Alfa Group VS Assistant State Tax Officer

The writ petition at hand revolves around a challenge against a notice (Ext.P2) wherein goods owned by the petitioner were seized at a parcel godown. The grounds for detention were primarily twofold: firstly, the value stated in the invoice accompanying the goods was allegedly lower than the Maximum Retail Price (MRP) of the items, and secondly, it was claimed that the Harmonized System of Nomenclature (HSN) code associated with the goods was incorrectly entered. The petitioner’s legal counsel argues that the reasons cited in Ext.P2 do not warrant the detention of the goods under either Section 129 or Section 130. Consequently, they seek a directive for the immediate release of the goods.

Upon hearing arguments from both the petitioner’s counsel and the government pleader representing the respondents, the court has weighed the facts and submissions presented. It was determined that none of the reasons outlined in the Ext.P2 order justify the seizure of the goods. Notably, there exists no provision within the GST Act that mandates goods cannot be sold below their declared MRP. Furthermore, there is a lack of legal basis for detaining goods solely based on discrepancies in the stated HSN code. Therefore, the court found the detention unjustified under the current legal framework.

The writ petition in question challenges Ext.P2 notice, which detained goods belonging to the petitioner in a parcel godown. The basis for detention was the alleged undervaluation of the goods in the invoice compared to their Maximum Retail Price (MRP), along with a claim of incorrect classification under the Harmonized System of Nomenclature (HSN) code. The petitioner contends that the reasons provided in Ext.P2 do not justify the detention under Section 129 or Section 130, and demands immediate release of the goods.

Upon hearing arguments from both the petitioner’s counsel and the Government Pleader representing the respondents, the court finds that none of the reasons cited in Ext.P2 justify the goods’ detention. It emphasizes that the Goods and Services Tax (GST) Act does not mandate goods to be sold at or above their MRP, nor does it indicate any tax rate discrepancy due to misclassification.

The court underscores the GST Act’s intention to facilitate the smooth movement of goods post self-assessment by the taxpayers. Arbitrary detentions during transportation undermine public trust in tax administration and the economy. Therefore, it annuls Ext.P2 detention order and directs immediate release of the petitioner’s goods upon presentation of the judgment copy. Additionally, it instructs the Commissioner of the Kerala State Taxes Department to issue guidelines to prevent similar unwarranted detentions in the future. The court orders the Registry to provide a copy of the judgment to the Commissioner for necessary action.

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