Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN THURSDAY, THE 15TH DAY OF SEPTEMBER 2022 / 24TH BHADRA, 1944 WP(C) NO. 18631 OF 2018 PETITIONER/S:
M/S.JAY JAY INTERMIX PLOT NO.60, RUBBER PARK, AIRAPURAM,VALAYANCHIRA PO, ERNAKULAM DISTRICT, REPRESENTED BY ITS MANAGING PARTNER-MR. SHAN.
BY ADVS.
SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON RESPONDENT/S:
1 THE ASSISTANT STATE TAX OFFICER STATE GOODS & SERVICE TAX SQUAD NO.1,MATTANCHERRY AT ALUVA-683001.
2 THE COMMISSIONER OF STATE GST TAX TOWERS, KILLIPPALAM, KARAMANA, THIRUVANANTHAPURAM-695002.
OTHER PRESENT:
SMT JASMINE M.M-GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 18631 OF 2018 2 JUDGMENT The prayers in the writ petition are as follows:
(i) To quash Ext.P2 notice issued by the 1st respondent by the issue of a writ of certiorari or such other writ or order or direction.
(ii) To direct the 1st respondent to refund the amount realized by Ext.P2 notice with interest at Bank rates by the issue of a writ of mandamus or such other writ or order or direction.
2.
The petitioner is an assessee under the KGST Act, 2017 engaged in the processing of rubber compound and is mainly undertaking mixing of rubber compound on behalf of M/s. Apollo Tyres Ltd. The petitioner was entrusted with some quantity of Rubber, Carbon Black, Chemical and process Oil for the purpose of converting the same into rubber compound on job work basis.
On carrying out the job work, the quantity of 6995 kgs. of rubber compound was transported in lorry bearing Registration No. KL- 41/G-1491 by the petitioner to M/s Apollo Tyres Ltd. along with Ext.P1 bill of supply. While the goods were being transported, the first respondent, Assistant State Tax Officer, State Goods and Service Tax Squad No.1, Mattancherry detained the consignment under Section 129(3) of the SGST Act, 2017 stating the following reasons and issued a notice dated 17.11.2017 demanding payment
WP(C) NO. 18631 OF 2018 3 of Rs.5,03,640/- towards penalty.
"On verification of document accompanied the consignment it is seen that the goods under transport is rubber compound which is taxable @ 18% under CGST/SGST Act 2017. But the document accompanied the consignment is bill of supply and it is mentioned in the document that the goods are transporting after job work. The delivery challan under Rule 55 and declaration under Rule 138 of the Kerala GST rules 2017 is not accompanied the consignment. Here the supplier issued Bill of supply it shall be issued only for exempted goods and for goods value up to Rs. 200/-. But here the goods under consignment has a value of above Rs. 200/- and goods are taxable at 18% under CGST/SGST Act 2017".
3.
The petitioner filed Ext.P3 objection dated 18.11.2017 explaining the details of the transactions. Since the 1st respondent insisted on furnishing security as above, the petitioner remitted Rs.5,03,640/- towards SGST/CGST/Penalty and got the consignment released. Though the petitioner is aggrieved by the said detention, there is no remedy provided under the Statue as the appellate authority has not so far being constituted and hence the petitioner approached this Court with the above writ petition.
4.
I have heard the learned counsel for the petitioner and the learned Government Pleader. The petitioner submits that an order passed under 129(3) of the SGST Act, 2017, there is no specific provision to file an appeal under the SGST Act. The first respondent has grossly erred in invoking the powers under
WP(C) NO. 18631 OF 2018 4 Section 129 against the petitioner since there was no defect in the documents or goods transported by the petitioner.
5.
Per contra, the learned Government Pleader submits that the provision under Section 129(3) of the SGST Act, 2017, is not an appealable order since the petitioner has already admitted the offence and paid the penalty which was demanded by the 2nd respondent.
6.
I have considered the submissions made across the bar.
The counsel for the petitioner submitted that a person who opts to make payment under S.129(1) of the Central Good & Services Tax or State Goods & Services Tax Acts are deprived of his right to file appeal against the proceedings. The counsel further submitted that on payment of the amount demanded the goods were released. Without an order by the officer concerned, the petitioner is disabled from filing an appeal. The learned Government Pleader submitted that Section 129 starts with Non Obstante Clause. Therefore it supersedes all the other provision with regard to goods and conveyance under transport. The petitioner came forward and made the payment demanded and the goods were released to him. Admittedly, the petitioner has got release of the goods on payment of amount demanded. After receiving the
WP(C) NO. 18631 OF 2018 5 notice under S.129(3) of the Central Goods and Services Tax Act, 2017 the petitioner filed Ext.P3 objection and thereafter paid the amount and got release of the goods. The petitioner challenged the said detention and release, before this court under Article 226 of he Constitution of India, since appellate authority was not constituted under the Act.
7.
The similar issue regarding the right of the dealer to receive an order and right to file appeal, came up for consideration before this Court in W.P.(C ) No.17454 of 2022 in Hindustan Steel and Cement vs. Assistant State Tax Officer (2022(4) KLT 864). It was held thus:
A reading of sub-section (3) of Section 129 of the CGST/SGST Acts, the provisions of Rule 142 referred to above and the provisions of the circular, cumulatively, compel me to hold that whether or not a person opts to make payment under section 129(1)(a) or to provide security under Section 129(1)(c), the responsibility of the officer to pass an order under sub- section (3) of Section 129 and to upload a summary of the order/demand in Form DRC-07 continues. The provisions of sub-section (5) or Section 129 which were pointed out by the learned Senior Government Pleader only contemplate that the procedure for detention on seizure of goods or documents or conveyances come to an end and it is always open to the person who suffers proceedings under 129 of the CGST/SGST Acts to challenge those proceedings if he feels that the demand has been illegally raised on him. This can be the only reasonable interpretation that can be placed on the provisions referred to above. Any other interpretation would
WP(C) NO. 18631 OF 2018 6 clearly violate Article 265 of the Constitution of India.
Further, Section 107 of the CGST Act is widely worded and provides that any person aggrieved by any decision, or order passed under the CGST/SGST Acts or Union Territory Goods and Services Tax Act, by an adjudicating authority, may appeal to such appellate authority as may be prescribed, within three months from the date on which such decision or order is communicated to such a person. It is obvious that the learned counsel for the petitioners in these cases is correct and contenting that whether or not a payment is made under Section 129(1)(a) or security is provided under Section129(1)(c), the person who is the subject matter
of
proceedings
under
section 129 of the CGST Act has the right to challenge those proceedings, culminating in an order under sub-section (3) of Section 129, before the duly constituted Appellate Authority
under
Section
107
of
that Act. The fact that the culmination of proceedings in respect of a person who seeks to make payment of Tax and Penalty under Section 129(1)(a) does not result in the generation of a summary of an order under Form DRC-07 cannot result in the right of the person to file an appeal under Section 107 being deprived.
The
fact
that
the
system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand does
not
mean
that
the intention of the legislature was different.
8.
Following the judgment in Hindustan Steel and Cement (supra), I am also of the opinion that the petitioner is entitled to get a similar relief to file an appeal against the penalty made under Ext.P2 notice before the competent authority. The concerned officer is directed to generate a demand for the payment made by the petitioner, so as to enable the petitioner file
WP(C) NO. 18631 OF 2018 7 an appeal before the statutory authorities. The said direction shall be complied with by the competent authority within one month from the date of receipt of a certified copy of this judgment.
Sd/- sab SHOBA ANNAMMA EAPEN JUDGE
WP(C) NO. 18631 OF 2018 8 APPENDIX OF WP(C) 18631/2018 PETITIONER EXHIBITS EXHIBIT P1 COPY OF BILL OF SUPPLY NO. JJI/2017/K/461 ISSUED BY THE PETITIONER DATED ON 17.11.2017.
EXHIBIT P2 COPY OF NOTICE ISSUED BY THE 1ST RESPONDENT DATED 17.11.2017.
EXHIBIT P3 COPY OF OBJECTION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED ON 18.11.2017.