2020 (3) TMI 890 - HC - GST

Court quashes order for release of detained goods due to valuation discrepancies. Driver had necessary documents.

The court quashed the order for the release of goods detained during transportation due to discrepancies in valuation, emphasizing that detention without ... Under valuation of goods is not a ground for detention - detention and seizure under Section 129 of the Central Goods and Service Tax Act, 2017 - release of goods on production of invoice and e way bill - alternative remedy and maintainability of writ despite remedy under Section 107Under valuation of goods is not a ground for detention - detention and seizure under Section 129 of the Central Goods and Service Tax Act, 2017 - Detention and seizure of the vehicle and goods on the sole ground of alleged under valuation/price discrepancy was unsustainable. - HELD THAT: - The Court found on the admitted facts that the person in charge produced a tax invoice and an e way bill which matched the quantity and description of the consignment, the only discrepancy being the sale price vis a vis the MRP. Mere sale at a price lower than MRP does not attract a statutory mandate for detention of goods during transit. Where the statutory documents required during transportation are in order, the Inspecting Authorities could have referred the valuation dispute to the appropriate assessing authority or initiated appropriate proceedings for evasion of tax; they were not entitled to effect immediate detention and seizure of the vehicle and goods under the guise of valuation discrepancy. The Court relied on analogous High Court decisions holding that unwarranted detention in such circumstances is impermissible and directed release of the goods on production of invoice and e way bill. [Paras 10, 11, 14]The order of detention and seizure under Section 129 and the concomitant demand of tax and penalty were quashed and set aside; goods to be released on production of invoice and e way bill.Release of goods on production of invoice and e way bill - The vehicle and goods were directed to be released forthwith on production of the invoice and the e way bill. - HELD THAT: - Given that the invoice and e way bill corresponded with the consignment produced at inspection, the Court ordered immediate release of the seized goods and vehicle upon production of those documents. The Court emphasised the statutory scheme under GST which facilitates free movement of goods subject to self assessment and statutory documentation, and held that release was warranted where those requirements were satisfied despite an outstanding valuation dispute. [Paras 8, 9, 14]Respondents directed to release the goods and vehicle based on the invoice and e way bill.Alternative remedy and maintainability of writ despite remedy under Section 107 - The writ petition was maintainable notwithstanding the availability of appeal under Section 107 because the detention and seizure were found to be without authority of law. - HELD THAT: - The State's contention that the petitioners should be relegated to pursue statutory appellate remedy was rejected. The Court held that where the initial action of detention and seizure is itself without lawful authority, it would be improper to compel the petitioners to first exhaust the alternative remedy; thus, extraordinary jurisdiction by way of writ was appropriately invoked and entertained. [Paras 13]Writ petition entertained and allowed; petitioners not required to first pursue appeal under Section 107 in the facts of this case.Scope for initiating separate proceedings for alleged under valuation - Quashing the detention and seizure does not preclude the State from initiating appropriate proceedings for alleged under valuation in accordance with law. - HELD THAT: - The Court made clear that while the detention and seizure were unlawful and thus quashed, the State retains the right to institute proper proceedings against the petitioners for any alleged under valuation of goods as per the legal provisions governing assessment and recovery of tax. The decision removes the immediate coercive measure of seizure but leaves open substantive enforcement by regular processes. [Paras 15]State may initiate appropriate proceedings for alleged under valuation notwithstanding quashment of the seizure order.Final Conclusion: The writ petitions were allowed: the order of detention and seizure dated 17.01.2020 under Section 129 and the related demand of tax and penalty were quashed; respondents directed to forthwith release the goods and vehicle on production of the invoice and e way bill, without prejudice to the State's right to initiate proper proceedings for alleged under valuation. 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.