Court Upheld Tax & Penalty Order Under GST Act

The Court upheld the Ext.P3 order imposing tax and penalty under Section 129(3) of the Central Goods and Services Tax Act, 2017. It ruled that the goods detained were subject to tax liability under Section 7 of the GST Act, and release pending appeal required the appellant to provide a Bank Guarantee for the entire tax and penalty determined or face confiscation proceedings. The Court emphasized that compliance with statutory provisions was necessary for release of goods and deemed stay under Section 107(7) prevented confiscation proceedings until appeal disposal. The writ appeal was disposed of with liberty granted to the appellant to explore avenues for releasing the goods.

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Issues:
Challenge against Ext.P3 order imposing tax and penalty under Section 129(3) of the Central Goods and Services Tax Act, 2017.
Interpretation of provisions under Section 107 and Section 129 of the Act.
Release of goods detained under Section 129(1) pending disposal of appeal.

Analysis:

The petitioner challenged the Ext.P3 order imposing tax and penalty under Section 129(3) of the Central Goods and Services Tax Act, 2017. The contention was that the goods detained were 'promotional materials' not intended for sale, thus not attracting tax liability under Section 7 of the GST Act. The petitioner had filed a statutory appeal under Section 107 of the Act, paying 10% of the disputed tax and penalty, satisfying the prerequisite condition under Section 107(6)(b). The petitioner argued that the balance amount should be deemed under stay as per Section 107(7), seeking release of the goods without further confiscation steps.

The respondents contended that since the tax and penalty were not paid as per Section 129(3), the goods were liable for confiscation under Section 130. They argued that release pending appeal could only happen if the appellant furnished a Bank Guarantee for the entire tax and penalty determined. The Single Judge found that mere pendency of an appeal did not warrant release without security, directing the appellate authority to dispose of the appeal within three months. The appellant was allowed to seek release by providing a Bank Guarantee for the tax and penalty imposed or wait for confiscation proceedings.

The appellant argued that confiscation proceedings could not proceed due to the deemed stay under Section 107(7) after complying with Section 107(6). The Court agreed, stating that as long as the stay existed, confiscation proceedings under Section 130 could not proceed until appeal disposal. The second contention was about releasing the goods pending appeal, which the Court rejected, stating that compliance with Section 129(2) and Section 67(6) was necessary for release. Without furnishing security or paying the tax and penalty, goods could not be released. The writ appeal was disposed of, granting liberty to the appellant to seek methods for release of the goods as mentioned.

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