Indian Kanoon - Search engine for Indian Law

The petitioner is a dealer within the State of Kerala, who has transported interstate, Multi-Function Printers, which is detained at the Checkpost as is indicated at Ext.P1. The reason for detention and the demand for security deposit at twice the value of tax sought to be evaded, is on the ground of misclassification. The Department contends that, by misclassifying the goods, the petitioner has sought to evade tax. Even in penalty matters, this Court has held that misclassification would be best looked at by the Assessing Officer and not by the Intelligence Officer. The principle is more so applicable herein. The detention has been made by the Checkpost authorities, which can be only on the ground of suspicion of evasion of tax. A mere misclassification, which is discernible from the records, cannot lead to a conclusion of  evasion. The issue with respect to whether the higher rate of tax is applicable cannot be looked at as an issue of evasion of tax. In any event, the petitioner shall be allowed release of goods on execution of a simple bond and adjudication proceedings shall be completed expeditiously untrammeled by any observation herein, but however regulated by the judgments of this Court.