This case law is related to Detention of Goods in Classification Disputes
In the case at hand, Jeyyam Global Foods Private Limited, a company engaged in manufacturing various food products such as dried chickpeas, gram flour, and pulses, has filed a writ petition. The company encountered an issue when their consignment of dried chickpeas was halted by a GST tax officer during transportation from Salem to Dindigul.
Jeyyam Global Foods specializes in producing dried chickpeas and other food items. They process chickpeas by drying them at a specific temperature, which they classify as “dried chickpeas.” The company considers these dried chickpeas to fall under a particular category, which would make them exempt from taxes. Thus, they did not file an E-Way bill, as it was statutorily exempted. During the transit of the dried chickpeas from Salem to Dindigul, the consignment was intercepted by a GST tax officer on December 21, 2018. The officer detained both the consignment and the vehicle. However, the tax officer disagreed with the categorization of the goods, asserting that the dried chickpeas should be classified as fried or roasted grams, belonging to a different category.
Subsequently, the officer issued a detention notice and imposed a tax along with an equivalent penalty. Jeyyam Global Foods paid the tax and penalty under protest while seeking the release of their goods and vehicle. The company challenged the decision of the GST tax officer through this writ petition.
The central issue revolves around the authority of the squad officer to intercept and detain goods during disputes related to their classification. Specifically, the question is whether goods or conveyances can be held for a reasonable duration, enabling the preparation of relevant documents for the jurisdictional assessing officer’s examination.
Jeyyam Global Foods argued that their product, dried chickpeas, fell within the exemption criteria of the law, justifying the absence of an E-Way bill. On the other hand, the squad officer believed that the process of drying chickpeas and heating them warranted their classification as roasted or fried grams, rendering them ineligible for exemption. The jurisdictional officer participated in the case by submitting an affidavit and assisting the court in understanding the matter.
Legal Framework and Powers of the Statutory Officer:
The statutory officer possesses jurisdiction to require the person in control of a conveyance carrying goods above a certain value to carry relevant documents and devices, as specified. If the transportation of goods violates any rules under the act, the goods and vehicle can be detained or seized. The release of the goods and vehicle occurs after the required documents have been provided and the applicable tax and penalty have been paid.
Observation and Judgment:
The court observed that the categorization of dried chickpeas as exempt or not exempt should be determined by the statutory officer. The squad officer can temporarily detain both the goods and the vehicle, but only with the cooperation of the individuals present in the vehicle. The ultimate decision rests with the jurisdictional assessing officer.
In light of this, the court directed the Commissioner of commercial taxes to issue a circular within eight weeks. This circular should guide squad officers not to detain goods or vehicles when there’s a genuine dispute about tax liability, considering cases like Mohammed Sulthan Rawther and Sons and Wilson vs. Union of India.
The court’s decision provides comprehensive guidance on the proper procedure for handling goods during transportation according to the law. Squad officers can detain goods and vehicles temporarily to facilitate assessment by the jurisdictional officer. The officer will determine whether the goods are exempt and the applicable tax rate. The writ petition was allowed based on the court’s decision and established legal precedents. Overall, the court’s verdict is a fair and balanced resolution of the matter.