This appeal has been filed under Section 107 of the Goods and Services Tax Act, 2017 by M/s. G.C. Tiles (Truck Driver/Person-in-charge : Shri Anil Kumar Pal S/o Shri Ram Shankar), 3401, Opp. : Water Tank, Jaiprakash Nagar, Bariatu, Ranchi-834 009 (hereinafter also referred to as “the appellant”) against Order No. IV(6)47/AE/Alwar/2018, dated 10-10-2018 (hereinafter referred to as “the impugned order”) passed by Assistant Commissioner (AE), Central Goods & Services Tax Commissionerate, Alwar (hereinafter also referred to as “the adjudicating authority”).

Brief facts of the case :-

2.1 The brief facts of the case are that on 9-10-2017 at. 08.30 AM a conveyance bearing Registration No. RJ-19-GF-6348 was intercepted in movement at Sikandara Toll Plaza, by the Officers of CGST Commissionerate, Alwar. The statement of the Driver/Person-in-Charge, of the vehicle was also recorded on 9-10-2018. The goods in movement were inspected under the provisions of sub-section (3) of Section 68 of the Central Goods and Services Tax Act, 2017 and the following discrepancies were found :-

(a) Bill was generated on undervaluation with intent to evade tax.

2.2 Therefore, calculation were made on the basis of physical verification, the total value of goods arrived at ₹ 6,22,767/- and GST payable is ₹ 1,12,098/-. Whereas, as per invoice produced by the Person-in-charge/Driver of the vehicle, the total value of goods was ₹ 2,47,005/- and GST payable is ₹ 44,461/-.

2.3 In view of the above, the impugned goods and the conveyance used for the movement of goods were detained under sub-section (1) of Section 129 of Central Goods and Services Tax Act, 2017 read with sub-section (3) of Section 68 of the State/Union Territory Goods and Services Tax Act, 2017 or under Section 20 of the Integrated Goods and Services Tax Act, 2017 read with sub-section (3) of Section 68 of the CGST Act, 2017 by issuing an order of detention in FORM GST MOV-06 and the same was served on the person-in-charge of the conveyance and owner of the vehicle on 9-10-2018. As the appellant has not filed any objection and consented for waiver of personal hearing in the instant case.

2.4 In view of the above, the following below mentioned goods and conveyance were confiscated by the adjudicating authority exercising their powers vested under Section 130 of the CGST Act and under Section 130 of the SGST Act/Section 20 of the IGST Act, 2017 :

2.5 M/s. G.C. Tiles, 3401, Opp. : Water Tank, Jaiprakash Nagar, Bariatu, Ranchi-834 009 as owner of the impugned goods has come forward to pay short paid IGST, penalty and redemption fine on impugned goods and vehicle, claiming the goods in the conveyance RJ-19-GF-6348. Accordingly, the adjudicating authority has passed the impugned order. The adjudicating authority apart from confirming the demand of short paid IGST amounting to ₹ 67,637/- also imposed equal penalty of 100% IGST amounting to ₹ 67,637/-, and also imposed redemption fine of ₹ 67,637/- on impugned goods and ₹ 67,637/- on conveyance used to transport of impugned goods. The impugned goods and conveyance used for transport of goods were released after depositing of tax, penalty and redemption fines. The owner of the goods i.e. M/s. G.C. Tiles, 3401, Opp. : Water Tank, Jaiprakash Nagar, Bariatu, Ranchi-834 009 as owner of the impugned goods, GSTIN 20AAQFG8464N1ZT has deposited the IGST @ 18% of ₹ 1,12,098/- on the value of seized goods ₹ 6,22,767/- (₹ 67,637/- + ₹ 44,461/-) penalty of ₹ 67,637/- and redemption fine of ₹ 67,637/- on impugned goods and redemption fine ₹ 67,637/- on vehicle used to transport of impugned goods, thus total amounting to ₹ 3,15,009/- vide Challan No. CPIN 181208000014753, dated 10-10-2018.

3. Being aggrieved with the impugned order, the appellant has filed the appeal on various grounds which are summarized as under :

(i)      that the impugned order is passed by the adjudicating authority under Section 130 is without jurisdiction illegal, perverse, issued in arbitrary manner, is highly erroneous and merely on presumption and assumption basis without considering the facts and circumstances of the case.

(ii)    that no SCN was issued and the same was issued was non-speaking and the same did not disclose the material facts on the basis of which the notice was issued. It is trite law that SCN should set out clearly grounds for proposed action.

(iii)   that the adjudicating authority has determined the value of goods without conducting any enquiry for the genuineness or say compare the product in the market with same product or say without any basis totally on presumptions basis.

(iv)   that in the facts and circumstances of the case and in law, it is not justified by the adjudicating authority to levy tax ₹ 44,461/- + 67,637/- Total ₹ 1,12,098/-, Penalty of ₹ 67,637/- and fines of ₹ 1,35,274/- whereby the supply is out to out State by the supplier and neither the consignor nor consignee belongs to the State of Rajasthan.

In the above context, the appellant has also submitted various case laws in support of their contention which may be summarised as under :

(i)      Maqbool Hussain v. State of Bombay – AIR 1953 SC 325 = 1983 (13) E.L.T. 1284 (S.C.),

(ii)    S.A. International v. Collector of Customs – 1988 (36) E.L.T. 445 (Cal).

(iii)   M/s. D.J. Malpani v. Commissioner of Central Excise, Nashik, Civil Appeal No. 5282 of 2005 [2006 (193) E.L.T. A23 (S.C.)], Hon’ble Supreme Court of India held that “transaction value” means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to; or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods assessee by reason of or in connection with the sale…, but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.

Thus, the adjudicating authority has imposed the tax on MRP instead of transaction value as mentioned in the Tax Invoice which is ultra vires the provision of the CGST Act.

4. Personal Hearing in the case was conducted on 12-2-2020. Shri Sharad Asawa, Advocate appeared on behalf of the appellant and explained the case in detail and reiterated the grounds as mentioned in the appeal memorandum and also submitted additional written submission dated 12-2-2020 and requested to decide the case.

5. I have carefully gone through the case records and detailed submissions made by the appellant in the appeal memorandum as well as additional written submission dated 12-2-2020 at the time of personal hearing.

6. I find that the department has made the case against the appellant on the ground that the appellant had cleared the goods “on considerably lesser value keeping in view the MRP marked on goods with intent to evade tax” and the total value of goods has arrived at ₹ 6,22,767/- on the basis of MRP on which GST payable is ₹ 1,12,098/-. Whereas, as per invoice available with the person-in charge/driver of conveyance the total value of goods is ₹ 2,47,005/- and GST payable is ₹ 44,461/-.

Now, the issue to be decided is whether the goods detained/seized by the department is undervalued or otherwise.

7. I find that M/s. G.C. Tiles, 3401, Opp. : Water Tank, Jaiprakash Nagar, Bariatu, Ranchi-834 009 as owner of the impugned goods having GSTIN 20AAQFG8464N1ZT, is partnership firm and is engaged in the business of trading in Ceramic Tiles has purchased the Ceramic Glazed Tiles from M/s. Liza Tiles Pvt. Ltd., Survey No. 175/2, At. Bela, Jetpur Road, Morbi-363642 (Gujarat) having GSTN : 24AABCL8311K1ZL vide Truck No. RJ 19-GF-6348 and LR No. 064, dated 7-10-2018.

8. I find that under GST law, taxable value is the transaction value, i.e. price actually paid or payable, provided the supplier and the recipient are not related and price is the sole consideration. In most of the cases of regular normal trade, invoice value will be the taxable value. However, to determine value of certain specific transactions, Determination of Value of Supply rules have been prescribed in CGST Rules, 2017. In GST, tax is payable on ad valorem basis, i.e. percentage of value of the supply of goods or services. Section 15 of the CGST Act and Rule 27 to Rule 35 of CGST Rules, 2017 contain provisions related to valuation of supply of goods or services made in different circumstances and to different persons. As per sub-section (1) of Section 15 of CGST Act, 2017 “The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply”. In the instant case before me nothing was brought on record by the adjudicating authority to substantiate that the appellant has undervalued the goods and value declared by the appellant is not a true value in terms of Section 15(1) of CGST Act, 2017. No investigation was made by the concerned authority and simply on the basis of MRP the case was made for undervaluation. In GST law there is no provisions for determination of value on the basis of MRP. Therefore, the order passed by the adjudicating authority is contrary to the provision of CGST Act, 2017 and not sustainable.

9. In view of the above facts and circumstances and in view of the legal provisions I hereby set aside the impugned order passed by the adjudicating authority and allow the appeal filed by the appellant.

10. The appeal is disposed of in above manner.