By TIOL News Service

CHENNAI, FEB 06, 2019: THE petitioner purchases chick peas, dry them by heating them to a certain degree and the resultant product is known as "Dried Chick Peas".

They had transported the dried chick peas [Chapter 0713] from Salem to Dindigul.

The petitioner had not filed any E-Way bill in view of the exemption statutorily granted [Rule 138(14)(e) of CGST Rules, 2017 & Notification 2/2017-CTR, Sr. no. 45 refers].

While so, the consignment of the dried chick peas sent by the petitioner was intercepted by the respondent Commercial Tax Officer, Roving Squad Section, Dindigul on 21.12.2018. The goods were seized and the vehicle in which the goods were being transported was detained. The respondent viewed that what was transported by the petitioner comes under the classification (fried or roasted grams) falling under Chapter 2106 of HSN.

A detention notice was issued and tax was levied with equal penalty. The petitioner paid the said amount as demanded by the fourth respondent under protest and he also obtained release of the goods as well as the vehicle.

The order is under challenge principally on the ground that when a bonafide dispute as to classification had arisen, it is only the jurisdictional assessing officer, namely, the Assistant Commissioner of Central Taxes, Salem II Division who could have ruled on the classification and that it was not open to the Squad Officer to have done so.

The CTO, Roving Squad Section submitted that he is statutorily empowered under Section 68 r/w Section 129 of the Tamil Nadu Goods and Services Tax Act, 2017 to call upon the person in charge of the conveyance to produce the documents in question for verification. And that the Commissioner of Commercial Taxes, Chennai has issued a notification dated 12.07.2017 notifying the Deputy Commissioner, Assistant Commissioner, State Tax Officer, Deputy State Tax Officer as the Proper Officer to exercise the powers and perform the functions conferred on them under Tamil Nadu GST Act, 2017 and the rules made thereunder and to exercise the powers under Section 129 of the Act in the matter of detention, seizure and release of goods and conveyances in transit. According to the respondent, the impugned goods would have to be classified as ‘roasted grams'.

The High Court noted that in view of the notification issued there cannot be any doubt that the fourth respondent is the notified Proper Officer in this case. However, the issue that arises for consideration is whether the inspecting squad officer is entitled to rule on the appropriate classification, it was added.

The High Court further observed that a similar issue came up for consideration before the Kerala High Court in the case of N.V.K. Mohammed Sulthan Rawther and Sons and Willson Vs. Union of India  - 2018-TIOL-170-HC-KERALA-GST and wherein it is 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"; that the process of detention of the goods cannot be resorted to when the dispute is bona fide, especially, concerning the exigibility of tax and, more particularly, the rate of tax.

Expressing agreement with the aforesaid enunciation of law, the Madras High Court further observed -

"…Here, a bonafide dispute with regard to the classification has arisen between the transporter of goods and the squad officer. I am of the view that the squad officer can intercept the goods, detain them for the purpose of preparing the relevant papers for effective transmission to the jurisdictional assessing officer. It is not open to the squad officer to detain the goods beyond a reasonable period. The process can at best take a few hours. Of course, the person who is in-charge of transportation will have to necessarily cooperate with the squad officer for preparing the relevant papers. I hold that the final call will have to be taken only by the jurisdictional assessing officer."

Undertaking that the petitioner would not press for the refund of the amounts already paid and would abide by the ultimate outcome of the proceedings that may be initiated by the Assistant Commissioner of Central Taxes, Salem II Division , the proceedings impugned in the writ petition were quashed and the writ petition was allowed.

The Commissioner of Commercial Taxes, Chennai was also 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 exigibility of tax or rate of tax.

The writ petition was allowed.

(See 2019-TIOL-432-HC-MAD-GST)