Page 64 - GSTL_30th April 2020_Vol 35_Part 5

550 GST LAW TIMES [ Vol. 35
33. The detention was because the petitioner, an unregistered
dealer, had allegedly attempted to evade the sales tax. The petitioner's
producing all the documents had no impact. Instead, the detaining of-
ficer insisted on the petitioner's furnishing bank guarantee for certain
sum as a condition for release of the goods, pending enquiry.
34. The order in enquiry affirmed that the Enquiry Officer
was “satisfied” that there was attempt at evasion of tax. So the penalty
followed. In this context, a Learned Single Judge of this Court has ob-
served that when there is scope for a genuine dispute regarding any
liability for tax, the question of detaining the goods at the check-post
or imposing penalty under Section 29A does not arise. There is a
ground for a genuine dispute whether there was any taxable sale at all.
Rams, then, further observes :
“In such cases it is not for the check-post authority to act
on mere suspicion and to find that there is any attempt at eva-
sion of payment of tax, which alone vests him with the jurisdic-
tion to act under S. 29A. At best, he can only alert the assessing
authority in Ernakulam to initiate proceedings for assessment of
any alleged sale, at which the petitioner will have all his oppor-
tunities to put forward his picas on law and on fact. The process
of detention of the goods at the check post, cannot be resorted to
in such cases when there is a bona fide dispute regarding the very
existence of a sale and exigibility for tax. S. 29A is not intended
to subserve such an object.”
35. I may examine the impugned Ext.P11 notice, or in other
words the act of detention, in the light of the dicta in J.K. Synthetics
Limited and Rams. In the former, the Supreme Court has emphatically
held that if the dealer furnishes all particulars about his business, as-
sesses the tax as he honestly believes to be correct, and pays it; his
conduct cannot be faulted as mala fide or as an effort to evade tax.
Here, the Exts.P8 and P8(a) are the returns for two recent months. The
first petitioner declared the HSN Code he has felt his product would
attract and paid the tax accordingly. The returns are very much on
record before the assessing officer. Therefore, to that extent the first
petitioner’s conduct cannot be faulted, nor can he be accused of evad-
ing the tax.
36. Then, I may examine the dictum of Rams, a judgment
rendered by this Court. In somewhat an analogous situation as we face
here, Rams held that the inspecting authority may entertain a suspi-
cion that there is an attempt to evade tax. But if the records he seizes
truly reflect the transaction and the assessee's explanation accords
with his past conduct, for example, the returns he has filed earlier, the
detention is not the answer. In the words of Rams, at best the inspect-
ing authority can alert the assessing authority to initiate the proceed-
ings “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.”
Indeed, emphatic is the enunciation of law in Rams 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 that tax.”
160. We are in full agreement with the aforesaid enunciation of law
laid down by the Kerala High Court. Thus, in a case of a bona fide dispute
with regard to the classification between the transporter of the goods and
the Squad Officer, the Squad Officer may 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
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