Kerala High Court has held that the assessee has the right to appeal even after the voluntary payment of the penalty made under the Central Goods and Service Tax (CGST) Act.
1. Petitioners : HINDUSTAN STEEL AND CEMENT, B M STEEL AGENCIES
2. Respondents - 1 :
Respondents - 2 :
3. Appeal Type/ No. : WP(C) NO. 17454 OF 2022 and WP(C) NO. 17463 OF 2022
4. CORAM : 1. HON'BLE MR. JUSTICE GOPINATH P.
5. Council For Petitioners : R.JAIKRISHNA. Adv, NARAYANI HARIKRISHNAN. Adv,
C.S.ARUN SHANKAR. Adv,
ANISH P. Adv,
VIVEK BHAT D. Adv
6. Council For R-1 : Dr. Thushara James, GOVERNMENT PLEADER, JOINT COMMISSIONER (APPEALS)(Party-In-Person)
7. Date of pronouncement : 20.07.2022
8. Facts : The petitioner, Hindustan Steel and Cement's goods /conveyance were the subject matter of detention/seizure under Section 129 of the CGST/SGST Acts and the petitioners in these cases opted to pay amounts in terms of the pre amended provisions of Section 129(1)(a) of the CGST/SGST Acts, to get the goods/conveyance released pending finalisation of proceedings. On payment of the amount, the goods and the conveyance were released as contemplated by sub-section (1) by issuing Form MOV-05. While an order was issued in Form MOV-09 (issued under sub-section (3) of Section 129), a corresponding summary of order/demand in form DRC-07 was not issued. As a result, the petitioners are not in a position to approach the appellate authority by filing an appeal under Section 107 of the CGST/SGST Acts.
Sri.R.Jaikrishna, the learned counsel for the petitioners submits that on the reading of sub-section (3) of Section 129 CGST/SGST Acts with Rule 142 (5) of the CGST/SGST Rules and the provisions of Ext.P5 circular No.41/15/2018-GST, dated 13.04.2018, the order under sub-section (3) of Section 129 issued in Form MOV09 should have been accompanied by a summary of the order in Form DRC-07. It is submitted that without a summary of the order in Form DRC-07, the petitioners are disabled from filing an appeal as the system accepts an appeal only if there is a summary of an order issued in Form DRC-07.
9. Nature of Issue : Appeal under CGST Act, Voluntary Payment of Penalty under CGST
10. Industry : Not industry specific
11. Held : The provisions of Section 129 of the CGST/SGST Acts provide for the detention, seizure and release of goods, conveyance and documents. It provides that when a person transports any goods or stores any goods while they are in transit in contravention of the provisions of the Act of the Rules made thereunder, such goods, documents and conveyance used as a means of transport shall be liable to detention or seizure and also provides for the procedure to be followed for release of goods following such detention or seizure. As already noticed, Section 129(1)(a) provides that where the person who suffers the order on detention makes payment of tax and penalty, the goods shall be released. Section 129(1)(c) gives an option to a person suffering an order of detention to provide security instead of making payment of tax and penalty as provided for in Section 129(1)(a). However, the provisions of sub-section (3) of Section 129 contemplate the issuance of a notice and the passing of an order. A reading of sub-section (3) suggests to me that whether the person suffering the detention chooses to make payment under Section 129(1)(a) or chooses to provide security in terms of Section 129(1)(c), the officer detailing or seizing the goods or conveyance has to issue a notice specifying the tax and penalty payable.
A reading of sub-section (3) of Section 129 of the CGST/SGST Acts, the provisions of Rule 142 referred to above and the provisions of the circular, cumulatively, compel me to hold that whether or not a person opts to make payment under section 129(1)(a) or to provide security under Section 129(1)(c), the responsibility of the officer to pass an order under sub-section (3) of Section 129 and to upload a summary of the order/demand in Form DRC-07 continues. The provisions of sub-section (5) or Section 129 which were pointed out by the learned Senior Government Pleader only contemplate that the procedure for detention on seizure of goods or documents or conveyances come to an end and it is always open to the person who suffers proceedings under 129 of the CGST/SGST Acts to challenge those proceedings if he feels that the demand has been illegally raised on him. This can be the only reasonable interpretation that can be placed on the provisions referred to above. Any other interpretation would clearly violate Article 265 of the Constitution of India.
Further, The court viewed that Section 107 of the CGST Act is widely worded and provides that any person aggrieved by any decision, or order passed under the CGST/SGST Acts or Union Territory Goods and Services Tax Act, by an adjudicating authority, may appeal to such appellate authority as may be prescribed, within three months from the date on which such decision or order is communicated to such a person. It is obvious that the learned counsel for the petitioners in these cases is correct and contenting that whether or not a payment is made under Section 129(1)(a) or security is provided under Section 129 (1) (c), the person who is the subject matter of proceedings under section 129 of the CGST Act has the right to challenge those proceedings, culminating in an order under sub-section (3) of Section 129, before the duly constituted Appellate Authority under Section 107 of that Act. The fact that the culmination of proceedings in respect of a person who seeks to make payment of Tax and Penalty under Section 129(1)(a) does not result in the generation of a summary of an order under Form DRC-07 cannot result in the right of the person to file an appeal under Section 107 being deprived. The fact that the system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand does not mean that the intention of the legislature was different.
The concerned among the respondents shall do the needful within one month from the date of receipt of a certified copy of this judgment. In order to prevent the recurrence of such issues, the Commissioner, Office of the State Goods & Services Tax Department, Thiruvananthapuram will issue an appropriate circular taking note of the aforesaid findings.
12. In favour of : Petitioner
13. Case Law References : N.A.
14. Relevant Act/ Rules/ Forms : Section 107 of the CGST/SGST Acts 2017 , Section 129 of the CGST /SGST Acts 2017, Rule 142 (5) of the CGST/SGST Rules, Circular No.41/15/2018-GST, dated 13.04.2018, Form MOV-05. Form MOV-09, Form DRC-03, Form DRC-07, Form DRC-08, Article 265 of the Constitution of India
15. Database Citation : HC-GW-89-2022-KER
