The High Court of Bombay High Court at Goa, while quashing an order for compounding of offence, has held that the amount for the compounding of offence under the GST Act shall not exceed the maximum penalty specified in the Act for such offence.
The petitioner, Mr. Shekhar P Vernekkar was aggrieved by the order of the department that the amount of penalty for compounding the offence which has been ordered to be paid in the sum of Rs.1,00,000/-. The petitioner contended that in respect of any compounding under Section 53 of the Act maximum amount of the penalty would be Rs.10,000/-. The order further stated that “will not grant any right to the applicant to be treated as registered dealer eligible to claim input tax credit and/or collect tax on sales.”
The Revenue, on the other hand, contended that in the facts of the present case and considering that it was an offence under Section 22(1) of the Act, the maximum penalty would be Rs.25,000/- under Section 44 clause(b) of the Act.
Justice G. S. Kulkarni observed that the grievance of the petitioner with regard toa penalty of Rs.1,00,000/- being imposed by the impugned order would be required to be accepted being exfacie contrary to the provisions of the Act.
“Even assuming as to what has been stated on behalf of the revenue that a penalty of Rs.25,000/- would be maximum penalty under Section 44 of the Act or even if the petitioner is right in his contention that the maximum amount of penalty would be Rs.10,000/- under notification dated 2 February 2012 issued by the State Government on either of the Counts, the impugned order which orders a penalty of Rs.1,00,000/- cannot be sustained,” the Court said.
Concluding the order, the High Court held that “In so far as the petitioner’s grievance with regards to the wording of the operative part of the order as noted above, in my opinion, the grievance raised by the petitioner is quite correct, although such observation may be clarrificatory in nature, it has some consequence, more particularly when the substantive appeal itself is pending before the Appellate Authority assailing the Assessment Order.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
