Order Date – 31 January 2024

Parties: M/s Shamhu Saran Agarwal And Company Vs Additional Commissioner Grade-2 And 2 Others

Facts –

• The Petitioner, M/s Shamhu Saran Agarwal And Company, was served with a show cause notice dated December 19, 2020, detaining the goods on the ground that the goods were undervalued.
• The appellate authority affirmed the penalty order on the ground that the goods were undervalued.

Issue –

• Whether the goods can be detained on the ground that the goods were undervalued?

Order –

• The Single Bench of Hon’ble High Court observed that 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. This is not a valid ground for detaining the goods as the officer concerned was not competent to carry out such detention.
• 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 undervalued, penalty can be imposed.
• Accordingly, imposition of penalty under Section 129 of the Act on the speculation that the goods are under valued cannot be allowed. The writ petition is allowed.