M/S A.N. ENTERPRISES
ADDITIONAL COMMISSIONER & ORS
WRIT TAX NO. – 366 OF 2021
DATED: NOVEMBER 19, 2024
HIGH COURT: ALLAHABAD
In this case, the petitioner is a registered GST dealer, is engaged in the scrap trade and transported aluminum cables through tax invoice along with e-way bill and GR. During transit, the goods were intercepted, and physical verification revealed “PVC Aluminum Mixed Cable (Feeder Cable)” instead of the declared “Aluminum Cable.” All documents indicated the correct HSN Code (8544) and tax rate applicable to the goods, which matched the declared details. The goods were detained under Section 129 of the CGST Act based on alleged misdescription. During appeal, the appellate authority introduced a new ground, claiming under-valuation of the goods, without prior notice. A circular issued by the Commissioner of Commercial Tax, Uttar Pradesh (dated May 9, 2018), explicitly stated that goods should not be detained for under-valuation disputes.
Now the issue arises, Whether the detention of goods solely on alleged misdescription or under-valuation without issuing proper notice is valid under the CGST Act? Whether the circular issued by the Commissioner of Commercial Tax regarding non-detention of goods for under-valuation disputes applies in this case? Whether the petitioner is entitled to a refund of amounts deposited during the proceedings?
Held that: The detention of goods was invalid as all relevant documents, including the e-way bill, tax invoice, and GR, were in order, and there was no mismatch in the HSN Code, quantity, or tax rate.
Noted that, the ground of under-valuation, raised for the first time during appeal, lacked a proper show-cause notice and violated the procedural safeguards provided under Sections 73 and 74 of the CGST Act.
Emphasized that, GST authorities must follow statutory provisions for under-valuation disputes, and detention under Section 129 is not permitted for such reasons.
Relied on the judgment in M/s Shambhu Saran Agarwal and Company v. Additional Commissioner Grade-2 and the Kerala High Court's ruling in Hindustan Coca Cola Pvt. Ltd. v. Assistant State Tax Officer, reinforcing that goods cannot be detained arbitrarily for valuation disputes.
Quashed the impugned order dated November 26, 2020 and directed the petitioner to refund of the deposited amount within four weeks.
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