2022 (5) TMI 902 - AT - Central Excise

Levy of penalty under Rule 12 (6) of Central Excise Rules - late filing of Returns (ER-1) for the period July, 2017 to February, 2018 - ex-parte order - violation of principles of natural justice - case of appellant is that it 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 - HELD THAT - This cogent explanation was given before the learned Commissioner (Appeals), but the Commissioner (Appeals) failed to record any findings on the said contention. It is further found that 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, 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 February 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 February 2018.

Analysis:
The judgment pertains to 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 February 2018. The appellant argued that the Central Excise Act and related Rules were repealed with the implementation of the GST regime from July 1, 2017. The appellant had transitioned to filing returns under the GST provisions and believed they were no longer required to file returns under the erstwhile Central Excise Act. The appellant had filed returns up to June 30, 2017, under the repealed Act. However, the Commissioner (Appeals) did not address this contention in their findings. The judgment highlighted that the lower court had based its decision on Section 174 of the CGST Act, which deals with repeal and savings but lacks a saving clause for imposing penalties for non-filing of returns once GST provisions are in place. The Tribunal found the show cause notice to be misconceived and the impugned order to be erroneous in law. Consequently, the Tribunal held that the penalty imposed for non-filing of returns for the period in question was unjustified and set aside the impugned order, allowing the appeal and granting the appellant consequential benefits.

In conclusion, the Tribunal allowed the appeal, set aside the impugned order imposing a penalty under Rule 12 (6) of the Central Excise Rules for late filing of Returns (ER-1) for the period July 2017 to February 2018. The judgment emphasized the appellant's transition to filing returns under the GST provisions post the repeal of the Central Excise Act and Rules, highlighting the lack of a saving clause in Section 174 of the CGST Act for imposing penalties under the erstwhile regime. The Tribunal deemed the penalty imposition as unwarranted and ruled in favor of the appellant, granting them consequential benefits.