The Kerala High Court in a
very important judgement namely Sameer Mat Industries vs the State of
Kerala has held that Issue
of misclassification and under valuation of goods has to be gone into by
respective Assessing Officers and not by detaining officer.
The judgement is very important in view of the fact that GST
authorities are very much active across India on the road side and lot of
penalties have been imposed in recent times on the road side.
Before moving to the
judgement, it is pertinent to mention here that section 129 deals with
the detention of goods and conveyance on the roadside for transporting the
goods in violation of the provisions of the law and thereby levy of penalty thereunder or
confiscation u/s 130 in case of non payment of penalty.
The Kerala High Court in an earlier judgement namely Indus towers Limited vs The Assistant State Tax officer has already held that section 129 and 130 are correlated with each other and goods can be detained u/s 129 only if the goods are liable for confiscation u/s 130 and goods can be confiscated u/s 130 only when there is a taxable supply and there is violation of procedure with intent to evade the payment of tax.
The Kerala High Court in an earlier judgement namely Indus towers Limited vs The Assistant State Tax officer has already held that section 129 and 130 are correlated with each other and goods can be detained u/s 129 only if the goods are liable for confiscation u/s 130 and goods can be confiscated u/s 130 only when there is a taxable supply and there is violation of procedure with intent to evade the payment of tax.
The Kerala High Court in
Sameer Mat Industries case as stated above has held that the issue of misclassification
and under valuation 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 verdict is
very important and will hopefully help all the concerneds.
The full judgement is as
follows:
HIGH COURT OF KERALA
Sameer Mat Industries
v.
State of Kerala*
K.
VINOD CHANDRAN, J.
W.P.
(C) NO. 36413 OF 2017
NOVEMBER 20, 2017
M. Gopikrishnan Nambiar, P. Gopinath, K. John Mathai, Joson
Manavalan, Kuryan Thomas, Paulose C. Abraham and Raja
Kannan, Advs. for the Petitioner. Dr. Thushara James,
Sr. Govt. Pleader and Bobby John, Adv. for the Respondent.
JUDGMENT
1. The petitioner the consignor of certain goods has approached
this Court against the notice issued by the detaining authority under the
CGST/SGST Act. After detention when verification was made, it was found that
there was mis-classification as also under valuation. The mis-classification
was in so far as the goods being described as falling under HSN Code 4601 as
per the invoice. On verification of the goods transported, it was seen that it
could only fall under HSN Code 3926. There was a rate difference in so far as
HSN Code 4601 attracting tax @18% while HSN Code 3926 attracting tax @28%.
Further ground was the mis-classification which the detaining authority assumed
on the basis of the market value of the goods as known to him but not verified
with any material. The detention notice also 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.
2. The essential contention taken up by the petitioner is 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. 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.
The same is 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.
3. The learned Government Pleader however submits that the release
of goods be permitted only on the payment of the amounts demanded, especially
since the petitioners-consignors are not dealers within the State. The
authorities appointed under the IGST and the CGST/SGST are one and the same and
it is the authorities of the State, who have been empowered to implement the
provisions of the goods and service tax enactments. It is also contended that
the supply of goods with an invoice without proper description being made
attracts penalty.
4. 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 mis-classification and under
valuation 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.
5. With the above observations the writ petition is allowed making
it clear that the petitioners and the 3rd respondent shall co-operate in the
adjudication proceedings under the IGST Act. The notice shall be deemed to be
one under the IGST Act. No observation on merits and the parties left to suffer
their respective costs.
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