Valuation of goods

[Rajesh Kumar]

Respected experts ,

I have a issue that department intercepted a truck loaded with cigarettes which was without Invoice and E way bill.

Now, they are calculating duty and penalty on the basis of MRP of the products which is in actual triple times of actual sale price.

Please guide whether they are doing right by calculating on MRP basis ?

What is the actual and practical method as per GST provisions for this valuation?

[Amit Agrawal]

It is true that concerned MRP on 'cigarettes' includes huge statutory levies (other than GST) as well as dealer's margin etc.

But, when such goods are removed / transported without invoice and e-way bill etc., Dept. is justified in presuming that intention was never to pay other statutory levies (other than GST) in first place so as to deny deduction of other statutory levies from MRP.

Furthermore, if there is no specified dealer as 'recipient' (any genuine recipient will not come forward in such cases, as he will become party to tax-evasion), Dept. is justified in denying any deny deduction against dealer's margin from MRP.

Summarizing above, it is you who has to convince Dept. about valuation u/s 15 while keeping in mind above points. And it cannot convince to the Dept. otherwise, all you can plead & hope for is to get cum-duty benefit. Again, this is not your matter of right in given situation as gst itself was sought to be evaded.

Question is how you intent to prove your selling price with some trustworthy documents / evidences? And whether such effort will lead to broader investigation / inquiry?

As a matter of fact, I think this incidence will lead to broader investigation / inquiry - one way or other - and probably from multiple Govt. agencies as there are much graver & serious issue/s involved than only 'evasion of gst per se'.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

AI Summary

Goods Transported Without Invoice: Department Justified in Using MRP for GST Valuation; Present Sale Price Evidence for Reassessment. A user raised a query regarding the valuation of goods under GST after a truck carrying cigarettes without an invoice or e-way bill was intercepted. The department calculated duty and penalty based on the Maximum Retail Price (MRP), which is significantly higher than the actual sale price. An expert responded that the department is justified in using the MRP for valuation since transporting goods without proper documentation suggests an intent to evade taxes. The expert advised convincing the department of the actual selling price with credible evidence, warning that this situation could lead to a broader investigation by multiple government agencies.