M/S. Perfect Engineering Works vs. The Commissioner Of CGST And Central Excise
Original PDF →Facts
The petitioner, M/s. Perfect Engineering Works, manufactures large match box filling machines, weighing approximately 12 tonnes. Due to their size, these machines are often split into three consignments for transport, requiring multiple E-Way Bills for a single invoice. The Assistant Commissioner of CGST and Central Excise issued a show cause notice on 27.12.2023, alleging short payment of GST due to discrepancies between E-Way Bill values and GSTR-3B returns for the tax period 2018-19, and interest liability for delayed GST payments. The petitioner submitted a reply with sample invoices for two transactions, explaining the necessity of multiple E-Way Bills. The impugned order dated 11.03.2024 was passed by the Assistant Commissioner, levying GST on the same transaction basis, despite the petitioner's explanation.
Held
The Court found merit in the petitioner's submissions, particularly noting that the modus operandi for the two sample transactions, which were furnished with the reply and found to be in order, was the same as for the remaining 70 transactions. The Court observed that the petitioner had clearly indicated in their reply that these were sample transactions and that the same procedure was followed for others. The Court held that if the respondent intended to verify documents for the remaining transactions, they should have put the petitioner on notice, allowing them to furnish supporting documentary evidence. Consequently, the impugned order was set aside. The petitioner was granted liberty to produce documentary evidence for the remaining 70 transactions to the respondents within four weeks. If such evidence is filed within the stipulated time, it shall be considered, and orders passed in accordance with law after affording a reasonable opportunity of hearing. Failure to furnish the evidence would result in the revival of the impugned order. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the impugned order dated 11.03.2024, passed by the Assistant Commissioner of CGST and Central Excise, is liable to be quashed on the grounds that it levies GST on the same transaction based on multiple E-Way Bills generated for a single invoice, contrary to the petitioner's explanation that this was necessitated by the physical division of large machinery into multiple consignments for transport. (Question of law and fact, concerning the interpretation and application of GST provisions related to E-Way Bills and invoicing). Petitioner's contentions: The petitioner argued that the E-Way Bill module does not contemplate generating E-Way Bills for transactions transported in more than one vehicle, forcing them to generate multiple E-Way Bills for a single invoice due to the size of their machinery. They contended that their modus operandi for 72 machines during 2018-19 was consistent, and the two sample transactions verified by the authorities were found to be in order. They claimed an opportunity should have been granted to present evidence for the remaining 70 transactions. Revenue's contentions: The respondents argued that the impugned order is an appealable order and therefore, the Writ Petition should not be entertained.
Sections Cited
GSTR-1, GSTR-3B
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Before: and
The present Writ Petition is filed challenging the impugned order dated 11.03.2024 inasmuch as the impugned order proceeds to levy GST on the very same transaction, on the basis of multiple E-Way Bills generated in respect of a single invoice/transaction.
The learned counsel for the petitioner submits that the petitioner is engaged in manufacturing of match box filling machines. These are huge machineries weighing close to 12 tonnes. In view of the same, these machineries are normally split into three consignments and loaded into different vehicles/lorries. Due to the fact that the E-Way module does not contemplate the E-Way Bills being generated in respect of a transaction, which is transported in more than one vehicle, the petitioner was constrained to generate three E-Way bills for a single transaction/invoice.
Based on the report of the Superintendent of CGST and Central Excise, Sivagangai Range, Sivagangai consequent to the scrutiny of GSTR-1, GSTR-3B returns filed by the petitioner for the tax period 2018-19 and e-way bill generated 2/10 https://www.mhc.tn.gov.in/judis by the petitioner during the said period, a show cause notice was issued to the petitioner by the second respondent dated 27.12.2023 alleging that, (i) The taxable value declared in e-way bills generated by the petitioner was more than the value declared in GSTR-3B returns and thus, there is a short payment of GST; (ii) The taxpayer had filed GST returns after the due date during 2018-19 and thus, there is interest liability on the GST payment by cash.
As a matter of fact, the petitioner vide his reply dated 20.02.2024 furnished the sample copies of the invoices in the E-Way Bill for two transactions. The same is extracted hereunder: 3/10 https://www.mhc.tn.gov.in/judis
It was also made clear that the transaction referred to in the said reply dated 20.02.2024 was only sample and that they have followed the very same procedure even in respect of the remaining transactions.
In the impugned order, after recording the reply, it is stated that a verification report was called for from the Range Officer, Sivagangai, pursuant to the personal hearing held on 20.02.2024. The Range Officer, Sivagangai, vide 4/10 https://www.mhc.tn.gov.in/judis letter in O.C.No.19/2024 dated 04.03.2024 submitted the verification report, wherein, it was found that the CGST and SGST had been calculated three times in respect of these two invoices/transactions. Resultantly, the impugned order has excluded the above two transactions. The relevant portion of the order is extracted hereunder: 5/10 https://www.mhc.tn.gov.in/judis 6/10 https://www.mhc.tn.gov.in/judis
It is submitted by the learned counsel for the petitioner that during the period 2018-19, the petitioner had effected sales of 72 match box filling machines adopting the same modus, which was found to be in order, in respect of two sample transactions, which was referred to in the reply dated 20.02.2024. That they would have furnished the details for the remaining 70 transactions if the Adjudicating Authority had only informed them that he intends to verify all the transactions.
It is submitted by the learned counsel for the petitioner that they have with them documentary evidence, which are identical to the transactions, which has been found by the Range Officer as well as the Adjudicating Authority to be in order, in respect of the remaining 70 transactions and that an opportunity may be granted inasmuch as the impugned order has been passed without even hearing the petitioner nor putting the petitioner on notice that the respondents intended to verify invoices of all transactions.
The learned Senior Panel Counsel for the respondents would contend that the impugned order passed by the second respondent is an appealable order and therefore, this Writ Petition may not be entertained. 7/10 https://www.mhc.tn.gov.in/judis
Having considered the submissions on both sides, this Court finds that there is some merit in the submissions of the learned counsel for the petitioner, more so, when the modus has been found to be in order in respect of the two transactions with regard to which documents were furnished along with the reply. Importantly, it was clearly indicated in the reply dated 20.02.2024 that the two transactions are only sample transactions and that the modus adopted was the same in respect of the remaining 70 transactions. If the respondent intended to verify the documents in respect of the remaining transactions, he could have put the petitioner on notice, which have enabled them to furnish the documentary evidence in support of remaining 70 transactions along with their reply.
In view there of, the impugned order is set aside and liberty is granted to petitioner to produce the documentary evidence in respect of the remaining 70 transactions to the respondents within a period of four weeks from the date of receipt of a copy of this order. Failure to furnish the documentary evidence would
result in the impugned order getting revived. If such document/representation/reply is filed within the stipulated time, namely, four weeks from the date of receipt of a copy of this order, the same shall be 8/10 https://www.mhc.tn.gov.in/judis considered and orders passed thereon in accordance with law after affording reasonable opportunity of hearing to the petitioner.
With the above direction, this Writ Petition is disposed of. No costs. Consequently, connected miscellaneous petitions are closed. Index : Yes / No 06.08.2024 Internet : Yes / No apd To 1.The Commissioner of CGST & Central Excise, Central Revenue Buildings, No.4, Lal Bahadur Shastri Road, Bibikulam, Madurai – 625 002. 2.The Assistant Commissioner of CGST and Central Excise, Madurai-II Division, No.5, V.P.Rathinasamy Nadar Road, Bibikulam, Madurai – 625 002. 9/10 https://www.mhc.tn.gov.in/judis MOHAMMED SHAFFIQ, J.
apd
2024 10/10 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.