UNDERVALUATION OF GOODS IN TRANSIT

[Sadanand Bulbule]

Dear Experts

Dhanteras Greetings.

Unlike in the pervious indirect tax regime like VAT,Central Excise, in my opinion the specific provision to deal with the situations of suspecting the undervaluation of goods in transit is not available under the present GST Acts. Despite, the proper officers under the GST Acts during the course of interception of conveyance are resorting to estimate the value of goods being in transit and proposing to levy penalty under Section 129(3) of the GST Acts by rejecting such documents, on the ground of huge difference between transaction value as per the prevailing market rate and the value of goods declared in tax invoice.To substantiate their estimation, some times proper officers are relying on the expert opinions of the reputed research institutions based on the testing of such sample goods drawn from the conveyance.

The query is, whether the proper officers are empowered to suspect the value of goods being in transit based on the prevailing market rates, estimate the value of such suspected goods and levy penalty under Section 129(3) of the GST Acts on such grounds? And why?

Please enlighten on the issue.

[Alkesh Jani]

Sir,

Please refer WP(C).No. 32324 of 2018 of Kerela High Court in case of N.V.K.MOHAMMED SULTHAN RAWTHER Vs. Union of India = 2018 (11) TMI 1503 - KERALA HIGH COURT. Hope this will help you.

Thanks,

With Regards

[Sadanand Bulbule]

Thank you so much Sir for quick clarification.
So kind of you.
With profound regards.

AI Summary

Undervaluation of goods in transit may prompt valuation estimates and penalty proposals under Section 129(3) of GST. Whether officers may suspect declared consignment values and estimate value during interception when invoice value diverges from market price, relying on market rates and expert testing, and propose penalties under Section 129(3) of GST; issues include scope of officer powers to revalue goods in transit, permissible evidentiary bases for revaluation, procedural limits on rejecting invoices, and nexus between rejection and penalty proposal.