Frozen Chicken from Other States being Sold at 0% GST Bill instead of 5%: Kerala HC directs to Investigate Evasion [Read Order]

The High Court of Kerala has directed the State GST Department to take prompt and effective action on a complaint alleging large-scale tax evasion in the trade of frozen chicken brought into the State from other jurisdictions and billed at 0% GST instead of the applicable 5%.

The Kerala High Court Justice Ziyad Rahman A A issued the directive while disposing of a writ petition filed by a dealer engaged in the sale of chicken meat at Manjeri.

The petitioner approached the Kerala Court highlighting what he described as a continuing malpractice in the poultry trade. Certain suppliers, including the sixth respondent, Shanthi Feeds Private Limited of Coimbatore, were selling packed frozen chicken within Kerala under bills reflecting 0% GST even though frozen chicken attracts GST at 5% under the applicable rate schedule, as per the petitioner.

He contended that the practice enabled evasion of tax due to the State exchequer and placed compliant dealers like him at a competitive disadvantage. The petitioner filed a detailed complaint before the Deputy Commissioner of State Tax (Intelligence), Palakkad, on 19 September 2024, but alleged that no meaningful action followed.

Advocates Gayathri Muraleedharan, Archana B., and Arathy P. represented the petitioner. The State was represented by Senior Government Pleader Reshmitha R. Chandran. Shanthi Feeds Private Limited was represented by Manoj Chandran, K. Srikumar (Sr.), Ammu Charles, and S.A. Mansoor (Pattanam).

GST on Real Estate & Works Contracts – Your Ultimate Guide to GST in the Real Estate Sector!, Click Here

In response to the petition, the State GST Department filed a statement confirming receipt of the petitioner’s complaint and acknowledging that the invoices produced showed frozen chicken being billed with 0% GST.

The statement noted that enforcement functions relating to vehicle checking were not assigned to the Intelligence Wing and that the complaint had been forwarded to the Deputy Commissioner (Enforcement), Ernakulam, for further action. Intelligence Unit I was also directed to examine the scope of the case for intelligence-based proceedings. The Department stated that a preliminary enquiry had already been conducted, and a report had been forwarded to the competent authority for appropriate action.

A subsequent communication dated 14 January 2025 from the Intelligence Unit confirmed that an investigation was underway and that action would be taken if evasion was established. The Court found that an active inquiry was in progress and that the authorities had acknowledged the seriousness of the allegations.

Justice Ziyad Rahman A.A. directed the respondents to ensure that no tax evasion takes place in the sale of frozen chicken and to adopt necessary enforcement measures to curb any such illegal practice.

With these observations, the writ petition was disposed of, ensuring that the petitioner’s concerns would be addressed through a formal investigation undertaken by the GST authorities.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates