2022 (5) TMI 796 - AT - Central Excise

Imposition of penalty under Rule 12 (6) of Central Excise Rules - late filing of Returns (ER-1) - period July, 2017 to April, 2018 - HELD THAT - It is not disputed that the appellant have filed the returns uptil the period ended 30/06/2017 under the repealed Act. They further stated that as the appellant was filing their returns under the GST provisions w.e.f. 01/07/2017, they were under bona fide belief that they are no longer required to file returns under the erstwhile Central Excise Act. I find that this cogent explanation was given before the learned Commissioner (Appeals), but the Commissioner (Appeals) failed to record any findings on the said contention. The Court below have passed the order with reference to Section 174 of the CGST Act, which provides for repeal and savings. There is no saving Clause in the said Section, for initiating and imposing penalty for none filing of the returns (ER-1), once the provisions of GST have been imposed w.e.f. 1st July, 2017. Accordingly, it is found that the show cause notice in misconceived and the impugned order have been erroneously passed, having no sanctity in law - the imposition of penalty for non-filing of returns for the period under dispute, July 2017 to April 2018, is bad and not called for. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under Rule 12 (6) of Central Excise Rules for late filing of Returns (ER-1) for the period July 2017 to April 2018.

Analysis:
The judgment pertains to an appeal regarding the imposition of a penalty under Rule 12 (6) of the Central Excise Rules for late filing of Returns (ER-1) for the period July 2017 to April 2018. The appellant contended that the Central Excise Act and Rules were repealed with the implementation of the GST regime from 01/07/2017. The appellant had transitioned to filing returns under the GST provisions and believed they were no longer required to file returns under the Central Excise Act. The Commissioner (Appeals) did not address this contention, and the lower court passed the order with reference to Section 174 of the CGST Act, which deals with repeal and savings. However, the section did not have a saving clause for imposing penalties for non-filing of returns once GST provisions were in place. The tribunal found the show cause notice misconceived and the impugned order erroneously passed, lacking legal sanctity. Consequently, the tribunal held that the penalty for non-filing of returns from July 2017 to April 2018 was unwarranted and allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits.