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

Valuation under GST may be based on MRP when goods move without invoice, shifting the burden to prove transaction value. Authorities may compute GST and penalties on MRP and deny deductions for other statutory levies or dealer margin when goods are transported without invoice or e-way bill, presuming intent to evade; the taxpayer bears the burden to prove transaction value under the valuation provisions with trustworthy evidence, and absence of a named recipient increases risk of refusal of deductions and broader investigations.