2025 (2) TMI 1011 - HC - GST

Challenge to an order rectifying a penalty imposed u/s 129(3) of the Goods and Services Tax Act 2017 - HELD THAT - It is not in dispute that an order of detention u/s 129(1) of the Act qua the goods being transported by the petitioner was passed and show cause notice under Section 129(1)(a) of the Act proposing a penalty of Rs. 22, 37, 220/- was issued. Reply to the show cause notice was filed by the petitioner whereafter though challan under PMT-06 for deposit of GST was generated the amount was deposited through DRC-03 in cash. The reason at the footnote clearly indicated that the amount of penalty is paid under protest and without prejudice to our legal right of appeal . Whereafter the order u/s 129(3) was passed on 06.10.2024 indicating a demand of Rs. 22, 37, 220/- and form GST DRC-07 qua the demand was also generated. However apparently by way of an afterthought exercising power u/s 161 of the Act the order dated 06.10.2024 was passed purportedly rectifying the order and the demand was indicated as NIL . Though in terms of the requirement on part of the respondent to pay the amount penalty it is true that the demand was NIL but the deposit was under protest. The passing of the order rectifying the order passed u/s 129(3) of the Act has the implication that on account of the demand being NIL the petitioner cannot file appeal against the demand raised and deposited under protest by him. The mere fact that the amount was deposited through DRC-03 of the Act with specific endorsement regarding the payment being under protest the same cannot be termed as a voluntary payment so as to permit the respondents to rectify the order and deprive the petitioner from questioning the validity of the said order by filing statutory appeal. Conclusion - The rectification order is quashed reinstating the petitioner s right to appeal the original penalty order. In view of the fact that on passing of the order dated 08.10.2024 the petitioner has been deprived of the right to file appeal the period starting from 08.10.2024 till passing of this order shall be excluded for computing the period of limitation for filing the appeal against the order dated 06.10.2024 passed under Section 129(3) of the Act - petition allowed.

Summary

The High Court considered a writ petition challenging an order rectifying a penalty imposed under Section 129(3) of the Goods and Services Tax Act, 2017. The key issues presented and analyzed in the judgment are as follows:1. Issue: Validity of the rectification order and its impact on the petitioner's right to appeal - The petitioner's vehicle was intercepted for checking goods and documents, leading to a penalty under Section 129(1)(a) of the Act. - The petitioner deposited the penalty amount under protest through DRC-03. - Subsequently, an order under Section 129(3) demanding penalty was passed, followed by a rectification order indicating a 'NIL' demand. - The petitioner argued that the rectification order was unjustified, depriving them of the right to appeal. 2. Analysis: - The Court examined the actions of the parties, including the interception, penalty imposition, deposit under protest, and subsequent rectification order. - The petitioner contended that the rectification order was illegal as the payment was made under protest, preserving their right to appeal. - The respondents argued that the penalty was voluntarily paid through DRC-03, justifying the rectification order. - The Court noted the implications of the rectification order on the petitioner's appeal rights and the absence of jurisdiction for such rectification. 3. Holding: - The Court allowed the writ petition, quashing the rectification order and reinstating the petitioner's right to appeal the original penalty order. - The Court excluded the period from the rectification order until the judgment for computing the appeal limitation period.In conclusion, the High Court held that the rectification order, which deprived the petitioner of the right to appeal, was unwarranted and illegal. The judgment reinstated the petitioner's appeal rights and excluded the relevant period for limitation calculation.