The Gujarat High Court in the case of Karnataka Traders Vs. State of Gujarat held that the Goods and vehicle under GST cannot be denailed merely for undervaluation of goods or change of route.
The petitioner has assailed the confiscation notice issued by the Tax Commissioner (Enforcement) Division – 1, Ahmedabad, in exercise of powers conferred under Section 130 of the Central Goods and Services Tax Act, 2017 read with the relevant provisions of the Integrated Goods and Services Tax Act, 2017. The petitioner has also prayed for direction of issuance of a writ of mandamus to forthwith release the goods and vehicle without demanding any security.
The petitioner is a seller of the Arecanut and a registered dealer under the GST. It is the case of the petitioner that the goods were to be sold by the petitioner to the buyer who was having the office premises in Ahmedabad. It is undisputed that the petitioner is a duly registered dealer under the GST Act. So far as the petitioner is concerned, he claims to be the owner of the Truck bearing registration on which the instant goods were to be transported.
Advocate Mr. Samir Gupta assisted by learned advocate Mr. Monal S. Chaglani has appeared for the petitioners and has submitted that two grounds on which the department proposes to confiscate the goods and vehicle referred to above are not tenable at all in law.
On the other hand, A.G.P. Mr. Sharma has vehemently objected to the grant of relief in favour of the petitioners by submitting that the route preferred by the petitioner reflects that he had intention to evade tax. Such intention can be presumed from the fact that the route which was preferred by the petitioner was travelling in a different direction than the direction of destination or way to the destination. Hence, it was submitted not to entertain writ application.
The division bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore found that the force in the contention of the advocate appearing for the petitioners that there cannot be any mechanical detention of a consignment in transit solely on the basis of the two reasons as stated by the respondent in the impugned notice.
“We find that merely the direction preferred by the petitioners for delivery of consignment to the place destined for, an inference cannot be drawn with regard to the intention of the petitioners to evade tax. So far as the second ground with regard to the goods being transported to be undervalue is concerned, no material has been placed on record. Even otherwise, as held by this Court as well as other High Courts, it is a settled legal position that undervaluation cannot be a ground for seizure of goods in transit by the inspecting authority. In the instant case, there is no such indication,” the court added.