TaxTMI 
TaxTMI 
2025 (6) TMI 1236
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....ocates appearing for the respective parties waives service of notice of rule on behalf of the respective respondents. 4. At the outset, it is required to be noted that the petitioners have not stated correct facts in the memo of the petitions and subsequently in affidavit-in-reply, it was pointed out about the transactions. The petitioners have provided the correct facts in the affidavit-in-rejoinder and therefore the facts as emerges from the record are narrated herein below. 5. The petitioners received an export order from a buyer located at United Arab Emirates (UAE) for purchase of sports related apparels and accessories on 28/08/2024. The petitioners thereafter placed an order. 6. The petitioners placed further order upon a vendor located in Gurugram through its sister concerns Modatach Ecommerce Private Limited for the purpose of complying with the purchase order for export transactions. 7. The goods were dispatched from Gurugram on 29/10/2024. The petitioners duly generated e-invoice as well as e-way bill for the transactions. 8. In the invoice and the e-way bill, it was specifically mentioned that the goods were to be exported and were being transported from ....
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....IGST Act'). 15. Learned advocate Mr. Uchit Sheth for the petitioners submitted that inadvertently the petitioners have not stated correct facts in the petitions as it does not make any material effect on the controversy with regard to the quantum of penalty to be paid by the petitioners under Section 129 (1) (a) of the Act as the petitioners are not disputing the contravention of the provision of Rule 138 of the CGST Rules, 2017 as admittedly the e-way bill expired on 04/11/2024 and there was no valid e-way bill along with the goods and conveyances when the same were intercepted by respondent no. 3 on 08/11/2024. 16. It was submitted that there is no dispute with regard to the fact that the goods in questions were meant for export to UAE and therefore the same were zero rated supply. It was submitted that considering the provisions of Sections 16 (1) and 16 (3) of the IGST Act, the petitioners had an option to export the zero rated supply either on furnishing the undertaking or on payment of tax which is subsequently to be refunded as per the provisions of Section 16(4) of the IGST Act read with Rule 96 of the CGST Rules, 2017. 17. It was therefore submitted that as per th....
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....espondents. It was submitted by learned AGP Ms. Shrunjal Shah that as per the provision of Section 129 (1) (a) of the Act, the petitioners are liable to pay the penalty at the rate of 200% on the tax payable on goods which is equivalent to the tax which is prescribed under the HSN. Learned AGP invited attention of the Court to the tax invoice at page-38 of the paper-book which was found at the time of interception to point out that the all description of the goods clearly shows the invoices with tax and therefore, the petitioners were liable to pay 200% of penalty on the tax payable on the goods. 22. In support of her submissions, reliance was placed on the following averments of the affidavit-in-reply. "13. It is submitted that the Petitioners in their reply dated 18.11.2024 and the Present Petition have raised various issues which are answered hereinunder: a. It is submitted that the primary case of the Petitioners is that the E-Way bill had expired due to vehicle breakdown coupled with the fact that the period in question involved Diwali Festival. Therefore, there was no malafide intention to evade payment of tax and therefore the imposition of penalty u/s 1....
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....n of Section 129 (1) (a) of the Act. It was also therefore submitted that when the tax is payable on the goods and not on the supply of the goods, and therefore, it is evidence from the facts that the tax was payable by the petitioners on the goods which were zero rated supply and therefore the respondents were justified in imposing penalty at the rate of 200% on the tax which was payable on the goods which may be zero rated supply or otherwise. 24. Learned AGP Ms. Shrunjal Shah thereafter submitted that there is a difference between the tax payable on the goods and the exempted goods. Reliance is placed on Annexure-R-9 at page-140 of the paper-book wherein the Directorate General of Taxpayer Services, Central Board of Excise and Customs has issued the explanation with regard to zero rating of supplies wherein the difference between exempted supplies and zero rated supplies is explained as under: Exempted Supplies Zero rated Supplies "exempt supply" means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11 of CGST Act or under section 6 of the IGST Act, and includes non-taxable supply "zero-ra....
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.... petitions should not be entertained while exercising extra ordinary jurisdiction under Article 227 of the Constitution of India. Reliance was placed on order dated 23/12/2024 in case of M/s. Rayzon Solar Private Limited vs. State of Gujarat and others in Special Civil Application No. 13745 of 2024 wherein, in similar facts, the petitioner did not press the petition so as to avail alternative remedy. 26. Considering the submissions made by learned advocates for both the sides, the petitions are entertained against the order passed under Section 129 (1) (a) of the Act though alternative remedy is provided under Section 107 of the CST Act only because the impugned order dated 19/11/2024 imposing penalty at the rate of 200% on the allegedly tax payable on the goods which are being transported as zero rated supply would be without jurisdiction as on plain reading of Section 129 (1) (a) of the Act, no penalty could have been imposed when no tax is payable on the zero rated supply and the computation of penalty would fail. 27. In order to determine as to whether any penalty leviable could have been imposed upon the breach of provision of Rules 138 by the petitioners for not carryin....
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....king goods out of India to a place outside India." 27.6.2. Section 2 (23) of the IGST Act reads as under: "(23) "zero-rated supply" shall have the meaning assigned to it in section 16." 27.6.3. Section 5 (1) of the IGST Act reads as under: "5. Levy and collection (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person: Provided that the integrated tax on goods [other than the goods as may be notified by the Government on the recommendations of the Council] imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duti....
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....be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed: Provided that the registered person making zero rated supply of goods shall, in case of nonrealisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999.) for receipt of foreign exchange remittances, in such manner as may be prescribed. (4) The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify- (i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid [in accordance with the provisions of section 54 o....
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.... territory by a person who has been exempted from the requirement of obtaining registration under clauses (i) and (ii) of section 24, the e-way bill shall be generated by the said person irrespective of the value of the consignment." 28. In view of the above provisions of the Act, it emerges that, in the facts of the case, the petitioners after receiving the purchase order from the UAE, purchased the goods from Gurugram through its sister concern so as to export the same to UAE and therefore the goods in questions are meant for export outside India. 29. As per Section 2(47) of the Act, a supply is said to be exempt when it attracts Nil rate of duty or specifically exempted by notification or kept out of the purview of the levy of tax i.e. non GST supply, however, if the goods or services exempted from payment of tax, same would not become a zero rated supply because the inputs which are used for making the goods for manufacture of the goods or providing services had already suffered a tax and only the final product is exempt and when the goods are exempted goods, the assessee is not entitled to avail or utilize credit on inputs used for supply of the exempted goods or service....
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.... Thus, even if a supply is exempted, the credit of input tax may be availed for making zero-rated supplies. A registered person making zero rated supply can claim refund under either of the following options, namely: - a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the CGST Act, 2017 or the rules made thereunder." 30. Section 16 (4) of the IGST Act provides for refund as per the provision of Section 54 of the CGST Act of the inputs or inputs services which are used for the purpose of zero rated supply as per the provisions of Section 54 (3) and the assessee is entitled to get the refund if the IGST is paid along with the export or if no tax is paid and the goods are exported under LUT then proportionate....
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....e expression payable has been defined as "that must be paid; due". 20. Thus, the expression "payable" connotes an obligation to pay and that the amount should be justly due and legally enforceable. Under the second part of section 4A of the Act, levy of additional tax is at the rate of ten paise in the rupee (10%) on the sales tax, general sales tax or purchase tax payable by a dealer. It, therefore, follows that the dealer must be under an obligation to pay such tax, and it is on such tax which he is obliged to pay that additional tax at the rate of ten paise on the rupee is to be collected. Accordingly, when the sales and purchase of goods are wholly exempted from payment of sales tax, general sales tax or, as the case may be, purchase tax, there is no obligation upon the dealer to pay such tax, and consequently, the sales tax, general sales tax or, as the case may be, purchase tax payable by the dealer would be nil and resultantly, the additional tax at the rate of 10% thereof would also be nil. This court is of the view that the legislature, appears to have consciously provided for additional tax to be computed at the rate of 10% of the sales tax, general sales tax or,....
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....ount of tax which becomes due under sub-sections (2) and (2-A) of the Act assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under Section 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under clause (a) of Section 11-B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predicate the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible." 32. Therefore, though the tax is leviable as per the provision of Section 17 (1) on the interstate supply as per Section 7 of the IGST Act, and the goods which are exported outside India is to be treate....