1. The first petitioner is a manufacturer of “Ground Betel Nuts (Arecanuts)” with the brand name “Roja”. The second petitioner is a registered dealer of that product. The first petitioner is an assessee under the Goods and Services Tax Act (“GST Act”), in Tamil Nadu; so is the second petitioner on the roles of the third respondent.

2. The first petitioner consigned a load of Roja betel nut to the second petitioner, through the Exhibit P9 tax invoice, dated 22.09.2018. It entrusted the consignment to the ABT Parcel Service for transportation. Indeed, in the Exhibit P9 invoice, the first petitioner described the commodity with “HSN 0802”, and paid the tax at 5%. The first petitioner also raised the Exhibit P10 e-way bill.

3. On 26.09.2018, the Assistant State Tax Officer (ASTO), the fourth respondent, intercepted the lorry when it reached Palakkad. The lorry had been carrying other goods, too. The ASTO detained the goods, alleging that the first petitioner’s product fits the description “HSN 2106” and attracts 18% tax—not 5%. In other words, the ASTO detained the goods because the petitioners had allegedly been trying to evade tax by mis-describing the product.

4. Served with the Exhibit P11 detention notice, dated 26.09.2018, the petitioners’ authorised representative met the ASTO and explained about the genuineness of the transport. He tried to impress upon the authority that there was neither misclassification nor evasion of tax. But the ASTO remained unconvinced. Aggrieved, the petitioners filed this Writ petition.

5. The petitioners seek the Court to (a) declare that the petitioners’ “Arecanut Ground” with HSN 0802 attracts GST only at 5%, as in item falling under Serial No. 28 of Schedule I of G.O.(P) No. 62/2017/TAXES, as amended; (b) direct the authority not to 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 speculation: that the ''arecanut ground'' carries HSN 2106 and attracts 18% tax. But it finds no statutory base. In this context, he relies on M/s. Crane Betal Nut Powder Works v. Commissioner of Customs and Central Excise, Tirupati., (2007) 4 SCC 155 He also contends that ASTO’s detaining the consignment is arbitrary, unjust, and without jurisdiction, too.

9. To elaborate, Sri Mather submits that the detention power conferred on the officers, either under Section 68 or Section 129, must be exercised only under the circumstances and grounds set out in those provisions. He also submits that Section 122 of the GST Act defines the offences warranting imposition of penalty. Misclassification of goods in the invoice, according to him, is not an offence falling under either Section 122, 67, or 68 of the Act.

10. About the HSN Code, too, Sri Mather has extensively argued. But I reckon the adjudicatory scope of this writ petition confines itself to detention and release of goods. Classification—or rather misclassification—of a commodit