Undervaluation cannot be reasons for detention of goods

Undervaluation cannot be reasons for detention of goods
in transit if vehicle containing the goods is accompanied
by proper invoice and e-way bill

Hon’ble Allahabad High Court in case of M/S Shamhu Saran Agarwal
and Company Versus Additional Commissioner Grade-2 and 2 Others
in Writ Tax No. – 33 of 2022 decided on January 31, 2024.

6. In the present case, 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. In my view,
this is not a valid ground for detaining the goods as the officer concerned was not
competent to carry out such detention.

7. In the event of under valuation, appropriate notice under Sections 73 or 74 of the Uttar
Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as “the Act”) is required
to be issued as per the procedure provided therein. If the Court holds such a detention to
be valid, it would be open to the authorities to carry out detention on their whims and
fancies. 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 under valued, penalty can be imposed.