Fact: M/s. N V K Mohammed Sulthan Rawther And Sons the, (“first petitioner”) is a manufacturer of “Ground Betel Nuts (Arecanuts) with the registered brand name “Roja”. The first petitioner consigned a load of Roja betel nut to Roja Agencies (“the second petitioner”), through the Exhibit P9 tax invoice dated 22.09.2018, under HSN 0802 with 5% rate of tax. The Assistant State Tax Officer (ASTO), intercepted the lorry and detained the goods, alleging that the first petitioner’s product fits the description “HSN 2106” and attracts 18% tax-not 5%. In other words, the ASTO detained the goods because the petitioners had allegedly been trying to evade tax by misdescribing the product. Therefore, the aggrieved, the petitioners filed a Writ petition.
Petitioner’s Interpretation of Law: The petitioners’ authorised representative met the ASTO and explained about the genuineness of the transport. He tried to impress upon the authority that there was neither misclassification nor evasion of tax. The petitioners further seeks to the Court that the “Arecanut Ground” with HSN 0802 attracts GST only at 5%, as in item falling under Serial No. 28 of Schedule I of G.O.(P) No. 62/2017/TAXES, as amended, further requested not to detain the petitioners’ commodity en route alleging that the rate of tax is 18% and not 5% as shown in the invoices, direct the ASTO to release the lorry and goods (arecanut) covered by the Exts.P9 and P10, as carried in Lorry No. TN-37-BS-9384, forth with.
It was further submitted that the consignment was carried all the valid documents and it cannot be accused of evading tax, the worst that can be attributed to them is about the correct rate of tax. The dispute about the rate of tax, according to him, is not a matter for adjudication in a proceeding under Section 68 or 129 of the GST Act.
Held: The Hon’ble High Court of Kerala In the case of M/s. N V K Mohammed Sulthan Rawther And Sons and Roja Agencies vs. Union of India and Commissioner of state tax officer vide WP(C) No. 32324 of 2018 dated October 16, 2018 held that the classification or the alleged misbranding of the product even the alleged tax variation, not evasion though – cannot be considered here, the first petitioner declared the HSN Code he has felt his product would attract and paid the tax accordingly. The returns are very much on record before the assessing officer, Therefore, to that extent the first petitioner’s conduct cannot be faulted, nor can he be accused of evading the tax – at best the inspecting authority can alert the assessing authority to initiate the proceedings “for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his pleas on law and on fact” and the order of detention is arbitrary and unsustainable, same is set aside and the Assistant State Tax Officer is directed to release the goods.
Citation: 2018-TIOL-170-HC-KERALA-GST