2024 (12) TMI 995 - HC - GST

Court Allows Appeal After Challenging 200% Penalty Under TNGST Act, Recognizes Mitigating Factors for Fair Legal Recourse.

Pulkit Metals Private Limited Represented by its Director, S. Navratan Gour Versus The State Tax Officer – II, (Intelligence), Villupuram

The HC addressed a challenge to a penalty under Section 129(3) of the TNGST Act, 2017, amounting to 200% of the seized consignment's value. Despite the ... Imposition of penalty equivalent to 200% of the value of the seized consignment - detention and seizure of goods - HELD THAT:- Section 129 of the respective GST enactments states that notwithstanding anything contained in the Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released. As per Section 129(5) on payment of amount referred to in Sub- Section 1, all proceedings in respect of the notice specified in Sub-Section 3 shall be deemed to be concluded. As per Sub-Section 3, the proper Officer detaining or seizing the goods or conveyance shall issue a notice within a period of 7 days from the detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of 7 days from the date of service of such notice, for payment of penalty under Clause (a) or Clause (b) of Sub-Section 1. In this case, as mentioned above penalty has been imposed under Clause A to Sub-Section 1. Therefore, it has to be construed that the issue has attained finality. However, it is noticed that the consignment in the e-way bill for the petitioner itself which had imported the goods from Singapore through Chennai port and had filed Bill of Entry under Section 49 of the Customs Act, 1962 - there are mitigating circumstances for not imposing the penalty as well. The records, particularly, the statement of the driver was not available at the time of seizure. Therefore, to balance the interest of the parties, Court is inclined to permit the petitioner to file a Statutory Appeal under Section 107 of the TNGST Act, 2017 within a period of 30 days from the date of receipt of a copy of this order - Petition disposed off. Issues:Impugned order under Section 129(3) of TNGST Act, 2017 - Penalty equivalent to 200% of seized consignment imposed - Validity of detention and seizure - Finality of issue under Section 129(5) - Option chosen by petitioner - Mitigating circumstances for not imposing penalty - Permission to file Statutory Appeal under Section 107 of TNGST Act, 2017.Analysis:The petitioner challenged an order imposing a penalty under Section 129(3) of the TNGST Act, 2017, equivalent to 200% of the value of the seized consignment. The petitioner imported goods from Singapore and had a valid e-way bill for transportation to their factory. The vehicle carrying the goods was intercepted, and the goods were seized. The petitioner paid the penalty and cleared the goods but filed a Writ Petition after a significant delay. The petitioner relied on a Supreme Court decision criticizing the tax collection process. The respondent argued that the issue was final under Section 129(5) and not open for a Writ Petition.The Court considered the arguments and the provisions of Section 129 of the GST enactments, which allow for detention and seizure of goods in transit for contravention of the Act. The petitioner chose option A for penalty payment instead of option C. Section 129(5) states that on payment of the penalty, proceedings are deemed concluded. The proper officer must issue a notice specifying the penalty within 7 days of detention and pass an order within 7 days of notice service. In this case, the penalty was imposed under Clause A, indicating finality.Despite the finality, the Court noted mitigating circumstances, such as the unavailability of the driver's statement at the time of seizure. To balance interests, the Court permitted the petitioner to file a Statutory Appeal under Section 107 of the TNGST Act within 30 days. The appeal would be considered on merits without limitation constraints. The petitioner could obtain necessary documents from the Department for the appeal. The Writ Petition was disposed of with these directions, allowing for further legal recourse through the Statutory Appeal process.