Assessee has Right to Appeal even after Voluntary Payment of Penalty under CGST: Kerala HC [Read Order]

In a significant ruling, the 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.

The petitioner, Hindustan Steel and Cement’s goods were seized under Section 129 of the CGST/SGST Acts and the petitioners paid the amount in terms of provisions of Section 129(1)(a) to get the goods 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.

A corresponding summary of order/demand in form DRC-07 was not issuedwith the order, resulting in the petitioner’s positionnotto approach the appellate authority by filing an appeal under Section 107 of the CGST/SGST Acts.

It was settled law that as per Section 129(3) of the CGST/SGST Acts with Rule 142 (5) of the CGST/SGST Rules and the provisions of circular dated 13.04.2018, the order under sub-section (3) of Section 129 issued in Form MOV-09 should have been accompanied by a summary of the order in Form DRC-07.

It wascontendedthat without a summary of the order in Form DRC-07, the petitioners were disabled from filing an appeal as the system accepts an appeal only if thereis a summary of the order issued on Form DRC-07.

In contra, the department argued that once the payment was made under Section 129(1)(a), there is no way in which a summary of order/demand can be generated on Form DRC-07, as Rule 142(5) indicates that there cannot be a proceeding under DRC-07 unless there was a demand for tax, interest, orpenalty.

The court viewed that Section 107 provides an opportunity for a person aggrieved to challenge any order or any proceedings and the wording of the section does not make a distinction between people who opt to make a payment under Section 129(1)(a) and people who opt to provide security as provided for in Section 129(1)(c).

The single bench of Justice Gopinath has observed that the person who suffered proceedings under section 129 of CGST/SGST Acts can challenge those proceedings if the demands have been made illegally on him and allowed the writ petition.

The petitioner was represented by R. Jaikrishna, Narayani Harikrishnan, C.S.Arun Shankar, Anish P & Vivek Bhat D and the respondent was represented by Thushara James.

To Read the full text of the Order CLICK HERE

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