2022 (11) TMI 786 - HC - GST

Levy of penalty of 200% of the alleged tax due - wrong mention on E-way bill as outward supply - Section 129(3) of the Tamil Nadu Goods and Services Tax Act - HELD THAT - It is submitted that consignment shall be released on payment of penalty of one time tax i.e., 100% tax and it is open to the Petitioner to agitate the rights finally by way of filing an appeal, if they are so advised. The learned counsel for the Petitioner submitted that they are willing to pay one time tax for the limited purpose of release of consignment and submit that the payment of 100% of tax as penalty may be adjusted towards 25% pre-deposit for filing an appeal, which was consented to by the learned Government Advocate for the Respondents. The writ petition stands disposed of with the following directions (a) The Respondents shall release the consignment on the Petitioner paying 100% tax forthwith. (b) In the event of the Petitioner filing an appeal, 100% taxes paid shall be adjusted towards 25% pre-deposit for filing appeal.

Summary

Issues:
Challenge to penalty imposed under Section 129 of the Tamil Nadu Goods and Services Tax Act for alleged tax due amounting to Rs.5,71,200. Compliance with the timeline prescribed under Section 129(3) of the Act for passing the order.

Analysis:

The writ petition challenges the penalty imposed under Section 129 of the Tamil Nadu Goods and Services Tax Act, amounting to 200% of the alleged tax due, totaling Rs.5,71,200. The Petitioner, a limited company engaged in battery manufacturing, argued that the seized goods were replacements for defective batteries, evident from the delivery challan labeling the transaction as "Warranty FOC." Although mistakenly labeled as "outward supply" in the E-way bill, the goods were intended for dealers in Kerala. The consignment was intercepted at Madurai without valid invoices, leading to the penalty imposition.

The Petitioner contended that the order passed on 02.11.2022, following the interception on 19.10.2022, was beyond the 7-day limit prescribed under Section 129(3) of the Act. This delay in passing the order was highlighted as a violation of the statutory timeline, rendering the proceedings legally flawed and barred by limitation under the Act.

In response, the Government Advocate for the Respondents justified the seizure as an anti-evasion measure due to the lack of appropriate documents, including invoices, accompanying the consignment. To resolve the matter, a proposal was made for the Petitioner to pay a one-time tax as an interim measure, despite Section 129(1) mandating a 200% penalty for release. Acknowledging the procedural lapse in the order's timing, it was suggested that the consignment could be released upon the Petitioner paying 100% tax, with the option to appeal the decision subsequently.

Consequently, the High Court directed the release of the consignment upon the Petitioner's immediate payment of 100% tax. Moreover, in the event of filing an appeal, the taxes paid would be adjusted as 25% pre-deposit for the appeal process. The writ petition was disposed of with these directions, emphasizing no additional costs incurred, and closing connected miscellaneous petitions.