M/S Shamhu Saran Agarwal And Company v. Additional Commissioner Grade-2 And 2 Others

Neutral Citation No. - 2024:AHC:15975

Case :- WRIT TAX No. - 33 of 2022

Petitioner :- M/S Shamhu Saran Agarwal And Company

Respondent :- Additional Commissioner Grade-2 And 2 Others

Counsel for Petitioner :- Suyash Agarwal

Counsel for Respondent :- C.S.C.

1. This is a writ petition under Article 226 of the Constitution of India

wherein the petitioner is aggrieved by the penalty order dated December 20,

2020 passed by the respondent No.2/Commercial Tax Officer, Mobile

Squad-6, Agra and the order dated September 17, 2021 passed in appeal by

the Additional Commissioner Grade-II (Appeal)-II, State Tax, Agra.

2. I have heard Mr. Suyash Agarwal, counsel appearing on behalf of the

petitioner, Mr. Ravi Shanker Pandey, Additional Chief Standing Counsel

appearing on behalf of the respondents and perused the materials on record.

3. Upon a perusal of the show cause notice dated December 19, 2020, it

is clear that the goods were detained on the ground of under valuation.

Subsequently in appeal, the appellate authority affirmed the penalty order on

the ground that the goods were under valued.

4. It is evident from the circular issued by the Commissioner,

Commercial Tax, Uttar Pradesh dated May 9, 2018 that the goods are not to

be detained on the ground of under valuation. The relevant paragraph of the

aforesaid circulate is extracted below:-

ß4- ifjogu ds nkSjku eky ls lEcaf/kr bZ-os fcy ,oa fu;e 138, ds

vUrxZr okafNr vU; izi= gksus ij dj dh nj ds fookn vFkok voewY;u ds

vk/kkj ij lkekU;r% eky dk vf/kxzg.k ugha fd;k tk,xk cfYd iathd`r

O;fDr ds [k.M ls lEcaf/kr TokbUV dfe’uj ¼dk;Zikyd½ dks ,d foLr`r

fjiksVZ lk{; layXu djrs gq, izsf"kr dh tk,xh vkSj ;fn laHko gks rks eky

dk uewuk Hkh ysdj eky ds lkFk izsf"kr fd;k tk,xkA ftlds vk/kkj ij

lEcaf?kr TokbUV dfe’uj ¼dk;Zikyd½ }kjk [k.M Lrj ls fu;ekuqlkj

5. Furthermore, Mr. Agarwal, appearing for the petitioner, has relied

upon a judgment of the Kerala High Court in the case of Hindustan Coca

Cola Private Limited vs. Assistant State Tax Officer reported in 2020 NTN

(73)-58 wherein the Kerala High Court held as follow:-

“7. From the perusal of the aforementioned findings, it is irresistibly concluded that in case of a bonafide dispute with regard to the classification between a transitor of the goods and the squad officer, the squad officer may intercept the goods and detain them for the purpose of preparing the relevant papers for effective transmission to the judicial assessing officers and nothing beyond. In the present case, it is a case of bonafide miscalculation as to whether the goods would be exigible to 12% or 28%. The judgment cited in N.V.K Mohammed Sulthan Rawtger's case (supra) was also a case where the petitioner firm was a manufacturer of 'Ground Betel Nuts (Arecanuts)' and registered with the Tamil Nadu under the Goods and Service Tax Act. The goods were intercepted by the inspecting authority to be in contravention of the misbranding. By relying upon the decision in J.K Synthetics Limited V. Commercial Taxes Officer, 1994 (4) SCC 276, it was held that the charging provisions must be construed strictly but not the machinery provisions which would be construed like any other statute.”

6. In the present case, there is no dispute that the invoice, e-way bill and

all other relevant documents were accompanied with the goods.

Furthermore, there was no mismatch in the description of the goods with the

documents. The only ground for detention of the goods was that the

valuation of the goods as per the invoice was not correct. In my view, this is

not a valid ground for detaining the goods as the officer concerned was not

competent to carry out such detention.

7. In the event of under valuation, appropriate notice under Sections 73

or 74 of the Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter

referred to as “the Act”) is required to be issued as per the procedure

provided therein. If the Court holds such a detention to be valid, it would be

open to the authorities to carry out detention on their whims and fancies. The

detention of the goods in such a scenario is not envisaged under the Act and

the officers have not been vested with such a power to detain the goods and

thereafter impose penalty under Section 129 of the Act. Specific provisions

have been provided for detection of under valuation and the GST officials

have to adhere to the same. It is to be noted that only after issuance of notice

under Sections 73 or 74 of the Act, if the goods are found under valued,

8. Accordingly, imposition of penalty under Section 129 of the Act on

the speculation that the goods are under valued cannot be allowed.

9. In light of the above, impugned orders dated December 20, 2020 and

September 17, 2021 are quashed and set-aside. Consequential reliefs to

follow. In the event any deposit has been made by the petitioner to the

authorities, the same shall be returned to the petitioner within four weeks

10. The writ petition is, accordingly, allowed.

Order Date :- 31.1.2024 Rakesh

2024-02-01T10:55:26+0530 High Court of Judicature at Allahabad