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TMI Blog2020 (3) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... forementioned drinks within the jurisdiction of Kerala and the vehicles carrying the aforementioned goods were intercepted on the premise that the aforementioned goods were wrongly classified, in fact they would be falling under the head 2202 10, for which the GST rate is 28%. Though against the aforementioned detention, the petitioner after paying the tax and penalties, obtained the release of the vehicles, this time again on 31st January 2020, the goods of similar nature being brought within the jurisdiction of the Kerala State were intercepted and detained on the same premise. It is in this back ground, the action of the authorities in detention has been assailed in the present writ petition. Counsel for the petitioner in view of the aforementioned facts, challenged the action by raising following submissions: a. The GST authorities in Kerala do not have jurisdiction to issue show cause notice of the tax on import as only the officers in the Tamil Nadu could initiate the proceedings. At the best the authorities at Kerala have a remedy of sending an intimation to the authorities of Tamil Nadu. b. It is not a case of evasion but a bonafide dispute concerning the exigibility o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner to the Central Tax Officer, Goods and Service Tax Department, Range-I, Salem-Tamil Nadu informing that the products manufactured by the firm under the trade mark 'DAILEE' as FRUIT JUICE and FRUIT PULP BASED DRINK under Commodity Code 2107 of TNVAT with a tax liability of 5%, and after the introduction of GST under HSN & SAC, the commodity/product has been classified under HSN code 2202.99.20 (FRUIT PULP OR FRUIT JUICE based DRINKS). The classification of same was placed till 12.07.2018 under the tax liability of 12%. The tax invoice Ext.P6 at Serial Nos.3 and 4 reflects the payment of the tax as 12% for 200 ml of "Dailee Lemon Fruit Drink" and "500ml of Dailee Lemon Fruit Drink" under the codes, aforementioned. The observation of the authorities of Kerala as reflected in the physical verification report dated 31st January 2020, Ext.P10 is without jurisdiction whereas the duty to assess the classification of the product vested only with the officer of the Tamil Nadu. 5. I have heard the learned counsel for the parties and apprised the paper book. The facts as narrated above with regard to the transit of goods from Tamil Nadu to Kerala, reflecting the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (c). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within 1 [fourteen days] of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130: PROVIDED that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of 1 [fourteen days] may be reduced by the proper officer." 6. On a perusal of the aforementioned Act, it is evident that Section 129 opens with a non obstante clause empowering the Officers to detain and seize the goods, if it found to be in contravention of any of the any of the provisions of the Act and release of the vehicles, as per the conditions, enumerated, therein. A similar question also arose for consideration before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspection, search, and seizure. Section 129 under Chapter XIX provides the mechanism for detention, seizure, and release of goods and conveyances in transit. It begins with a non-obstante clause and goes on to lay down the procedure. If any person transports or stores any goods "contravening this Act" or its rules, all those goods and means of transport and documents relating to those goods and conveyance will be detained or seized. They will, however, be released to the owner of the goods (a) on its paying the applicable tax and penalty equal to one hundred percent of the tax payable on the goods. If the goods belong to an exempted category, a different rate applies, though. 27. The Revenue asserts that there is "contravention", and that contravention concerns misbranding the product and paying less tax. Under the erstwhile Kerala Value Added Tax Act, the first petitioner and those trading in the same product-- betel nut--have had many rounds of litigation, Eventually, as seen from the Exts.P1 to P5 proceedings, this Court and the Revenue accepted that the product is not supari and it attracts lesser tax. The Exts.P6, P6(a), P7, and P7(a) are the first petitioner's purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be difficult to hold that the 'tax payable' by him is not paid' and that he is liable for consequences. 32. The correctness of the Exts.P8 and P8(a) accepted, as held in J. K. Synthetics Limited, we will examine what amounts to statutory violation or contravention under Section 129 of the Act. Apt is the case decided by this Court: Rams v. Sales Tax Officer. The petitioner in Rams contracted with the Government of India to print and supply a large number of telephone directories. For this purpose, he procured paper from the Tamil Nadu government agency. When the paper was under transport, at Kochi a sales tax officer detained the lorry, under Section 29A(2) of the Kerala General Sales Tax Act, 1963. 33. The detention was because the petitioner, an unregistered dealer, had allegedly attempted to evade the sales tax. The petitioner's producing all the documents had no impact. Instead, the detaining officer insisted on the petitioner's furnishing bank guarantee for certain sum as a condition for release of the goods, pending enquiry. 34. The order in enquiry affirmed that the Enquiry Officer was "satisfied" that there was attempt at evasion of tax. So t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 160. We are in full agreement with the aforesaid enunciation of law laid down by the Kerala High Court. Thus, in a case of a bona fide dispute with regard to the classification between the transporter of the goods and the Squad Officer, the Squad Officer may intercept the goods, detain them for the purpose of preparing the relevant papers for effective transmission to the jurisdictional Assessing Officer. It is not open to the Squad Officer to detain the goods beyond a reasonable period. The process can, at best, take a few hours. It goes without saying that the person, who is in charge of transportation, will have to necessarily cooperate with the Squad Officer for preparing the relevant papers. [See Jeyyam Global Foods (P.) Ltd. vs. Union of India & Ors., (2019) 64 GSTR 129 (Mad.)-2019-VIL-47 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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