2024 (11) TMI 1073 - HC - GST

Seizure and detention of goods - goods in question was under valued - instead of aluminum cable, PVC Aluminum mixed cable (Feeder Cable) was found - HELD THAT - On perusal of the records, it shows that the goods in question were accompanying with all the relevant documents i.e. e-way bill, GR, tax invoice etc. and in the e-way bill, the HSN Code 8544 were specifically been mentioned and quantity 3520 was mentioned. There was no difference in HSN Code and quantity as well as the tax leviable on the goods in question. However only on the ground that on physical verification PVC Aluminum Mixed Cable (Feeder Cable) was found, the goods were detained. Further before the appellate authority, new ground in respect of under valuation of the goods, was taken. The Commissioner, Commercial Tax, UP by way of Circular dated May 9, 2018 has specifically stated that no goods shall be detained on the ground of under valuation. In the present case, the respondent authority has failed to bring on record any material that the goods mentioned in the tax invoice accompanying with the goods, has different HSN Code and different rate of tax or mentioned in the detention memo dated 1.10.2019. Once this fact is not disputed that HSN Code and rate of tax is similar, no adverse inference can be drawn. The petitioner would not gain in not mentioning correct description of items or state would loose its legitimate tax. The impugned order dated 26.11.2020 cannot be sustained in the eyes of law and same is hereby quashed - Petition allowed.

Summary

Issues:
Challenge to order in GST Appeal, Allegation of under valuation of goods, Detention of goods under Section 129 of the Act, Validity of detention based on under valuation, Applicability of circular prohibiting detention for under valuation.

Analysis:
The petitioner challenged the order passed in GST Appeal, contending that the goods detained under Section 129 of the Act were not undervalued intentionally, as the goods were accompanied by relevant documents with correct details. The petitioner argued that the detention was arbitrary as no show cause notice was issued for under valuation. The circular issued by the Commissioner, Commercial Tax, UP, prohibiting detention for under valuation, was relied upon by the petitioner to support the claim.

The Court examined the documents accompanying the goods and found that the HSN Code and tax details matched, indicating no intentional under valuation. The Court noted that the only ground for detention was alleged under valuation, which was not a valid reason for detention without proper notice under Sections 73 or 74 of the Act. The judgment cited from the Kerala High Court emphasized the need for strict adherence to charging provisions and proper procedure for valuation disputes.

Based on the lack of evidence of intentional under valuation and the applicability of the circular prohibiting detention for under valuation, the Court quashed the impugned order dated 26.11.2020. The Court held that the detention under Section 129 of the Act on speculation of under valuation was not permissible, and any deposit made by the petitioner should be refunded. The judgment highlighted the importance of following proper procedures and provisions in cases of valuation disputes to prevent arbitrary detentions and penalties.