Detention order quashed for goods with correct HSN Code despite description mismatch and under-valuation allegations

HC quashed detention order for goods seized on grounds of incorrect description and under-valuation. Court found goods accompanied by proper documents including e-way bill with correct HSN Code 8544 and quantity. Despite physical verification revealing PVC Aluminum Mixed Cable instead of aluminum cable, HSN Code and tax rate remained identical. Appellate authority's new ground of under-valuation was rejected citing Commissioner's circular prohibiting detention solely for under-valuation. Since HSN Code and tax liability were same, no adverse inference could be drawn against petitioner. Detention order set aside.

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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.

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