2023 (1) TMI 437 - HC - GST

Allegation of suppression of sales - failure to maintain records - Non-compliance with three statutes - the CGST, TGST, IGST Acts - non-maintenance of particulars of name/complete address of suppliers qua goods and services chargeable to tax - non-maintenance of particulars of name/complete address qua entities to whom goods and services were supplied - monthly production accounts showing quantitative details of raw materials used in the manufacture and quantitative details of goods manufactured including the waste and by-products not maintained. HELD THAT - A careful perusal of Section 74 makes it clear that 'suppression of facts to evade tax' is the expression used. As the writ petitioner has time till 31.03.2021 to reconcile, it may not really qualify as suppression but that does not take the writ petitioner away from the rigour of penalty as Section 73 is available. Section 73 talks about tax that has not been paid or short paid and it excludes 'suppression of facts to evade tax' - In the instant case, penalty as regards purported suppression is only Rs.3890/- and if Section 73(9) is applied, it would become Rs.10,000/-. Writ petitioner would be worse off by filing the writ petition. Therefore, this writ Court deems it appropriate to leave it at that and say that interference is refused but it is made clear that it cannot be put against the writ petitioner that there is 'suppression of facts to evade tax' within the meaning of Section 74(1) and it is only a case of tax not being paid within the meaning of Section 73(1). In the considered view of this Court, this by no means fits into Section 126 in the light of Explanation thereat. Explanation thereat makes it clear that the tax liability or the amount of tax involved should be less than Rs.5,000/- or it should be a omission or mistake in documentation which is easily rectifiable in the same as an error apparent on the face of record. Subsection (6) makes it clear that Section 126 will not be attracted, when the penalty is expressed as a fixed percentage - In the case on hand, Section 122(1)(iii) read with Section 122(1) makes it clear that it is expressed in both units namely a fixed sum as well as a fixed percentage. On this ground also Section 126 does not come to the aid of the writ petitioner. To be noted, interest under 50(1) is not subject matter of disputation or contestation. All the three points on which the order of Original Authority is predicated do not call for interference even if the grounds urged/raised by the writ petitioner before the second respondent-Appellate Authority are considered on merits - Petition dismissed.

Summary

Issues Involved:
1. Challenge to an order dated 13.10.2022 by the Appellate Authority under three statutes and rules.
2. Availability of appeal under Section 112 of TN-G & ST Act.
3. Alleged defects during business inspection leading to penalties under various sections.
4. Consideration of penalties under Sections 73, 74, 125, and 122 of the Acts.
5. Interpretation of Sections 126 and 50(1) in relation to penalties.

Analysis:

1. The writ petition challenged the order dated 13.10.2022 by the Appellate Authority, questioning penalties imposed under various sections of the Central Goods and Services Tax Act, Tamil Nadu Goods and Services Tax Act, and Integrated Goods and Services Tax Act.

2. The availability of appeal under Section 112 of the TN-G & ST Act was discussed, highlighting that the Tribunal was not constituted at the time of the petition, leading to the matter being heard by the High Court.

3. The inspection of the petitioner's business revealed alleged defects, including sales suppression, contravention of statutory provisions, and non-filing of tax returns. The Original Authority imposed penalties, which were confirmed by the Appellate Authority.

4. The analysis delved into the application of Sections 73, 74, 125, and 122 of the Acts concerning the determination and imposition of penalties based on tax evasion, non-payment, or contraventions of tax regulations.

5. The interpretation of Sections 126 and 50(1) in relation to penalties was crucial in determining the applicability of penalties for minor breaches and the fixed sum or percentage-based penalties under the Acts, ultimately leading to the dismissal of the writ petition.

In conclusion, the High Court dismissed the writ petition challenging the penalties imposed by the Appellate Authority, emphasizing the legal provisions and interpretations regarding tax liabilities, penalties, and compliance with statutory requirements under the relevant Acts.