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2021 (3) TMI 540 - HC - GSTConfirmation of demand of GST with penalties - Principle of natural justice - Detention of goods - E-way bill had expired on account of a clerical error which would not result into any tax liability - HELD THAT - As per this Circular dated 14th September, 2018, in case the goods are accompanied by an invoice as also an E-way bill, proceedings under Section 129 of the CGST Act, 2017 should not be initiated if there is a error of one or two digits in a document number mentioned in the E-way bill. In such a situation, at best, penalty of ₹ 500 1000/- under State and Central GST may be collected under Section 125 of the Act. In view of such facts, this is not considered fit case where we should relegate the petitioner to appeal remedy, more importantly when the order passed by the Inspector of State Tax suffered from gross irregularity of no hearing been granted to the petitioner. As noted, the said authority issued a notice of personal hearing making it returnable on 19.11.2018, long before that however, on 05.11.2018 i.e. a date on which he issued the notice, he passed a separate order confirming the demand of tax with penalty. This was wholly impermissible since he does not treat this order as a tentative demand but as a mandatory demand. Petition disposed off.
Issues:
Challenge to tax demand under CGST and SGST Acts based on clerical error in E-way bill validity period leading to penalty imposition. Detailed Analysis: Issue 1: Tax Demand and Penalty Imposition The petitioner challenged an order demanding CGST and SGST along with penalties under the CGST and SGST Acts due to a clerical error in the E-way bill. The goods were transported from Howrah to Agartala, with the E-way bill showing an incorrect distance of 470 Kms instead of the actual 1470 Kms. The Inspector of State Tax issued the demand and penalty without granting a proper hearing to the petitioner, which was contested by the petitioner. Issue 2: Legal Provisions and Circulars The judgment highlighted the relevant provisions of the GST Act and Rules, emphasizing the importance of correct documentation for goods transportation. The Central Board of Indirect Taxes and Customs issued a circular clarifying the treatment of minor discrepancies in E-way bills, stating that penalties should not be imposed for errors like incorrect document numbers or minor lapses. This circular guided the court's decision in this case. Issue 3: Court's Analysis and Decision After considering submissions from both parties and examining the documents, the court found that the clerical error in the E-way bill was a minor oversight. The court noted key undisputed facts, including the correct distance between the origin and destination, the duty paid status of the goods, and the inter-state nature of the sale. The court referred to the circular and the affidavits filed by the Central Government and the company from which the goods were purchased, supporting the petitioner's claim of a minor clerical error. Conclusion: The court ruled in favor of the petitioner, setting aside the order demanding tax and penalties. The court emphasized that the Inspector of State Tax did not have the authority to demand GST with penalties in this case, especially considering the minor nature of the error and the lack of proper hearing granted to the petitioner. The judgment concluded by disposing of the petition and any pending applications related to the case.
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