The Kerala High Court while dismissing the review petition held that the penalty under State Goods and Service Tax (SGST) can not be imposed in case of Interstate Transaction.
The State filed the Review Petition seeking to review the judgment, which considered the legality of the detention of a consignment of goods at Muthanga, Wynad, during the course of interstate transportation.
The Court, taking note of the fact that the consignment was not covered by a valid delivery challan that was one of the prescribed documents for transportation of exempted goods, found that the detention was justified.
It was, however, held that the petitioner would only have to pay the lessor of an amount equal to 5% of the value of the goods or Rs.25,000/-, in terms of Section 129 (1)(b) of the CGST Act for obtaining a release of the goods and the vehicle.
The Counsel for the state, Dr. Thushara James contended that once it was found that the detention was justified, it was incumbent upon the petitioner to pay not only the amount of Rs.25,000/- in terms of Section 129(1)(b) of the CGST Act but also a similar amount under Section 129(1)(b) of the SGST Act since the tax payment under the IGST Act included components of the tax payable under both the CGST and SGST Acts.
The issue raised was whether the 4th proviso would be attracted to the detention that was the subject matter of the Writ Petition more so when the transportation involved was of exempted goods.
The Single Judge Bench of Justice A.K. Jayasankaran Nambiar clarified that when exempted goods are transported interstate, in contravention of the provisions of the CGST Act, the goods and the conveyance used for transportation are liable to detention and can be released on payment of an amount equal to 5% of the value of the goods or 25,000 rupees whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty.
The court while dismissing the review petition reiterated that the only amount to which the writ petitioner was liable was the amount equal to 5% of the value of the goods or 25000 rupees whichever was less as mandated under Section 129(1)(b) of the CGST Act. “The liability of a person, who is not the owner of the goods, and who has transported exempted goods in contravention of the IGST Act, can only be in an amount equal to 5% of the value of the goods or 25000 rupees whichever is less, as specified under the CGST Act. He cannot be further mulcted with a similar amount under the SGST Act since the provisions of tax and penalty under the SGST Act are not attracted to the inter-state transaction of exempted goods covered by the IGST Act,” the court said.
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