Detention Of Goods In The Course Of Transportation On The Ground Of Undervaluation: Kerala GST Dept. Issues Instructions
The Kerala Goods and Service Tax Department has issued the instruction on the detention of goods in the course of transportation on the ground of undervaluation with reference to the Kerala High Court judgement in WP (C). No. 30798 of 2019(Y) dated 18.11.2019.The goods belonging to the petitioner in WP (C) No. 30798 of 2019 were detained in a parcel godown by the Intelligence Squad on...
The Kerala Goods and Service Tax Department has issued the instruction on the detention of goods in the course of transportation on the ground of undervaluation with reference to the Kerala High Court judgement in WP (C). No. 30798 of 2019(Y) dated 18.11.2019.
The goods belonging to the petitioner in WP (C) No. 30798 of 2019 were detained in a parcel godown by the Intelligence Squad on the ground that the value quoted in the invoice that accompanied the goods was low when compared to the Maximum Retail Price (MRP) and that the HSN code of the goods was wrongly entered.
While disposing of the case, the Kerala High Court found that there was no provision under the Goods and Services Tax Act that mandates that the goods shall not be sold at prices below the MRP declared. Also, there was nothing in the GST MOV-06 detention order to show that, on account of the wrong classification, there was any difference in the rate of tax adopted by the assessee. The High Court observed that the respondents could not resort to arbitrary and statutorily unwarranted detention of goods in the course of transportation. The goods were hence ordered to be released to the petitioner.
Section 15 of the Kerala State Goods and Services Tax Act, 2017, provides common provisions for determining the value of goods and services. The determination of the value of supply is provided in Chapter IV of the Kerala State Goods and Services Tax Act, 2017. However, it is noticed that some intelligence squads have issued detention notices for goods in the course of transport, stating only that the goods were undervalued. These notices get quashed when brought up for litigation before the judicial forums.
The GST Department, while complying with the judgement of the Kerala High Court, has directed the department not to detain or issue any show cause notice to the goods under transport or stored in parcel agencies, thus raising the sole reason for undervaluation of the goods compared to the MRP.
If any undervaluation cases are suspected in such cases, the officers are directed to upload the details of such invoices using the option provided in the mobile app and send a report to the jurisdictional officer, marking a copy to the jurisdictional district Joint Commissioner. Furthermore, the intelligence squads must collect evidence to establish the case, such as documents pertaining to the actual value of the supply.The jurisdictional officer concerned shall verify the same with the help of the report and the uploaded details. Thereafter, the jurisdictional officer of the taxpayer vertical or the intelligence formation can take further action as provided in the law.
Circular No.6/2022
Dated: 06/04/2022