Under valuation of goods in invoice cannot be a ground for detention of the goods and Vehicle

Last updated: 17 January 2022

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The Chhattisgarh High Court ruled that a discrepancy in the valuation of goods on an invoice is not a valid reason to detain goods and vehicles under Section 129 of the CGST Act. The court found the detention and seizure of goods by the Revenue Department to be unlawful. Consequently, the court set aside the detention order and any related tax and penalty demands, ordering the release of the seized goods.

Court :
Chhattisgarh High Court

Brief :
This petition was filed before the Hon'ble Chhattisgarh High Court, against the order passed by the Revenue Department, for release of the seized vehicle carrying goods from the manufacturing centers to the dealer with a tax invoice and an e-way bill, belonging to the assessee, a manufacturer of pan masala and tobacco products, on the grounds of discrepancies in the valuation of the goods.

Citation :
WPT No. 36 of 2020, WPT No. 49 of 2020 dated March 16, 2020

K.P. Sugandh Ltd. v. State of Chhattisgarh & Ors. [WPT No. 36 of 2020, WPT No. 49 of 2020 dated March 16, 2020]

This petition was filed before the Hon'ble Chhattisgarh High Court, against the order passed by the Revenue Department, for release of the seized vehicle carrying goods from the manufacturing centers to the dealer with a tax invoice and an e-way bill, belonging to the assessee, a manufacturer of pan masala and tobacco products, on the grounds of discrepancies in the valuation of the goods.

The Hon'ble Chhattisgarh High Court observed that, under valuation of a goods in the invoice cannot be a ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") read with Rule 138 of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules").

Further, held that, proceedings of detention and seizure of the goods and the vehicle by the respondents is without any authority of law. Set aside the order passed under Section 129 and the order of demand of tax and penalty both being unsustainable and directed the Revenue Department to release the goods.

FAQ :

No, the Chhattisgarh High Court has ruled that under-valuation of goods in an invoice cannot be a ground for detention of the goods and vehicle under Section 129 of the CGST Act.

The court decided that the detention and seizure of goods and vehicles due to invoice valuation discrepancies were unlawful and set aside the orders, directing the release of the goods.

The judgement refers to Section 129 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Rule 138 of the Central Goods and Services Tax Rules, 2017 (CGST Rules).

The goods and vehicle belonging to K.P. Sugandh Ltd. were seized due to alleged discrepancies in the valuation of the goods as stated in the tax invoice.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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