2022 (6) TMI 276 - HC - GST

Seizure of goods alongwith the vehicle - petitioner had escaped to refer the alphabetical figures, which was given therein, i.e. SAI/V235 - HELD THAT - The learned counsel for the State had made reference to a judgement of the Hon ble Apex Court in Achal Industries Vs. State of Karnataka 2019 (3) TMI 1483 - SUPREME COURT , and particularly, he makes reference to para 11 of the said judgement, which has provided that the Court cannot exercise the powers of an economic superiority, in determining the principle of levying of turnover taxes, on the assessee in pursuance to the commercial transaction, which in the said case was falling within the ambit Section 6-B (1) of Karnataka Sales Tax Act, 1957 - In fact, if the opening paragraph of the aforesaid judgement is taken into consideration, it was an aspect, where the charging Section was under consideration. The charging section, was pertaining to the charging of tax on the basis of the turnover of the assessee. The scope of its interpretation has been limited only, qua applicability of the charging section; because of the economic superiority, which has been vested with the revenue for incorporation of a charging section. But here, since the issue involved is not factually akin to the one, which has been settled by the Hon ble Apex Court in the case of Achal Industries, the same would not be applicable in the present case. The imposition of the penal consequences due to an exception, which has been caused on account of the inadvertent human error by not referring the invoice number as SAI/V-235 and by referring it to 235 only. Since even the invoice number 235 has been consistently maintained in all the documentations, which were made by the petitioner, since it never cleverly intended to evade the tax, or revenue of the State, the exception would fall to be within Clause 5 of the Circular dated 14th September, 2018 - the imposition made on account of the said human error, which has crept in in invoice number is pardonable under Clause 5 of the Circular dated 14.09.2018. Petition allowed.

Summary

Issues:
Challenge to order under Section 129 of GST Act imposing penalty.

Analysis:
1. The petitioner challenged an order dated 20th August, 2019, passed under Section 129 of the Goods and Services Tax Act, imposing a penalty of Rs. 6,84,000. The contention was that a minor error in the invoice number should not lead to such a penalty as other details in the invoice were correct.

2. The petitioner argued that the inadvertent error in mentioning the invoice number as "235" instead of "SAI/V/235" should not attract a penalty as it was not intended to deceive the revenue authorities. The petitioner maintained that all other details in the invoice were accurate and the error was unintentional.

3. An appeal was filed against the order, but the appellate authority upheld the penalty citing the discrepancy in the invoice number. The petitioner relied on Circular No. 64//38/2018-GST, which allowed overlooking minor discrepancies in way bills or tax invoices before invoking penalties under Section 129.

4. The court analyzed the Circular and held that the error in the invoice number, considering all other correct details, fell within the exception provided in Clause 5 of the Circular. The court emphasized that the error was not deliberate and did not aim to defraud the state revenue.

5. Reference was made to a Supreme Court judgment highlighting the strict interpretation of taxation statutes, especially in penal cases. The court concluded that the penalty imposed due to the inadvertent human error in the invoice number was pardonable under the Circular.

6. Consequently, the court allowed the writ petition, quashing the orders imposing the penalty. The petitioner's request for the refunded penalty amount was also granted in light of the judgment allowing the writ petition.