Challenges:
- Ambiguity in Tax Classification
- Unnecessary Delays in Business Operations
- Lack of Clarity for Transporters & Businesses
- Potential Misuse of Section 129
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The present appeal (SAH1/GST/0658/2024) concerns the detention of goods under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 for the year 2023-24. The dispute arose over the classification of goods and the applicable GST rate. The tax authorities detained the goods on the ground that the tax paid was lower than the prescribed rate. However, the court ruled that in such cases, detention is not justified if documents are in order and the dispute is bona fide.
The court ruled that in cases where a bonafide dispute exists regarding the tax rate, the correct approach is to refer the matter to the Assessing Authority rather than detaining the goods. Authorities must not detain goods beyond a reasonable period, and businesses should be given an opportunity to justify their tax classification. This judgment reinforces the principle that GST compliance should be fair and transparent, rather than punitive.