M/s A.N. Enterprises Vs Additional Commissioner And 2 Others ( Allahabad High Court)
Allahabad High Court ruled in favor of S.A.N. Enterprises, quashing a GST penalty imposed for alleged misclassification and under-valuation of goods during transit. The petitioner, a registered dealer engaged in the scrap trade, had transported aluminum cables with all necessary documents, including a tax invoice and e-way bill. However, authorities detained the goods on the grounds that the cables were PVC-aluminum mixed cables (Feeder Cables) instead. The petitioner argued that both goods had the same HSN code and tax rate, making the detention unjustified.
The court found that the consignment was accompanied by all relevant documents, with no discrepancies in the HSN code, quantity, or tax rate. The only reason for detention was a physical verification suggesting a minor variation in product description. Additionally, the appellate authority introduced a new ground of under-valuation, despite no prior show cause notice. The petitioner cited a 2018 circular from the Commissioner, Commercial Tax, Uttar Pradesh, which explicitly stated that goods should not be detained for under-valuation disputes.
Relying on its earlier decision in M/s Shambhu Saran Agarwal & Co. v. Additional Commissioner (2024), the court reiterated that goods cannot be detained solely on under-valuation grounds. The Kerala High Court’s ruling in Hindustan Coca Cola Pvt. Ltd. v. Assistant State Tax Officer (2020) was also referenced, where it was held that disputes over classification or valuation should be addressed through assessment proceedings rather than roadside detentions. The court emphasized that only a proper notice under Sections 73 or 74 of the Uttar Pradesh GST Act, 2017, could initiate action on under-valuation claims.
