2020 (3) TMI 890 - HC - GST

Release of vehicle alongwith the goods - discrepancies in the valuation of the goods - Section 129(3) of the Central Goods and Service Tax Act, 2017 - HELD THAT - When the vehicle was intercepted from the 14.01.2020, the person Incharge of the conveyance was in fact carrying the requisite documents, which he was supposed to carry in the course of transportation of the goods. As regards the discrepancy found in the course of inspection, the only observation made by the authorities concerned is that the valuation does not seem to have been properly conducted. Merely because the manufacturer sells his products to its customer or dealer at a price lower than the MRP, as such cannot be a ground on which the product or the vehicle could be seized or detained. If at all if this, according to the respondents, is contrary to the law, the authorities are supposed to draw an appropriate proceeding under the law - The Inspecting Authorities for the alleged discrepancy could have only intimated the Assessing Authority for initiating appropriate proceedings. What is more relevant to take note of is the fact that the details in the invoice bill as well as in the e-way bill matched the products found in the vehicle at the time of inspection except for the price of sale. Maintainability of petition - alternative remedy available to the petitioner - HELD THAT - This Court is of the opinion that since the case of the petitioners at the outset itself was that the entire proceedings for detention of the vehicle and the seizure of the goods being in total contravention to the GST law, relegating the petitioners to avail the alternative remedy of appeal under Section 107 would not be proper, legal and justified - when this Court also finds that the proceedings of detention and seizure of the goods and the vehicle by the respondents is without any authority of law. This Court is of the opinion that under valuation of a good in the invoice cannot be a ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the Central Goods and Service Tax Act, 2017 read with Rule 138 of the Central Goods and Service Tax Rules, 2017 - Petition allowed.

Summary

Issues:
Challenge to order for release of goods detained during transportation due to discrepancies in valuation.

Analysis:
1. The petitioners, manufacturers of Pan Masala and Tobacco Products, dispatched goods to a customer via a transport company. The vehicle was intercepted by tax officials despite having necessary documents like tax invoice and e-way bill.
2. The officials seized the vehicle and goods citing discrepancies in valuation, issuing a notice under Section 129(3) of the Central Goods and Service Tax Act, 2017. The petitioners applied for release, but the authorities assessed tax and penalty without considering their contentions.
3. The petitioners argued that discrepancies in valuation should not lead to detention of goods, as the driver had all required documents. They contended that any valuation dispute should be addressed separately to avoid financial losses due to perishable goods.
4. The State argued that discrepancies in valuation justified detention, claiming the selling price below MRP was the issue. They stated that the petitioners' reply was unsatisfactory, making the order under Section 129 appealable under Section 107.
5. The court found that the driver had all necessary documents during inspection, and valuation discrepancies should not warrant seizure unless supported by law. The court referenced a similar case from the High Court of Kerala to support releasing the goods.
6. The court held that detention without legal authority was unjustified, quashing the order and directing immediate release of goods. It emphasized that the State could still pursue legal action for undervaluation separately.
7. The court rejected the argument for an alternative remedy, as the detention was deemed contrary to GST law. It concluded that under-valuation in an invoice should not lead to detention under Section 129, setting aside the order and instructing the release of goods.

This comprehensive analysis highlights the legal dispute, arguments presented by both parties, court's interpretation of the law, and the final judgment quashing the order and directing the release of goods.