M/S. Shrimali Industries PVT.LTD. Through Its Director Mr. Dinesh Vyas Son Of Shree Nand Kishore vs. State Of Rajasthan

Facts

The petitioner, M/s. Shrimali Industries Pvt. Ltd., filed a writ petition challenging the detention of its vehicle and goods by the Assistant Commissioner of State Tax, Anti-Evasion, Udaipur. The vehicle was transporting aluminum scrap, but the detention memo and show cause notice alleged it was aluminum sections. The petitioner argued that the detention was illegal, contravening Section 68 read with Section 129 of the CGST Act and relevant guidelines, and cited a Kerala High Court judgment. The respondent authorities contended that the goods were fraudulently declared as aluminum scrap when they were actually new aluminum sections, with a significant difference in value, and that the show cause notice was appealable under Section 107 of the CGST Act, making the writ petition not maintainable.

Held

The Court held that the situation was not merely one of mis-classification, as observed in the Kerala High Court case cited by the petitioner. Instead, the petitioner was indulging in blatant evasion of GST by fraudulently mis-describing brand new aluminum sections as aluminum scrap. The Court found the respondent authorities were justified in detaining the vehicle and goods due to this blatant mis-description. Furthermore, the Court agreed with the respondent's contention that the show cause notice dated 08.06.2018 was appealable under Section 107 of the CGST Act. Citing the Supreme Court judgment in Assistant Commissioner of State Tax & Ors. vs. M/s. Commercial Steel Limited, the Court concluded that the writ petition was not maintainable. Consequently, the writ petition was dismissed as devoid of merit.

Key Issues

1. Whether the detention of the petitioner's vehicle and goods was illegal and in contravention of Section 68 read with Section 129 of the CGST Act and the guidelines for interception of conveyances, based on a mere suspicion of mis-classification of goods? 2. Whether the writ petition is maintainable in light of the availability of an appeal under Section 107 of the CGST Act against the show cause notice? Petitioner's Arguments: The petitioner argued that the detention was illegal as it was based on a mere suspicion of mis-classification, citing the Kerala High Court judgment in M/s. Podaran Foods India Private Limited vs. State of Kerala. They contended that the action violated the procedure prescribed under Section 68 read with Section 129 of the CGST Act and the Government of India's guidelines for interception. The petitioner sought quashing of the detention order and the show cause notice. Respondent's Arguments: The respondent authorities argued that the detention was justified due to a patent fraudulent declaration of goods. They asserted that brand new aluminum sections were being transported and falsely declared as aluminum scrap, with a significant difference in value indicated in the E-Way Bill. They relied on the Supreme Court judgment in Assistant Commissioner of State Tax & Ors. vs. M/s. Commercial Steel Limited, arguing that the show cause notice was appealable under Section 107 of the CGST Act, rendering the writ petition not maintainable.