GST - Issue of misclassification and under valuation has to be gone into by respective assessing officers and not by detaining officer - goods to be released on execution of simple bond without sureties: High Court
Published: Dec 02, 2017
By TIOL News Service
ERNAKULAM, DEC 02, 2017: THE petitioners situated at Tamil Nadu approached the Kerala High Court against the notice issued by the detaining authority viz. Assistant State Tax Officer, State GST Department, Thiruvananthapuram, under the CGST/SGST Act.
After detention, when verification was made, it was found that there was misclassification as also undervaluation.
The alleged mis-classification is that the goods were classified under HSN Code 4601 as per the invoice whereas on verification it was opined that the same could only fall under HSN Code 3926.
There was a tax rate difference inasmuch as HSN Code 4601 attracted tax @18% while HSN Code 3926 attracts tax @28%. The detaining authority assumed the misclassification on the basis of the market value of the goods as known to him but not verified with any material.
The detention notice directed payment of CGST and SGST each @14% totaling 28% and the GST @5% for one other commodity as also a security deposit of an equal amount.
In the Writ Petition, the petitioners contend that the goods were transported inter-State and neither CGST nor SGST was applicable to such goods. It is also contended that the HSN Code as disclosed in the invoice is the one used by the manufacturer. Furthermore, the petitioner having purchased the goods from the manufacturer at Delhi could not change the HSN Code in which event there would be a violation of the provisions of the tax statutes. It is further contended that the E-way Bill uploading procedure as provided in the Rules to the CGST which has been adopted under the IGST is not implemented as of now and the same stands deferred till 31.12.2017. Hence to support the case of the inter-State transport the petitioner need accompany the goods only with an invoice which has been done in the present case.
The Government Pleader submitted that the release of goods be permitted only on the payment of the amounts demanded, especially since the petitioner-consignor are not dealers within the State. It is also contended that the supply of goods with an invoice without proper description being made attracts penalty.
The High Court observed –
++ There is no doubt that the authorities appointed by the State have been empowered to implement the provisions of the enactments which regulates the inter-State as also the intra-State trade. However the specific power invoked in issuing the impugned notice is under the CGST/SGST which is applicable only to the intra-state movement of goods.
++ Admittedly the petitioner has consigned the goods from Tamil Nadu and was transporting it to the 3rd respondent at Pattambi. The 3rd respondent also appears and submits that they are ready to accept the consignment.
++ The issue of misclassification and undervaluation has to be gone into by the respective assessing officers and not by the detaining officer. In such circumstances, this Court is not inclined to permit the further detention of the goods.
++ The petitioners shall be permitted release of the goods on the execution of simple bond without sureties as expeditiously as possible. The detaining officer shall inform the assessing officer of the 3rd respondent who would be entitled to take appropriate proceedings at the time of assessment of the 3rd respondent. The assessing officer of the petitioners at Tamil Nadu would also be intimated, the details of whom shall be furnished by the petitioners before release of the goods.
With the above observations the writ petition was allowed.
It was also made clear that the petitioners and the 3rd respondent shall co-operate in the adjudication proceedings under the IGST Act and the notice shall be deemed to be one under the IGST Act.
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