Mere undervaluation of goods is not sufficient ground to detain goods or vehicle: HC

Case Details: Karnataka Traders v. State of Gujarat - [2022] 137 taxmann.com 18 (Gujarat)

Judiciary and Counsel Details

• • J.B. Pardiwala and Ms. Nisha M. Thakore, JJ.
  • Samir Gupta, Adv. and Monal S. Chaglani for the Petitioner. 
  • Utkarsh Sharma, AGP for the Respondent.

Facts of the Case

The petitioner was a registered dealer under the GST. It sent a consignment of goods which was intercepted by the department while it was travelling to different direction than direction of destination. The department issued Form GST MOV – 02 to conduct physical verification/inspection of the conveyance, goods and documents. No discrepancy was noted by the proper officer with regard to the description of goods as per invoice and conveyance nor any anomaly found with regard to quantity as per invoice and physical verification undertaken by the concerned officer. The only discrepancy found was that there was under valuation of goods and goods were confiscated. It filed petition against the same.

High Court Held

The Honorable High Court observed that mere change of route without anything more would not necessarily be sufficient to draw an inference that the intention was to evade tax. It was also noted that mere undervaluation of goods also by itself was not sufficient to detain goods and vehicle as it is a settled legal position that undervaluation cannot be a ground for seizure of goods in transit by the inspecting authority. Therefore, it was held that confiscation proceedings were liable to be quashed.

List of Cases Referred to

• • K.P. Sugandh Ltd. v. State of Chhattisgarh [2020] 122 taxmann.com 291 (Chhattisgarh) (para 10)
  • Podaran Foods India (P.) Ltd. v. State of Kerala [2021] 123 taxmann.com 282 (Ker.) (para 11)
  • Kannangayathu Metals v. Asstt. STO [2020] 113 taxmann.com 176 (Ker.) (para 11).