Allahabad High Court Directs Department To Release The Seized Goods On The Condition Of Payment Of 200% Of The Tax Payable

The Allahabad High Court has directed the department to release the seized goods on the condition of payment of 200% of the tax payable on the goods valued at the same on the basis of the valuation as shown in the invoice.

The bench of Justice Pankaj Bhatia has observed that the value of the goods in transit is to be determined in accordance with the provisions of Section 15 declared in an invoice, a bill of supply, or a delivery challan in respect of the consignment. Even Section 15(1) prescribes that the value of the supply of goods or services shall be the transaction value, which should include the amounts clarified under Section 15(2) and the benefits contained in Section 15(3).

The petitioners placed an order for the supply of mixed ready-made garments, which were being transported. On September 13, 2022, the goods were intercepted while in transit, and a physical verification report was prepared on September 17, 2022, in form GST MOV-04, and no discrepancy was found in the quantity of the goods in question.

On September 21, 2022, a detention order was passed detaining the goods in question mainly on the ground that the goods were without an E-Way bill.

The petitioner argued that although under Section 129(3) of the U.P. GST Act there is a prescription for the issuance of a notice in Form GST MOV-07, however, the notice was not issued but was issued by an authority whose name is not even specified, as the order itself records that the same was issued for the authority and not by the authority.

In reply to the letter issued to the petitioner, the petitioner filed a detailed reply denying the allegations that led to the passing of an order. The petitioner preferred an appeal, which too was dismissed by means of an order dated October 19, 2022.

The petitioner contended that, in the event Part B of the E-Way Bill was not carried, no penalty was imposed. In any event, the detaining authority does not have the jurisdiction to value the goods as has been done.

The petitioner contended that even if it is presumed that the petitioner is liable, the provisions of Section 129(1)(a) can be attracted and not Section 129(1)(b) as the petitioner is the owner of the goods in terms of the invoice issued in favor of the petitioner. It is well settled that if the petitioner is either a consignor or a consignee, he has to be treated as the owner of the goods. Thus, the provisions of Section 129(1)(b) are not invokable, as has been done by the department.

Section 7 provides for the levy and collection of tax, and Chapter IV provides for the determination of the value of supply. Section 15 provides for the value of taxable supply, and Section 15(4) makes it clear that if the value of the supply of goods or services or both cannot be determined under Section (1), the same shall be determined in such a manner as may be prescribed.

The petitioner is prepared and willing to pay the liability in accordance with Section 129(1)(a), so instead of remanding the matter, the court noted that it directed the petitioner to pay 200% of the tax payable on the goods.

Case Title: S/S S.K. Trading Co Versus Additional Commissioner Grade 2(Appeal )

Case No.: Writ Tax No. - 1464 Of 2022

Date: 16.03.2023

Counsel For Appellant: Bipin Kumar Pandey, Aditya Pandey

Counsel For Respondent: C.S.C.

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