M/S Kalpana Stores vs. The State Of Tripura And Ors

Held

The Court held that the action of the State authorities was illegal and could not be approved. The order dated October 25, 2018, was not an assessment order but a demand of tax and penalty. The Court found that the authorities had failed to provide the petitioner with a minimum opportunity of hearing before levying penalty, which is a penal action. The Court referred to Sections 68 and 129 of the Tripura State Goods and Services Tax Act, 2017. Specifically, Section 129(3) requires the proper officer to issue a notice specifying the tax and penalty payable, and Section 129(4) mandates an opportunity of being heard before determining tax, interest, or penalty. The Court found that these provisions were breached as the authorities straightway passed the demand order. Therefore, despite the availability of an appellate remedy, the petition was entertained. The Court quashed the order dated October 25, 2018. As the petitioner had already deposited the amount and the goods were released, the Court moulded the relief by directing the respondents to issue a notice of hearing to the petitioner, allowing 4 weeks for response, followed by a speaking order within 4 months. The deposited amount of `5,10,066 would be adjusted, and any excess refund would be issued with statutory interest.

Facts

The petitioner, M/s. Kalpana Stores, a registered dealer under the GST Act, 2017, was transporting TMT Bars weighing approximately 25.990 Metric Tons, purchased for `10.59 lakhs with IGST of `1.90 lakhs paid, and accompanied by a tax invoice and e-Way bill. On October 15, 2018, the State tax authorities intercepted and detained the goods and the transport vehicle. On October 25, 2018, the authorities issued a demand for `5,10,066, comprising basic tax and penalty. Facing compulsion, the petitioner paid this amount to secure the release of the goods and vehicle on October 26, 2018, after which the present writ petition was filed challenging the authorities' action.

Key Issues

1. Whether the action of the State tax authorities in detaining the petitioner's goods and vehicle and demanding tax with penalty without affording an opportunity of hearing was illegal, contrary to the provisions of the Tripura State Goods and Services Tax Act, 2017, specifically Sections 68 and 129. Petitioner's contentions: The petitioner argued that the goods were fully covered by necessary documents and taxes paid, and the demand for tax and penalty was unlawful and raised without any opportunity of hearing. The movement of goods was pursuant to a sale, and the authorities lacked the authority to seize the goods or detain the vehicle. Revenue's contentions: The State authorities contended that the order dated October 25, 2018, was an appealable order, and the petitioner had directly approached the High Court without availing the statutory appeal mechanism.