2024 (2) TMI 419 - HC - GST

Tax demand which is 1817 times what was really due and payable - error in the E-way bill or not - inadvertent mistake or not - HELD THAT - It appears that there is a clear error in the punching and because of which the system calculated a tax amount which was certainly not commensurate with the actual E-way bill when the tax amount was only Rs. 3081/-. Considering these issues, an appropriate decision could have been taken by the Designated Officer in consultation with the higher authorities - following the principles as discussed in the decision of this Court in Star Engineers (I) Pvt. Ltd. 2023 (12) TMI 729 - BOMBAY HIGH COURT , it is opined that the Petitioner needs to be permitted to correct the bonafide mistakes, more particularly considering that there is no loss of revenue to the Department. It is deemed appropriate to dispose of this Petition - petition disposed off.

Summary

Issues Involved:
The issues involved in the judgment are related to erroneous calculation of GST on an E-way bill due to a mistake in punching the HSN code, issuance of show cause notice, submission of relevant documents by the Petitioner, passing of order by Designated Officer without considering the explanation provided, and the need for rectification of the mistake to avoid undue financial burden on the Petitioner.

Summary of Judgment:

Issue 1: Erroneous Calculation of GST on E-way Bill
The Petitioner mistakenly punched the wrong HSN code in the E-way bill, resulting in a significant miscalculation of GST. The actual taxable value was Rs. 3,081.60, but the system calculated GST of Rs. 61,28,836.20, leading to a tax demand 1817 times higher than what was due. The Petitioner had voluntarily reversed the tax credit before the show cause notice was issued, indicating no loss of revenue to the Department.

Issue 2: Show Cause Notice and Response
Following the erroneous calculation, a show cause notice was issued to the Petitioner, who promptly replied, explaining the inadvertent mistake and providing all relevant documents to support their claim. Despite the submission of detailed explanations and documents, the Designated Officer passed an order without considering the Petitioner's contentions, leading to the Petitioner approaching the Court.

Issue 3: Judicial Review of Designated Officer's Order
The Petitioner contended that the impugned order was mechanical and lacked application of mind, failing to address the bonafide error made in the E-way bill. The Court noted the clear error in the calculation and emphasized the need for rectification without causing any loss to the Department's revenue.

Judicial Decision and Order
After hearing both parties, the Court quashed the Impugned Order dated 29th July 2022 and directed the Petitioner to approach the Department for correcting the error in the tariff code within three weeks. The Department was instructed to accept and process the corrections, followed by a review of the Petitioner's Returns in accordance with the law. The judgment highlighted the importance of rectifying bonafide mistakes to prevent undue financial burden on taxpayers and emphasized the principles laid down in previous court decisions regarding such matters.