Court clarifies role of assessing officer in goods classification disputes, limits detention powers, directs tax authority directives.

The court resolved the classification dispute by emphasizing the jurisdictional assessing officer's role in determining the classification of goods during transportation. It clarified the limited authority of squad officers in detaining goods temporarily for proper classification verification and directed tax authorities to issue directives to prevent unnecessary detentions in tax disputes. The judgment quashed the impugned proceedings and instructed the Commissioner of Commercial Taxes, Chennai, to issue a circular preventing unwarranted detentions in tax disputes.

---

---

Issues:
Classification dispute between petitioner and fourth respondent regarding dried chick peas transportation; Jurisdiction of assessing officer vs. squad officer in determining classification; Authority of proper officer under Tamil Nadu Goods and Services Tax Act, 2017; Applicability of detention and seizure provisions under Section 129 of the Act; Legal validity of detention notice and tax levied by fourth respondent.

Classification Dispute:
The petitioner, a manufacturer of dried chick peas, gram flour, pulses, and grams, claimed that their product falls under Chapter 0713 of HSN. However, the fourth respondent, seizing the goods during transportation, classified the product as roasted grams under Chapter 2106 of HSN, leading to detention and tax penalty. The petitioner challenged this classification, arguing that only the jurisdictional assessing officer should determine the classification in case of a bona fide dispute.

Jurisdictional Dispute:
The main contention was whether the squad officer, in this case, the fourth respondent, had the authority to rule on the classification of goods during transportation. The petitioner emphasized that the inspecting squad officer should only alert the assessing authority for proper classification determination, as per the decision of the Hon'ble Kerala High Court in a similar case.

Authority of Proper Officer:
The fourth respondent claimed statutory empowerment under Section 68 r/w Section 129 of the Tamil Nadu Goods and Services Tax Act, 2017, allowing for interception of goods and verification of documents during transportation. The Commissioner of Commercial Taxes, Chennai, had designated the fourth respondent as the Proper Officer for exercising powers under Section 129 regarding detention, seizure, and release of goods and conveyances in transit.

Detention and Seizure Provisions:
Section 129(1) of the Act outlined the conditions for detention or seizure of goods transported in contravention of the Act, specifying tax and penalty amounts for release based on the owner's compliance. The petitioner contended that the squad officer's role was limited to detaining goods temporarily for classification verification by the assessing officer.

Legal Validity of Detention Notice:
The Court, in agreement with the Hon'ble Kerala High Court's decision, held that a bona fide dispute on classification warranted detention only for preparing necessary papers for the jurisdictional assessing officer. The petitioner, not seeking a refund but awaiting the third respondent's decision, led to quashing the impugned proceedings and directing the Commissioner of Commercial Taxes, Chennai, to issue a circular preventing unwarranted detentions in tax disputes.

In conclusion, the judgment resolved the classification dispute by emphasizing the role of the jurisdictional assessing officer in determining the classification of goods during transportation. It clarified the limited authority of squad officers in detaining goods temporarily for proper classification verification and directed the tax authorities to issue directives to prevent unnecessary detentions in tax disputes.

---