2018 (12) TMI 588 - HC - GST

Constitutional validity of rule 138(10) of the Central Goods and Services Tax Rules, 2017 / Gujarat Goods and Services Tax Rules, 2017 - validity period of the e-way bill in terms of distance to be travelled in a day - Held that - Issue Notice returnable on 10th January, 2019.

Summary

Issues:
Challenge to the constitutional validity of rule 138(10) of the Central Goods and Services Tax Rules, 2017 / Gujarat Goods and Services Tax Rules, 2017. Breach of principles of natural justice in passing an order under section 129(3) without waiting for the date of hearing. Interpretation of penalty provisions under section 129(1) and section 122(1)(xiv) of the Act. Application of section 73 and section 74 of the Act regarding tax payment, interest, and penalty. Interpretation of the statute as a whole in relation to section 129 of the Act. Consideration of circular No.64/38/2018-GST and circular No.3/3/2017-GST for procedural compliance and delegation of powers.

Analysis:
The petition challenges the constitutional validity of rule 138(10) of the Central Goods and Services Tax Rules, 2017 / Gujarat Goods and Services Tax Rules, 2017, alleging it to be unconstitutional and violative of Articles 14, 19(1)(g), and 301 of the Constitution of India due to restrictions on the validity period of the e-way bill based on distance traveled in a day. The petitioner contends a breach of natural justice principles as the impugned order under section 129(3) was issued before the scheduled hearing date, contrary to sub-section (4) of section 129 of the Act, which mandates an opportunity to be heard before determining tax, interest, or penalty.

The petitioner argues discrepancies in penalty imposition under section 129(1) compared to section 122(1)(xiv) of the Act, emphasizing compliance with section 73 and section 74 provisions for tax payment, interest, and penalty determination. Section 73 allows for penalty waiver if tax and interest are paid within thirty days of the show cause notice, while section 74 mandates a penalty equivalent to twenty-five percent of the tax in cases of fraud or willful misstatement within the same timeframe.

Furthermore, the petitioner asserts that section 129 of the Act should be construed in conjunction with related provisions, citing the Supreme Court's directive in Kailash Chandra v. Mukundi Lal to interpret statutes holistically when dealing with similar subject matters. Reference is made to circular No.64/38/2018-GST, indicating that errors in writing distance on e-way bills may fall under exemptions outlined in the circular, which are illustrative rather than exhaustive.

Lastly, the petitioner raises a jurisdictional issue concerning the delegation of powers under sub-section (3) of section 129 to specific officers as per circular No.3/3/2017-GST. The impugned order was allegedly issued by a State Tax Officer lacking the authority to exercise powers under section 129(3) of the Act, highlighting a jurisdictional flaw. The court, considering the submissions, issued a notice returnable on 10th January, 2019, allowing direct service on the same day for further proceedings and clarification on the raised issues.