for example, the returns he has filed earlier, the detention is not the answer. In the words of Rams, at best the inspecting authority can alert the assessing authority to initiate the proceedings for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his pleas on law and on fact. Indeed, emphatic is the enunciation of law in Rams that the process of detention of the goods cannot be resorted to when the dispute is bona fide, especially, concerning the exigibility of tax and, more particularly, the rate of that tax. Thus, it can be concluded that the Ext.P11 is arbitrary and unsustainable, and is accordingly set aside - the Assistant State Tax Officer will release the goods forthwith - petition allowed.
Issues Involved:
1. Classification of "Ground Betel Nuts (Arecanuts)" under GST. 2. Authority of Assistant State Tax Officer (ASTO) to detain goods based on tax rate disputes. 3. Applicability of Section 129 of the GST Act for detention of goods. 4. Petitioners' compliance with GST documentation and returns. 5. Jurisdiction of the Court to adjudicate on the classification and tax rate issues. Issue-wise Detailed Analysis: 1. Classification of "Ground Betel Nuts (Arecanuts)" under GST: The petitioners argued that their product "Arecanut Ground" falls under HSN 0802, attracting a 5% GST rate, as per Serial No. 28 of Schedule I of G.O.(P) No. 62/2017/TAXES. The ASTO, however, contended that the product should be classified under HSN 2106, attracting an 18% GST rate. The court noted that the classification issue is beyond the scope of the writ petition and should be adjudicated by the assessing authorities. 2. Authority of ASTO to Detain Goods Based on Tax Rate Disputes: The petitioners contended that the ASTO's detention of goods based on a tax rate dispute is arbitrary and beyond jurisdiction. They argued that such disputes should be resolved by the assessing officer, not by the inspecting officials under Sections 67, 68, 69, or 129 of the GST Act. The court agreed, stating that the ASTO should not hold up the consignment merely because the tax declaration does not align with his notion of the product's classification. 3. Applicability of Section 129 of the GST Act for Detention of Goods: The court examined whether Section 129 of the GST Act allows the ASTO to detain goods on the ground of paying less tax. It concluded that while a literal reading of Section 129 might support the state's view, a purposive interpretation and practical commercial considerations suggest otherwise. The court emphasized that the ASTO should not detain goods when the documents are in order and the product description matches the declarations made in the returns. 4. Petitioners' Compliance with GST Documentation and Returns: The petitioners provided all necessary documents, including tax invoices and e-way bills, and their GST returns reflected the same HSN Code and tax rate. The court noted that the petitioners' conduct could not be faulted as mala fide or an attempt to evade tax, as they had furnished all particulars about their business and paid the tax they believed to be correct. 5. Jurisdiction of the Court to Adjudicate on Classification and Tax Rate Issues: The court clarified that it would not pronounce on the classification or alleged misbranding of the product, as these issues fall within the jurisdiction of the assessing authorities. The court's focus was on the legality of the detention and the immediate release of the goods. Conclusion: The court held that the detention of goods by the ASTO was arbitrary and unsustainable, ordering the immediate release of the goods. It emphasized that the Revenue could initiate appropriate proceedings on the classification and tax rate issues if deemed necessary. The court did not impose any costs. Separate Judgments: No separate judgments were delivered by different judges in this case.
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