Did you Know  No GST penalty can be imposed without giving an opportunity of being heard

Audi alteram partem is a Latin phrase and a legal maxim which states “listen to the other side”, or “let the other side be heard as well”.  On this basis we will be knowing a very interesting case Kalpana Stores v. State of Tripura that how on these grounds a petitioner challenged the acts Competent Authority and moved to the High Court (High Court of Tripura) by filing a writ petition.

Facts of the Case

Petitioner a proprietary concern and a registered dealer under the Goods and service tax was engaged in a business of TMT Bars of dimensions. The petitioner had purchased 3 bars for a sale consideration of Rs. 10.59 lakhs and paid IGST of Rs 1.90 lakhs. He had also generated a tax invoice for the same and the seller had also generated E-way bill for transport of goods. With all legal documents the consignment was being transported on 15.10.2018. During the course of transportation the respondent intercepted the transport vehicle, detained it and seized the goods. According to the petitioner the movement of goods was in accordance with law to the sale. The official respondents thereby did nit have any authority to seize goods or detain the vehicle.

The official respondents on 25.10.2018 raised a bill of a sum of Rs. 5,10,066 lakhs including the basic tax and penalty. The same was deposited  by the petitioner under compulsion since if it was not deposited the State respondents would not release the goods or the vehicle. The petitioner after the payment got the goods and vehicle released on 26.10.2018. Thereafter the writ petition was filed.

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Sections Involved

Light is thrown upon section68 and Section 129 of the Tripura State Goods and Services Tax Act, 2017

Section 68 deals with, Inspection of goods in movement

1. The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.
2. Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said

Section 129 deals with, Detention, seizure and release of goods and conveyances in transit read with sub section 6 of section 67

1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,—

a) on payment of the applicable tax and penalty equal to one hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;

b) on payment of the applicable tax and penalty equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;

c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

2. Further the provisions of sub-section (6) of section 67 shall, mutatis mutandis (which means- by changing those things which need to be changed), apply for detention and seizure of goods and conveyances

3. The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).

4. No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

5. On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.

6. Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within

Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.

Observations

It was observed that although the Section 129 of the Goods and Services Tax Act, allows detention of goods in transit if it is found that the same is in contravention of the provisions of the Act or the rules and that the detention can also be made of the transport vehicle carrying the goods both are subject to the conditions provided in the same sub section itself. This condition clearly states that the proper officer detaining or seizing the goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter pass an order for payment of tax and penalty under respective clause. Further, it also states that no tax, interest or penalty shall be determined under the relevant section without giving the person concerned an opportunity of being heard.

The Competent Authority had detained goods of assessee under transport as well as vehicle and straightway passed order of demand of tax and penalty, without giving a notice and an opportunity of being heard thereby contravening the very essence of natural justice.

The question arises

Whether order of demand of tax and penalty clearly breached requirement of sub-sections (3) and (4) of section 129- Yes it was clearly breached requirement of sub-sections (3) and (4) of section 129.

Whether Competent Authority was to be directed to give a notice of hearing to assessee why tax with penalty demand should not be confirmed and thereafter pass a speaking order- It was held Yes

Order and Judgement

On seeking the facts of the case , since the petitioner has already deposited the amount indicated in the said order dated 25.10.2018 and the goods along with the transport vehicle are already released, by moulding the relief and the observations the following Judgement was made

a) The respondents shall give a notice of hearing to the petitioner why the said tax with penalty demand should not be confirmed giving clear 4(four) weeks time to respond;

b) The petitioner will file written opposition to such demand with documents as may be found necessary within the said stipulated period;

c) The competent authority shall thereafter pass a speaking order within a period of 4(four) months from today;

d) The amount of Rs. 5,10,066 which is already deposited by the petitioner shall be adjusted towards the final crystallized tax/penalty if any as per such order. If the demand is dropped partially or fully, refund shall be made with statutory interest.