Vehicle not to be detained for under-valuation of goods: Gujarat High Court

Vehicle not to be detained for under-valuation of goods: Gujarat High Court

The change of route of the consignment is not sufficient ground to impound a carrier under the Goods and Services Tax

The Gujarat High Court has held that mere undervaluation of goods or a change of route of a consignment cannot be sufficient grounds to detain goods or vehicles under the Goods and Services Tax (GST) Act.

The petitioner, Karnataka Traders challenged the confiscation notice issued by the Tax Commissioner (Enforcement) in the exercise of powers conferred under the Central Goods and Services Tax Act, 2017. It prayed for the direction of the issuance of a 'writ of mandamus' to forthwith release the goods and vehicle without demanding any security.

(Mandamus is a judicial remedy in the form of an order from a court to any government, subordinate court, corporation, or public authority to do some specific act under the law. It is a public duty and in certain cases a statutory duty).

The petitioner had submitted that the two grounds on which the department had confiscated the goods and the vehicle were not tenable under the law.

The department had objected to the relief in favor of the petitioner. It submitted that the route preferred by the petitioner reflected that his intention was to evade the tax. It could be presumed from the fact that the route preferred by the petitioner was different from the direction of the destination.

However, the division bench of Justice J B Pardiwala and Justice Nisha M Thakore held that merely because the direction preferred for the delivery of the consignment was different, an inference could not be drawn that the intention of the petitioner was to evade the tax.

Regarding the goods being transported to be of under-value, no material was placed on record. "Even otherwise, as held by this court as well as the other high courts, it is a settled legal position that under-valuation cannot be a ground for seizure of goods in transit by the inspecting authority," it ruled.