The High Court of Andhra Pradesh at Amaravati recently dismissed a Penalty Order purported by the Revenue, observing that Form GST MOV 07 issued under Section 129(3) of the Central Goods and Services Tax Act, 2017 ( CGST Act ) stipulates provision of seven days time to issue a reply towards a Show-Cause Notice (SCN) issued for the same purpose.
The observation was made by the High Court while adjudicating a Writ Petition filed by Sfc Environmental Technologies Limited, an entity providing environmental technology solutions, specifically for sewage treatment and municipal solid waste treatment.
The Petitioner had placed an order of certain components from a manufacturer based in Telangana, for delivery to their facility in Karnataka. During transit, the goods were apprehended in Andhra Pradesh and subject to seizure and confiscation process which had been averted at the time through payment of penalty.
Pursuantly, on 29.10.2024 the Petitioner was served with a SCN to show-cause as to why the earlier levied penalty should not be confirmed. The Petitioner issued a reply towards the SCN on 31.10.2024, contending that a statutory time period of 7 days is available to the Petitioner to issue a reply in such cases.
Complete Draft Replies of GST ITC Related Notices, Click Here
However the Revenue had completed the proceedings within the time period and sent notices of personal hearing therein, all while confirming the penalty amount that had been levied on the Petitioner earlier.
During the proceedings before the Andhra Pradesh High Court, the Revenue contested the maintainability of writ petitions against orders of seizure and confiscation, referencing the Supreme Court decision in The State of Uttar Pradesh & others vs. M/s. Kay Pan Fragrance Pvt. Ltd. (2020).
The Division Bench comprised by Justice R Raghunandan Rao and Justice Maheswara Rao Kuncheam observed the inapplicability of Kay Pan Fragrance to the present case as the main contention raised by the Petitioner cited violation of principles of natural justice and non-provision of the minimum period of seven days to file a reply to SCN.
The Bench observed that the SCN had been issued on 29.10.2024 while the penalty order was passed on 05.11.2024, before exhaustion of the time limit of seven days as statutorily provided to the Petitioner by Form GST MOV 07 issued under Section 129(3) of the CGST Act, 2017.
Complete Draft Replies of GST ITC Related Notices, Click Here
Noting a clear procedural violation, coupled with violation of principles of natural justice in providing adequate opportunity, the Andhra Pradesh High Court set aside the penalty order dated 05.11.2024 and remanded the matter back to the Revenue to pass necessary orders after providing due opportunity to the Petitioner to make out their case.
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