Uttar Pradesh boosts tax authority to seize undervalued goods

The Uttar Pradesh state tax department has given more power to its officials to seize goods with undervalued invoices. This follows a recent ruling by the Allahabad High Court, which addressed ongoing tax evasion issues in the pan masala industry. On March 3, the court upheld tax officials’ right to detain goods if their declared values are significantly lower than their actual worth. The case involved 384,000 pouches of pan masala declared at just ₹69,600, an amount the court found to be highly inaccurate. The court found that some traders were purposely undervaluing their goods to avoid the need for e-way bills, which are required for items valued over ₹50,000. The ruling also noted that a truck driver provided evidence contradicting the traders' claims about the goods’ origin. Digital tracking confirmed that the vehicles had not made the journeys claimed in their documents. The court emphasized the need for accurate valuation on tax invoices. It stated that registered dealers must report the true value of goods to comply with the GST Act. Failing to do so means the documents cannot be considered valid for tax purposes. Investigations showed that the questioned goods were made in Kanpur, but traders attempted to mislead authorities by claiming they came from West Bengal or Assam. The tax department verified through its app that there were no records of the vehicles making such trips. Traders are now reminded that they bear the responsibility to prove the actual movement and value of their goods. State tax officials are being instructed to ensure that they follow this ruling to combat organized tax evasion effectively.