2020 (2) TMI 892 - Commissioner - GST

Levy of IGST with penalty - e-way bill has not been generated for the movement of goods - supply of exempted goods i.e. plants as per Rule 138 (14) (E) of CGST/HPGST Rules, 2017 - scope of supply under section 7 of HPGST/CGST Act, 2017 - HELD THAT - It appears that there is no dispute regarding quantity /quality of goods and further it has been clearly mentioned on the challan that the goods are not for sale only for repair. Since the transaction has no tax implications, the proper office while adjudicating the case has taken into consideration the invoice value of the nine month old purchase invoice for determining the tax and penalty in this case under section 129(1) of the Act. The method used for valuation of transaction is not just and proper as the disputed goods were old and were dispatched for repair. As there is no doubt that the taxpayer has violated the provisions of the CGST/HPGST Act, 2017, so is liable to pay penalty. The tax payer has transported goods without the cover of proper documents (e way bill is one of them). The instant appeal is accepted and the order passed by Assistant Commissioner State Taxes Excise-cum- Proper Officer, North Enforcement Zone Palampur dated 27.11.2018 is set aside - The tax and penalty deposited by the appellant under section 129 (1) may be refunded and a penalty of Rs Ten Thousand only is imposed on the taxpayer under section 122 (1) of the Act.

Issues Involved:
1. Applicability of e-way bill for the movement of goods not intended for sale.
2. Determination of tax and penalty under Section 129 of CGST/HPGST Act, 2017.
3. Consideration of principles of natural justice in the adjudication process.
4. Definition and scope of "supply" under GST laws.
5. Bonafide belief and procedural lapses in compliance with GST provisions.

Detailed Analysis:

1. Applicability of e-way bill for the movement of goods not intended for sale:
The appellant argued that they were under the bonafide belief that an e-way bill was not required for the movement of goods sent for repair, as they were engaged in the supply of exempted goods. The respondent contended that as per Rule 138 (1) of CGST/HPGST Rules, 2017, an e-way bill is required for the movement of goods of consignment value exceeding fifty thousand rupees, irrespective of whether the movement is for supply or other reasons. The appellate authority noted that the appellant later accepted the requirement of an e-way bill for reasons other than supply but argued that no penalty should be imposed due to the absence of tax implications.

2. Determination of tax and penalty under Section 129 of CGST/HPGST Act, 2017:
The adjudicating authority imposed a tax and penalty of ?1,18,800/- under Section 129 of the Act for the non-generation of an e-way bill. The appellant contended that the machinery sent for repair did not attract GST as it was not covered under the definition of "supply" and thus, no applicable tax or penalty should be imposed. The appellate authority found that the method used for determining the tax and penalty, based on the nine-month-old purchase invoice value, was not just and proper, given that the goods were old and dispatched for repair.

3. Consideration of principles of natural justice in the adjudication process:
The appellant argued that the impugned order was passed in violation of the principles of natural justice, as no opportunity for a personal hearing was afforded to them, and the detailed order considering their objections was not provided. The respondent maintained that the notice issued in GST MOV-07 was sustainable and that the appellant was given enough opportunity to be heard. The appellate authority acknowledged the procedural lapses and emphasized the need for adherence to principles of natural justice.

4. Definition and scope of "supply" under GST laws:
The appellant argued that their transaction did not satisfy the definition of "supply" under Section 7 of CGST/HPGST Act, 2017, as the goods were not meant for sale but were sent for repair. The appellate authority examined the provisions of Section 7 and Schedule-I of the Act, concluding that the machinery sent for repair was not covered under the definition of "supply" and thus did not attract GST.

5. Bonafide belief and procedural lapses in compliance with GST provisions:
The appellant claimed that they were under the bonafide belief that an e-way bill was not required due to their engagement in the supply of exempted goods. The appellate authority considered this bonafide belief and the procedural nature of the lapse, noting that no revenue loss was involved. The authority concluded that the procedural lapse should be condoned, and the impugned order demanding GST and imposing an equal penalty was not sustainable.

Conclusion:
The appellate authority set aside the order passed by the Assistant Commissioner State Taxes & Excise-cum-Proper Officer, North Enforcement Zone, Palampur, dated 27-11-2018. The tax and penalty deposited by the appellant under Section 129 (1) were ordered to be refunded, and a penalty of ?10,000/- was imposed on the taxpayer under Section 122 (1) of the Act. The judgment emphasized the importance of adhering to procedural justice and the correct interpretation of GST provisions.

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