A single Bench of Justice C. Saravanan of Madras High Court directed the buyer to make a pre-deposit of 200% of maximum penalty or an alternative furnish Bank Guarantee in terms of Section 129(c) of the respective Goods and Services Tax enactments and the Rules made thereunder.
The respondents Goods and Services Tax authorities were directed to release the detained consignment on furnishing Bank Guarantee for the balance amount of penalty or payment of the same in cash.
The fact is that the petitioner had transported a consignment of goods with a tax invoice dated 18.04.2023, which was intercepted and detained by the first respondent. An order of detention in Form GST MOV-06 dated 18.04.2023 was issued and therefore, the consignment that was in transit was detained even though it accompanied the E-Way Bill.
The bench noted that the reason the goods were being detained by the respondents was because the petitioner’s supplier had improperly transferred the Input Tax Credit, necessitating the petitioner’s use of it to offset the tax liability on the supplier’s supplies.
The supplier has wrongly passed on the input tax to the petitioner, it is for the department to initiate appropriate proceedings to recover the same. At best, the petitioner can be charged with a maximum penalty equivalent to 200% of tax payable in terms of Section 129(1)(a) of Central Goods and Services Tax, 2017 (CGST) stated the counsel of the respondent.
The counsel for the petitioner submitted that the petitioner has also filed a statutory appeal under Section 107 of the Central Goods Services Tax (CGST) Act, 2017 before the Appellate Authority and has paid 25% of the disputed penalty, whereas, the respondents have imposed penalty equivalent to 100% value of the goods that was detained.
Additionally, the petitioner claimed that once there is a pre-deposit of the amount in terms of Section 107(6) of the Central Goods and Services Tax Act, the respondents ought to have released the goods. It is further submitted that the petitioner has paid a sum of Rs.17,42,350.
The bench noted that the mandatory pre-deposit was made so that the interest of the revenue can be safeguarded as the appeal would take longer time for final disposal.
Although the Officer who detained the goods has become functus officio, once there is a mandatory pre-deposit, the order has no force and all further recovery proceedings will be subject to the final outcome of the appeal.
The High Court held that “Therefore, to balance the interest of the revenue and the petitioner, I am of the view that there can be a direction to the petitioner to deposit the maximum penalty of 200% of the tax to safeguard the interest of the revenue.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
