2024 (8) TMI 949 - HC - GST

Challenge to impugned circular dated 13.04.2018 - case of the petitioner is that, the petitioner cannot mulct with tax liability twice, once at the stage of detention and other at the stage of payment of tax in the regular returns in GSTR-3B - HELD THAT - The apprehension of the petitioner that the tax is being levied twice by virtue of the impugned circular and is contrary to Section 129 of the respective GST enactments cannot be countenanced. The purpose of Section 129 as it stood during the material period was to recover tax on such goods in transit, where removal of such goods fell short of any of the statutory compliance required for removal of goods - the tax was to be collected to the extent of tax that was payable in the returns at the stage of detention of such detained goods. Tax is to be debited from an assessee's electronic credit account maintained under the respective GST Act. If a supplier's goods were detained and subjected to tax and penalty under Section 129 of the GST Act as it stood prior to amendment, such supplier is entitled to claim refund of the excess tax, if any, paid in the returns filed in GSTR-3B. Therefore, the apprehension expressed in the writ petitions misplaced and unwarranted. These writ petitions are liable to be dismissed. Accordingly, these writ petitions are dismissed.

Summary

Issues:
Challenge to impugned circular dated 13.04.2018 under GST Act, petitioner's contention of double tax liability, validity of demand notice dated 28.04.2021 and 29.04.2021, interpretation of Section 129 of GST Act pre and post 01.01.2022.

Analysis:
The petitioner contested the circular dated 13.04.2018 under GST Act, specifically objecting to Para 2(h) which outlined the procedure for releasing goods upon payment of tax and penalty under Section 129. The petitioner argued against being subjected to double tax liability, raising concerns about the demand notices issued in April 2021. The court examined Section 129 of the GST Act, both pre and post 01.01.2022, highlighting the changes in the provisions related to detention, seizure, and release of goods and conveyances during transit.

The court noted that prior to 01.01.2022, tax and penalty were applicable upon detention of goods under Section 129, with the tax payable at the stage of detention. However, post the amendment, only a penalty at 200% of the tax payable on the goods is imposed. The purpose of Section 129 was clarified as the recovery of tax on goods in transit that did not meet statutory compliance for removal.

Addressing the petitioner's concern of double tax imposition, the court explained that tax collected at the time of detention aligns with the tax payable in returns, debited from the electronic credit account under the GST Act. Furthermore, if a supplier's goods were detained and taxed under the previous provisions, they could claim a refund for any excess tax paid through GSTR-3B filings. The court concluded that the petitioner's apprehensions were unfounded and dismissed the writ petitions, emphasizing that the concerns raised were misplaced and unwarranted. The court ruled in favor of upholding the impugned circular and demand notices, closing the connected miscellaneous petitions without costs.