2021 (2) TMI 1297 - HC - GST

Levy of penalty, interest and GST for the remittance of the shortage value in stock - HELD THAT - In a similar Writ Petition in K.R. SUBRAMANIAN VERSUS THE MANAGING DIRECTOR, THE SENIOR REGIONAL MANAGER, THE DISTRICT MANAGER, TAMIL NADU STATE MARKETING CORPORATION LIMITED (TASMAC), 2020 (12) TMI 1338 - MADRAS HIGH COURT has considered the identical impugned order and set aside the same. It was held that the imposition of the GST by the respondents, to the penalty imposed, under Rule 7(b) (xiv) of the Code, in a disciplinary proceedings initiated against the and W.M.P.Nos.15636, 15637, 15683, 15686, 15688, 15689, 15758, 15759, 17253, 17257, 23030 22961 of 2020 employees would not attract the GST and the penalty referred therein would only refer the penalty imposed in the course of trade or commerce. The present Writ Petitions are allowed and all the respective impugned orders passed by the concerned District Manager, TASMAC, are hereby set aside.

Summary

Issues:
Challenging impugned orders imposing penalty, interest, and GST for shortage value in stock.

Analysis:
The Writ Petitions were filed against impugned orders by District Manager, TASMAC imposing penalty, interest, and GST for stock shortage. Petitioners argued similarity to a previous case where a Judge set aside the order. The Judge's detailed order highlighted the illegality of imposing GST on penalties in disciplinary proceedings. The Judge emphasized that penalties in disciplinary proceedings do not attract GST unless related to trade or commerce agreements. The Court agreed that the penalty in this case was not related to trade or commerce, thus GST imposition was deemed illegal. The standing counsel did not dispute the previous judgment's finality, leading to the current Writ Petitions being allowed and impugned orders set aside. The respondents were directed to proceed lawfully as per the Prevention of Fraudulent Acts Code.