Case -M/S.Jeyyam Global Foods (P) Ltd vs. Union of India

The petitioner is a manufacturer of dried chick peas, gram flour, pulses and grams. The petitioner’s claim is that they purchase chick peas, dry them by heating them to a certain degree and the resultant product is known as Dried Chick Peas. According to the petitioner, this would have to be classified only under Chapter 0713 of HSN. The petitioner had transported the dried chick peas from Salem to Din Digul. The petitioner had not filed any E-Way bill in view of the exemption. While so, the consignment of the dried chick peas sent by the petitioner was intercepted by the authorities on 21.12.2018. The authorities seized the goods and also detained the vehicle in which the goods were being transported. The authorities took the view that what was transported by the petitioner comes under the classification falling under Chapter 2106 of HSN.

In this view of the matter, authorities issued a detention notice and levied tax with equal penalty. The petitioner paid the said amount as demanded under protest and he also obtained release of the goods as well as the vehicle. The order is under challenge in this writ petition principally on the ground that when a bonafide dispute as to classification had arisen, it is only the jurisdictional assessing officer who could have ruled on the classification and that it was not open to the Squad Officer to have done so.

According to the Assistant sales tax officer, he is statutorily empowered under Section 68 r/w Section 129 of the Tamil Nadu Goods and Services Tax Act, 2017. Section 68 of the said Act reads as under:
Section 68 (1) : The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.

(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed.

(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods. Section 129(1) of the Act reads as under:

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released:

(a) On payment of the applicable tax and penalty equal to one hundred per cent of the tax

Payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. Of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty.

(b) On payment of the applicable tax and penalty equal to the fifty per cent. Of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. Of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; 

(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed.

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

According to assistant sales tax officer he is entitled to call upon the person in charge of the conveyance to produce the document in question for verification. In present scenario, there is no dispute for the goods that were actually transported. But according to petitioner goods would qualify as chick peas whereas by the assistant sales tax officer it is classified as roasted grams

A Similar issue came up for consideration before the Hon’ble Kerala High Court in the decision reported in 2018 (1) TMI 1503 (N.V.K.Mohammed Sulthan Rawther and Sons and Willson Vs. Union of India). The Hon’ble Kerala High Court held that in such cases 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. The process of detention of the goods cannot be resorted to when the dispute is bona fide, especially, concerning the eligibility of tax and, more particularly, the rate of tax.

Squad officer can detain the goods only for the purpose of preparing relevant papers regarding any issue involved like wrong classification of goods, and handover the papers to the jurisdictional assessing officer. But, final action can be taken only by the jurisdictional assessing officer.

The Commissioner of Commercial Taxes, Chennai is directed to issue a circular to all the inspecting squad officers in Tamil Nadu not to detain goods or vehicles where there is a bonafide dispute as regards the eligibility of tax or rate of tax.

Conclusion:
It is not open to the inspecting squad officers to detain goods beyond a reasonable period of time and take action against it. Detention of goods cannot extend beyond a reasonable period of time.

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