Detention Quashed: Misclassification is an Assessment Issue, Not a Ground for Section 129 Detention

1. The Core Dispute: Detention vs. Regular Assessment

The Revenue intercepted a consignment of goods in transit. Although the goods were accompanied by all prescribed documents—including a valid tax invoice and e-way bill—the officer detained the goods under Section 129 of the CGST Act.

The Revenue’s Stand: The officer alleged that the goods were mis-described or misclassified based on a discrepancy in the Harmonized System of Nomenclature (HSN) code. They argued this constituted a “contravention” of the Act, justifying detention and penalty.
The Assessee’s Stand: The movement was bona fide with valid documentation. Any dispute regarding the rate of tax or classification should be handled during regular assessment (under Sections 73 or 74), not via the “emergency” machinery of Section 129 during transit.

2. The Legal Ruling: Limits of Section 129

The Division Bench of the Kerala High Court dismissed the Revenue’s appeals, affirming the decision of the Single Judge.

I. Validity of Documentation

The Court noted that if the consignment is moving with valid documents (invoice and e-way bill) that match the physical description and quantity of the goods, Section 129 cannot be invoked for “technical” disputes like classification. Detention is meant to check tax evasion (e.g., movement without documents), not to settle complex legal debates on HSN codes while a truck is on the road.

II. Misclassification vs. Patent Mis-description

The High Court drew a distinction between a bona fide classification dispute and a patent mis-description.

Detention is justified only if there is a “glaring” or “patent” mis-description (e.g., describing “apples” as “oranges”).
Detention is UNWARRANTED if the dispute is merely about whether an item falls under a 12% HSN code or an 18% HSN code. Such issues must be addressed by the jurisdictional Assessing Officer, not a squad officer in transit.

3. Final Order Summary

Writ Appeals: Dismissed.
Proceedings: Section 129 proceedings and detention notices were quashed.
Liberty to Revenue: The Revenue was given the liberty to raise the classification issue during the regular assessment of the assessee.
Outcome: The goods were ordered to be released without penalty under Section 129.

Key Takeaways for Transporters and Businesses

Carry Full Documentation: As long as your invoice, e-way bill, and physical goods match in terms of description and quantity, you have a strong defense against Section 129.
Challenge Arbitrary Detentions: If an officer detains your goods solely because they believe the “tax rate” or “HSN” is wrong, you can challenge this via a Writ Petition or Appeals, citing this Kerala High Court precedent.
HSN Discrepancy ≠ Evasion: Mere HSN errors (where the first two digits are correct) are often protected by Circular No. 64/38/2018-GST, provided the tax has been paid.

HIGH COURT OF KERALA

Assistant State Tax Officer

Hindustan Coca Cola (P.) Ltd.^*

V.G. Arun and Harisankar V. Menon, JJ.

WA NO. 1659 OF 2020

JANUARY 8, 2026

P.N.Damodaran Namboodiri and Hrithwik D. Namboothiri, Advs. for the Appellant. Smtg.Mini, P.J.Anilkumar, P.S. Sree Prasad, Advs. and A. Kumar, Sr. Adv. for the Respondent.

JUDGMENT

Harisankar V. Menon, J.- These writ appeals are filed by the Revenue/ Department challenging the judgment of the learned Single Judge, setting aside the proceedings initiated under the provisions of Section 129(3) of the Central Goods and Services Tax Act and the State/Union Territory Goods and Services Tax Act.

2. Dr.Thushara James, learned Senior Government Pleader would contend that, admittedly the goods have been detained even though the transport of the goods were accompanied with separate e-way bills, as there was mis-description of the commodity. A reading of the detention notice, which has been challenged in the Writ Petition, would show that documents prescribed under the statute – e-way bill etc.-were accompanying the consignment with the same description. Therefore, especially when the detaining officer specifically states that there is difference with reference to HSN No., it is for the officer who detained the goods to inform the assessing authority of the respondents herein, about the description difference and it is for the assessing authority to consider the same while considering the acceptability or otherwise of the returns to be filed by the assessee.

3. Proceedings under Section 129 of the Act based on misclassification or mis-description, as suggested by the Learned Government Pleader, is not called for.

4. Therefore, the learned Single Judge was perfectly justified in allowing the writ petition, especially when the very same issue has already been considered and decided against the Revenue/Department by various judgments of this Court including the one at N.V.K. Mohammed Sulthan Rawther and Sons and Willson v. Union of India GSTL 708 (Kerala)/(2018 VIL-502-KER) referred to by the learned Single Judge.

Resultantly, these appeals would stand dismissed, however, permitting the Revenue/Department to point out these aspects in the assessment proceedings, if so advised.