The Madras High Court, in a recent decision, noted that there was a failure on the part of the department to consider relevant GST circular and directed a fresh review of the matter imposing a 200% penalty on the non-generation of e-invoice.
The petitioners, M/s. Urmilla Enterprises Pvt. Ltd., had approached the High Court under Article 226 to issue a writ of certiorarified Mandamus on the respondents.
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Coming to the facts of the present case, the petitioner had sold an old KOBELCO SD520 excavator to M/s. Stone Factory on 01.01.2025, supported by an invoice dated 27.12.2024 and an e-way bill dated 01.01.2025.
During transit, the goods were detained for non-generation of an e-invoice. A show cause notice (Mov-07) was issued on 02.01.2025, proposing a 200% penalty. The petitioner explained the delay was due to technical glitches, generating the e-invoice on 02.01.2025 as 01.01.2025 was a public holiday. Even after this, the respondent imposed a penalty of Rs. 39.6 lakhs.
The petitioner’s counsel strongly contended that the demand would not withstand by virtue of Circular No. 10/2019 dated 31.05.2019, issued by the Commissioner, Commercial Tax.
It is to be noted that the petitioner’s counsel submitted that the party was ready to deposit Rs. 10 lakhs to the respondent for the release of the vehicle.
The Additional Government Pleader on behalf of the respondent submitted that the impugned order was passed by the respondent authorities without paying attention to the Circular No. 10/2019 dated 31.05.2019. The counsel requested that the matter be remanded to the respondent for fresh consideration in light of Circular No. 10/2019 dated 31.05.2019.
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The High Court noted that the impugned order was passed without considering Circular No. 10/2019 dated 31.05.2019.
Justice Krishnan Ramaswamy of the Madras High Court set aside the impugned order, which was passed by the respondent.
The bench further observed that “it is made clear that if the respondent has come to the conclusion that the benefit available by virtue of the said circular is not applicable for the petitioner, the respondent shall release the vehicle upon the deposit of sum of Rs.10 Lakhs (Rupees Ten lakhs only) by the petitioner, and if the detained vehicle is kept idle, it would get damaged and its value also get deteriorated till final orders being passed, if the said order is challenged, attains finality.”
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