TMI Blog2018 (11) TMI 1503X X X X Extracts X X X X X X X X Extracts X X X X ..... ER - in J.K. Synthetics Limited [1994 (5) TMI 233 - SUPREME COURT], where it was finally held that if the assessee pays the tax, which according to him is due based on the information supplied in his return, there would be no default on his part to meet his statutory obligation. Therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' and that he is liable for consequences. In the case of Rams [1993 (3) TMI 324 - KERALA HIGH COURT], it was held that the inspecting authority may entertain a suspicion 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 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.” 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, concernin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o detain the petitioners commodity en route alleging that the rate of tax is 18% and not 5% as shown in the invoices; (c) direct the ASTO to release the lorry and goods (arecanut) covered by the Exts.P9 and P10, as carried in Lorry No. TN-37-BS-9384, forth with. Submissions: The Petitioners : 6. In the above factual backdrop, Sri Mayankutty Mather, the petitioners counsel, has submitted that the petitioners consignment carried all the valid documents. His singular contention is that the petitioners cannot be accused of evading tax; the worst that can be attributed to them is about the correct rate of tax. The dispute about the rate of tax, according to him, is not a matter for adjudication in a proceeding under Section 68 or 129 of the GST Act. 7. The adjudication of the rate-issue is a matter to be undertaken by the assessing officer alone, but not by the inspecting officials exercising powers under Sections 67, 68, 69 or 129 of the CGST Act/ KGST Act, 2017. To support this proposition, Sri Mather relies on Rams v. Sales Tax Officer 1993 (91) Sales Tax Cases 216. 8. Sri Mather has asserted that the fourth respondent has indulged in sheer speculati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to her, the assessee s mere self-declaration. She thus asserts that a return can only mean a true and correct return, accepted by the authorities on scrutiny and verification. 15. To elaborate on the tax regime and the statutory scheme, Dr. James has taken me through various provisions including Sections 31, 95, and 122, besides Rule 46 of the KSGST Rules. She repeatedly stressed that the petitioners have an efficacious alternative remedy and that they ought to have taken recourse to it. For her, the petitioners effort before this Court is premature, and any adjudication at this stage will stultify the statutory authority s efforts at fair adjudication. 16. Heard Sri Mayankutty Mather, the petitioners counsel, and Dr. Thushara James, the Government Pleader. Discussion: 17. The facts are not in dispute. The first petitioner manufactures and markets Roja betel nut for human consumption, and the second petitioner is one of the dealers; both have been registered under the GST regime. The load of Roja betel nut sent to the second petitioner was intercepted and detained en route. 18. The ASTO, the detaining authority, served on the lorry driver the Exhibit P11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icted. It is, indeed, for the assessing authorities to adjudicate on the issue. So I refrain from examining, much less pronouncing on, the nature of the product. 24. Detention under the KSGST Act has an elaborate remedial mechanism. Now, we focus on the release of the product, and it lies in narrow confines. Suffice it for me to examine this singular issue: Can the State Tax Officer invoke Section 129 of the Act and detain goods on the ground the tax paid on the product is less? Here, the documents are in order and the product description accords with what the first petitioner has already declared, say, in his returns before the assessing authority. Then, can the ASTO still hold up the consignment because the declaration already made does not suit his notion of what the product is? 25. True, a literal reading of Section 129 of the Act presents a different picture and, perhaps, lends support to the State s view. But purposive interpretation and the practical commercial considerations trump that view. 26. Chapter XVI of the Combined Acts deals with inspection, search, and seizure. Section 129 under Chapter XIX provides the mechanism for detention, seizure, and release of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te to the best of knowledge and belief, without the dealer being guilty of wilful omission. The dealer, according to J. K. Synthetics Limited , must deposit the full tax due, based on the information furnished. And that information must be correct and complete to the best of the dealer's knowledge and belief. If the dealer has furnished full particulars regarding his business, without wilfully omitting or withholding any particular information affecting the assessment of tax, and if he honestly believes to be 'correct and complete', the dealer is said to have acted ' bona fide ' in depositing the tax due and filing the return. Of course, the tax so deposited is to be deemed to be provisional and subject to necessary adjustments under the final assessment. 31. To support its ratio, J.K. Synthetics Limited accepts the minority of view in Associated Cement Co. Ltd.. v. CTO (1981) 4 SCC 578. And it has finally held that if the assessee pays the tax, which according to him is due based on the information supplied in his return, there would be no default on his part to meet his statutory obligation. Therefore, it would be difficult to hold that the 'tax p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he former, the Supreme Court has emphatically held that if the dealer furnishes all particulars about his business, assesses 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 evading 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 suspicion 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 inspecting authority can alert the assessing authority to initiate the proceedings for as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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