Order issued rejecting appeal is not valid: High court of Kerala
What is section 129 of the CGST act?
Section 129(1) of the CGST act 2017 states that 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 100% of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs. 25,000, 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 50% 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 5% of the value of goods or Rs. 25,000, 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.
No goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
Fact of the case
The taxpayer is a registered dealer under the Central Goods and Service Tax Act, 2017 while transporting two consignments of TMT steel in a Goods Vehicle from Perumbavoor to Muvattupuzha supported by invoices e-way bills were detained on September 27, 2018 alleging that the e-way bills were not valid as the number of the vehicle of the e-way bills was not entered. The competent authority further issued on assesse a notice dated September 28, 2018 demanding tax and penalty. Against impugned notice dated September 28, 2018, assesse filed an appeal before Appellate Authority on October 11, 2018. During the pendency of the appeal, the Competent Authority passed the adjudication order dated November 21, 2018 on assesse. Thereafter Appellate Authority passed order dated August 14, 2019 holding that notice dated September 28, 2018 was not appealable and accordingly rejected appeal as not maintainable. Assessee filed writ petition for restoration of appeal granting liberty to it to challenge adjudication order dated November 21, 2018.
Issue of the case
The issue of the case is whether demanding tax and penalty from the petitioner on account of detention of the vehicle and the goods can be construed to be an adjudication order as per the provisions of Section 129(5) of the CGST Act 2017 & Kerala State GST Act, 2017 (for short, ‘the Act’) or not.
Observation of the court
High Court observed that on a plain and simple reading of the provisions of the Act, sub-section (3) of Section 129 envisages that 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) and on payment of the amount referred to in subsection (1) all the proceedings in respect of notice specified in sub-section (3) shall be again to be concluded. It further observed that the appeal was filed on October 11, 2018 and the adjudication order dated November 21, 2018 was issued during the pendency of the appeal. The appeal could have been rectified by an amendment appropriately to be against the adjudication order. The authorities ought not to have adopted a rigid approach and rejected the appeal as not maintainable. At the best request of the petitioner could have been construed in the manner for the amendment of the appeal, challenging the adjudication order in order to overcome the maintainability of the appeal.
The High court held that the impugned order dated August 14, 2019 received on November 13, 2019 is set aside. The appeal is restored granting liberty to the taxpayer to challenge the order dated November 21, 2018 in accordance with law. Accordingly the petition filed is disposed off by the court.
Read the full order of Kerala High Court from below LinkOrder-issued-rejecting-appeal-is-not-valid-High-court-of-Kerala