Month: August 2024

E-way bill expired and amended e-way bill submitted – Detention and Penalty set aside since there is no intention to evade Tax

Citation:

Aa Plastics (P.) Ltd. Vs. Additional Commissioner Grade 2

Writ Tax No. 1006 of 2022

[2024] 165 taxmann.com 564 (Allahabad)

Facts of the Case:

  1. Petitioner is engaged in the business of manufacturing and supply of Polythene Sheets bags. On 05.08.2021, the petitioner dispatched the goods from their unit to Agra.
  2. The goods in question were in transit, which were detained on 09.08.2021 on the ground that the time mentioned in E-way bill has expired, to which petitioner stated that truck driver received a call from his native place, which was en route and he went there without informing the consignor & consignee about the same.
  3. Petitioner submitted in his reply that an amended E-way bill dated 08.08.2021, was generated on 08.08.2021 night and 09.08.2021 morning, which was presented on the very next day.
  4. Not being satisfied with the reply, the impugned order was passed on 17.08.2021 seizing the goods and levying penalty against which the petitioner filed an appeal, which has also been rejected without considering the material available on record.

Submissions of the Petitioner:

  1. Further to the amended e-way bill dated 08.08.2021, Petitioner submitted that there was no variation in the quantity of goods as mentioned in the accompanied documents, yet the goods in question were detained and also that before passing of the seizure order, an amended E-way bill was produced.
  2. He further submitted that there is no intention to avoid the payment of tax, which is mandatory for seizing/detaining of goods.
  3. Judgment of this Court in the case of Shyam Sel and Power Ltd. v. State of U.P., 2023 (78) Centax – G.S.T.L. 283/(2023) 11 Centax 99 (Centax – All.).

Findings of Hon’ble Allahabad High Court:

  1. This Court in the case of Shyam Sel and Power Ltd. has held at Paras 10, 11 and 13 that (Relevant Extracts):
    • 10. For invoking the proceeding under section 129(3) of the CGST Act, section 130 of the CGST Act was required to be read together, where the intent to evade payment of tax is mandatory, but while issuing impugned notice or the order of detention, seizure or demand of penalty, tax, no such intent of the petitioner was observed. Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach. The authority could have initiated proceedings under section 122 of the CGST Act instead of proceedings under section 129 of the CGST Act. It is also not in dispute that after release of the goods, the same were sold to P.L. Trading Company.
  2. 11. Both the sections 129 and 130 revolve around a similar issue and provide for the proceedings available at the hands of the proper Officer upon him having found the goods in violation of the provisions of the Act, Rule 138 of the Rules framed under the CGST Act being one of them. Upon a purposive reading of the sections, it would sufice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act.
  3. 13. Recently, the Division Bench of this Court in Writ Tax No. 600 of 2022 (Gobind Tobacco Manufacturing Company & Another v. State of U.P. & Others) quashed the levy of penalty under section 129 of the GST Act with heavy costs upon the Revenue for abuse of their powers.

Held that:

In view of the above facts as stated as well as law laid down in the aforesaid judgment, the impugned order cannot be sustained in the eyes of law and the same is hereby quashed.

Provisions of Section 130:

(1) Where any person—

  1. supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
  2. does not account for any goods on which he is liable to pay tax under this Act; or
  3. supplies any goods liable to tax under this Act without having applied for registration; or
  4. contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
  5. uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,

then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under Section 122.

(2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit.

Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:

Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty equal to hundred per cent of the tax payable on such goods (substituted for “Penalty leviable under Section 129(1)” w.e.f. 1st January 2022)

Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.

(3) Omitted w.e.f. 1st January 2022 (Requiring payment of any tax, penalty and charges payable in respect of such goods or conveyance in addition to the fine imposed as above).

(4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.

(5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.

(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.

(7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.

Appeal uploaded online within due date along with Copy of the Order – Delayed submission of Hard copy is not relevant – Rule 108

Citation:

Sunbeam Generators (P.) Ltd. Vs. Additional Commissioner (Appeals-I)

[2024] 165 taxmann.com 617 (Madras)

W.P. No. 16140 of 2024

Facts of the Case:

  1. Petitioner’s Application for Refund was rejected by an order dated 13th April 2022.
  2. The petitioner has submitted an appeal against the same online, on 28th June 2022, when the time limit for filing the appeal was 12th July 2022.
  3. However, this appeal was rejected by the appellate authority vide order dated 24th January 2024, stating that hard copy of the order was submitted on 23rd May 2023.

Petitioner has submitted that:

Appeal was filed in Form GST APL-01 through the online mode on the GST portal on 28th June 2022 as per Rule 108(1) of CGST Rules, 2017 within the prescribed period of Limitation. (Rule 108(1) is provided below)

Hon’ble Madras High Court has observed that:

  1. Sub-rule 108(3) of the Rules clearly indicates that the requirement of filing a self-certified copy of the order appealed against becomes applicable, as per the first proviso thereto, only where the order appealed against is not uploaded on the common portal. (Rule 108(3) was amended on 26th December 2022, Rule as existing prior to and after that date, are provided below).
  2. In the case at hand, the order was duly uploaded on the common portal. In such event, the date of online filing is the date of filing of the appeal.
  3. Even otherwise, the filing of a hard copy is a purely procedural requirement. 

Held that:

Impugned order dated 24th January 2024 is set aside and the appellate authority is directed to receive and dispose of the appeal on merits.

Provisions of Rule 108(1) of CGST Rules, 2017:

An appeal to the Appellate Authority under sub-section (1) of section 107 shall be filed in FORM GST APL-01, along with the relevant documents, electronically and a provisional acknowledgement shall be issued to the appellant immediately.

Note: Rule 108(1) of CGST Rules (Appeal to Appellate Authority) has been amended vide Central Goods and Services Tax (Second Amendment) Rules, 2023, w.e.f. 04-08-2023, wherein the words “electronically or otherwise as may be notified by the commissioner” has been replaced by “Electronically”. Hence, Appeal can be filed only electronically after 4th August 2023.

PROVISO TO RULE 108(1): However, Proviso to Rule 108(1) inserted vide the same rules states that “An appeal to the Appellate Authority may be filed manually in FORM GST APL-01, along with the relevant documents, only if–

(i) the Commissioner has so notified, or

(ii) the same cannot be filed electronically due to non-availability of the decision or order to be appealed against on the common portal,

and in such case, a provisional acknowledgement shall be issued to the appellant immediately.

Provisions of Rule 108(3) of CGST Rules, 2017 (On or after 26th December 2022):

(3) Where the decision or order appealed against is uploaded on the common portal, a final acknowledgement, indicating appeal number, shall be issued in FORM GST APL-02 by the Appellate Authority or an officer authorised by him in this behalf and the date of issue of the provisional acknowledgement shall be considered as the date of filing of appeal:

Provided that where the decision or order appealed against is not uploaded on the common portal, the appellant shall submit a self-certified copy of the said decision or order within a period of seven days from the date of filing of FORM GST APL-01 and a final acknowledgement, indicating appeal number, shall be issued in FORM GST APL-02 by the Appellate Authority or an officer authorised by him in this behalf, and the date of issue of the provisional acknowledgment shall be considered as the date of filing of appeal:

Provided further that where the said self-certified copy of the decision or order is not submitted within a period of seven days from the date of filing of FORM GST APL-01, the date of submission of such copy shall be considered as the date of filing of appeal.

Explanation: For the provisions of this rule, the appeal shall be treated as filed only when the final acknowledgement, indicating the appeal number, is issued.

Provisions of Rule 108(3) of CGST Rules, 2017 (Prior to 26th December 2022):

(3) A certified copy of the decision or order appealed against shall be submitted within seven days of filing the appeal under sub-rule (1) and a final acknowledgement, indicating appeal number shall be issued thereafter in FORM GST APL-02 by the Appellate Authority or an officer authorised by him in this behalf:

Provided that where the certified copy of the decision or order is submitted within seven days from the date of filing the FORM GST APL-01, the date of filing of the appeal shall be the date of the issue of the provisional acknowledgement and where the said copy is submitted after seven days, the date of filing of the appeal shall be the date of the submission of such copy.”

Explanation: For the provisions of this rule, the appeal shall be treated as filed only when the final acknowledgement, indicating the appeal number, is issued.

Similar Decision on Rule 108 of the CGST Rules (Under erstwhile provisions prior to 4th August 2023):

Appeal allowed to be filed Manually – Rule 108 of Haryana GST Rules (up to 04-08-2023)

Goods found to be in Excess and Confiscated – Proceedings initiated u/s. 130 instead of u/s. 73 or 74 – Order Set Aside

Citation:

S/S Dinesh Kumar Pradeep Kumar Vs. Additional Commissioner Grade 2, State Tax

Writ Tax No. 1082 of 2022

[2024] 165 taxmann.com 166 (Allahabad)

Facts of the Case:

  1. Petitioner is engaged in the business of trading of Cement, Mauram and Saria. On 24.08.2018, petitioner’s business premises has been surveyed and only on the basis of eye measurement, it was held that the stock was excess and the goods were confiscated. 
  2.  Notice was issued and the ex-parte impugned order was passed on 23.02.2019 against which the petitioner preferred an appeal, which was also dismissed by the impugned order dated 24.03.2022.

Submissions of Petitioner:

  1. Survey, which was made under Section 67 of the UPGST Act, proceeded with the notice under Section 30 of the Act read with Rule 32.
  2. Even assuming without admitting that if the goods were found in excess then the proceedings should have been initiated as per Sections 73 & 74 of the Act.
  3. As per Section 35 (6) of the UPGST Act, proceedings under Section 130 of the UPGST Act are not permissible against a registered dealer.
  4. Decision of this court in the case of M/s Shree Om Steels v. Additional Commissioner Grade- 2 and Another in Writ Tax No. 1007 of 2022. 

Findings by the Hon’ble High Court of Allahabad:

  1. This Court on various occasions has held that if the excess stock was found then the proceedings under Sections 73 & 74 of the UPGST Act will come into play and not proceedings under Section 130 read with Rule 122 of the Act.
  2. Decision in Shree Om Steels’ Case: Recently, this Court in Writ Tax No. 1007 of 2022 (M/s Shree Om Steels v. Additional Commissioner Grade- 2 and Another has observed that the issue in hand is covered by the judgement of this Court in Metenere Limited, in which it was observed that:
    • Section 35(6) of the Act: Section 35 (6) of the said Act provides that in the event the person fails to keep their accounts for the goods or the services in accordance with the provisions of Sub-section 1of Section 35, the proper officer is empowered to determine the amount of tax payable on the goods or the services which are unaccounted for as if such goods or services had been supplied by such person and the provisions of Section 73 or 74 shall mutatis mutandis apply for determination of the said tax.
    • A perusal of the said section 35(6) makes it clear that proper officer, while determining the said tax payable, is bound to determine it in accordance with Sections 73 & 74 of the Act.
    • In the above case, this Court has specifically held that even if excess stock is found, the proceedings under section 130 of the UPGST Act cannot be initiated. Although as per Section 35 (6), the unaccounted goods are ”deemed to be supplied’ however, determination and quantification of the tax on the said ”deemed supply’ has to be done as per Section 73 or Section 74 of the Act”.
  3. Decision in Mahamaya Alloys Ltd’s case: Further, in M/s Maa Mahamaya Alloys Pvt. Ltd., this Court has held that:-
    • In the light of the decision in the case of M/s Metenere Limited (supra), it is clear that the entire exercise resorted to under Section 130 of the GST Act for assessment/ determination of the tax and the penalty is neither stipulated under the Act, nor can be done in the manner in which it has been done, more so, in view of the fact that the department itself had undertaken the exercise of quantifying the tax due, by taking recourse under Section 74.
    • Demand based on a Survey: As the entire tax has been determined and the penalty has been levied only on the basis of a survey by taking recourse under Section 130 of the GST Act and not taking a recourse to Section 74, the order impugned is clearly unsustainable.
    • Reference to Section 130: In the present case, even assuming for the sake of argument, that the goods were lying in excess of the goods in record, the case against the petitioner would not fall under Clause (ii) of sub-section (1) of Section 130 for the simple reason that the liability to pay the tax arises at the time of point of supply, and not at any point earlier than that. On a plain reading, the scope of Clause (ii) of sub-section (1) of Section 130 is that any assessee who is liable to pay tax and does not account for such goods, after the time of supply is occasioned, would be liable to penalty under Clause (ii). 

Held that:

The Impugned order cannot sustain in the eyes of law and the same is hereby set aside.

Provisions of Section 35(6):

(6) Subject to the provisions of clause (h) of sub-section (5) of section 17, where the registered person fails to account for the goods or services or both in accordance with the provisions of sub-section (1), the proper officer shall determine the amount of tax payable on the goods or services or both that are not accounted for, as if such goods or services or both had been supplied by such person and the provisions of section 73 or section 74 (or section 74A w.e.f. a date yet to be notified), as the case may be, shall, mutatis mutandis, apply for determination of such tax.

Provisions of Section 130(1):

(1) Where any person—

  1. supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
  2. does not account for any goods on which he is liable to pay tax under this Act; or
  3. supplies any goods liable to tax under this Act without having applied for registration; or
  4. contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
  5. uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,

then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under Section 122.