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09 January 2021

Discrepancies in valuation of goods cannot be the ground for detention of goods under transport

In the matter of: K.P. Sugandh Ltd. v. State of Chhattisgarh 2020 [38] G.S.T.L, 317

The Hon’ble High Court of Chhattisgarh, has held that “Under valuation of goods in the invoices cannot be made ground for detention and seizure of the said goods and vehicle, in transit, for the purpose of initiation of proceeding under Section 129 of the CGST Act, 2017 read with Rule 138 of the CGST, 2017.”

In the present matter, the Petitioner dispatched goods (Pan Masala and Tobacco Products) along with tax invoice and e-way bill to its customer located at Raipur. The vehicle was intercepted in between transit by the Department officials when the conveyance-in-charge immediately produced the relevant invoice bill and e-way bill as required under the CGST Act 2017. Despite the fact that necessary documents accompanying the consignment were duly produced, the Officer seized & detained the vehicle and the goods on the ground that there is alleged discrepancy in the valuation of such goods.

The Hon’ble High Court, after going through the facts of the case held that ‘merely because the manufacturer sells his products to its customers at a price lower than the MRP, as such cannot be made ground on which the product or the vehicle could be seized or detained.’ It was further held that at the time of inspection, the details in the tax invoice as well as the e-way bill were in reconciliation with the products found in the vehicle except for the price of sale, for which, even if required, Inspecting Authorities (rather than detaining and seizing the goods) could have intimated the Assessing Authority for the alleged discrepancy and initiating appropriate proceedings upon Petitioner.

Similar views were earlier taken by Hon’ble High Court of Kerala in the matter of Alfa Group v. Asstt. State Tax Officer, cited in [2020] 113 taxmann.com 222 (Ker.) and by Hon’ble Gujarat High Court while granting an interim relief in the matter of Sakal Naza Mohmd. v. State of Gujarat, reported in [2020] 113 taxmann.com 394.