Allahabad High Court bench of Judge Pankaj Bhatia directed the Goods and Services Tax (GST) authorities to refund the GST Demand paid by the petitioner on reason that quantifying the goods on basis of eye is not in accordance with law.
The present petition has been filed challenging the order whereby tax of Rs.26,10,000 has been assessed to be payable by the petitioner and penalty of Rs.26,10,000 and further the fine of Rs.25,000, total Rs.52,54,000 has been assessed against the petitioner. Also, the appellate order whereby the appeal preferred by the petitioner was partly allowed.
M/s Maa Mahamaaya Alloys Pvt. Ltd., the petitioner is a registered Goods and Services Tax (GST) payer. It was asserted that the petitioner’s purchases, including the GSTR-3B, were accurately depicted on the department’s portal.
The purpose of Form GSTR-3B is to simplify the summary return, enabling taxpayers to disclose and discharge their total unpaid GST liabilities for a specific tax period.
It was argued that the petitioner was compelled to deposit an amount of Rs.52,20,000 for getting the seized goods released.
Further contended that in terms of the mandate of the GST Act, although a power of search and seizure is conferred upon the authorities, the manner in which the goods were held to be in excess of the recorded goods, is wholly arbitrary.
Moreover, the goods were quantified only on the basis of the eye estimation, which argument of the petitioner was also accepted by the appellate authority, as is clear from the perusal of the appellate order.
The petitioner side asserted that once the appellate authority accepted the contention of the petitioner that the valuation of the goods on the basis of eye estimation was not possible, the entire proceedings ought to have been declared as null and void.
The bench observed that in “Section 15 of the Central Goods and Services Tax Act (CGST Act) or the Rules framed thereunder, there was no prescriptions for valuation of the goods on the basis of eye estimation as has been done by the department and has been repelled by the appellate authority.”
Additionally stated that the appellate authority erred in rejecting the valuation performed using an eye estimate, but went ahead and valued the goods at the appellate stage without following the instructions and procedures outlined in Section 15 read with the Rules, so the contested order is also unjustifiable on that count.
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