M/S.Amco Batteries Limited vs. The State Tax Officer (Intl.,)
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M/s AMCO Batteries Limited (the Petitioner) filed a writ petition challenging an order dated 02.11.2022 passed by the 1st Respondent, the State Tax Officer (Intl.), Adjudication-1, Madurai. The order imposed a penalty of 200% of the alleged tax due, amounting to Rs. 5,71,200/-, under Section 129 of the Tamil Nadu Goods and Services Tax Act. The Petitioner stated that the seized goods were replacement batteries for defective ones, supplied free of charge under warranty, and the E-way bill mistakenly indicated "outward supply" instead of "Warranty FOC". The consignment was intercepted on 19.10.2022, a show cause notice was issued on 22.10.2022, and the Petitioner replied on 26.10.2022. The impugned order was passed after a personal hearing on 02.11.2022.
Held
The Court noted the Petitioner's submission that the impugned order was passed beyond the 7-day limitation period prescribed under Section 129(3) of the Tamil Nadu Goods and Services Tax Act. The Respondents conceded that the impugned order was prima facie contrary to the limitation prescribed. The Court observed that the Petitioner was willing to pay one-time tax for the release of the consignment and that this payment could be adjusted towards the 25% pre-deposit required for filing an appeal. The Respondents consented to this arrangement. Consequently, the Court directed the release of the consignment upon the Petitioner paying 100% of the tax. It was further directed that if the Petitioner files an appeal, the 100% tax paid would be adjusted towards the 25% pre-deposit. The Court did not decide the substantive issue of the validity of the order based on limitation but disposed of the writ petition based on the consent and interim arrangement.
Key Issues
1. Whether the impugned order dated 02.11.2022, passed by the 1st Respondent, is bad in law as it was passed beyond the limitation period prescribed under Section 129(3) of the Tamil Nadu Goods and Services Tax Act? Petitioner's contention: The Petitioner argued that Section 129(3) mandates that an order ought to have been passed within 7 days from 26.10.2022 (the date of reply to the show cause notice). As the order was passed on 02.11.2022, it falls outside this 7-day period, rendering the proceedings barred by limitation. Respondents' contention: The learned Government Advocate for the Respondents submitted that the provisions are intended as anti-evasion measures and the seizure was due to the consignment not being supported by appropriate documents, including invoices. The Respondents suggested that as an interim measure, the Petitioner could be directed to pay one-time tax, acknowledging that the impugned order might be contrary to the limitation prescribed under Section 129(3).
Sections Cited
Section 129, Section 129(3), Section 129(1)
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Before: and
This writ petition is filed challenging the impugned proceedings under Section 129 of the Tamil Nadu Goods and Services Tax Act, whereby, penalty of 200% of the alleged tax due amounting to Rs.5,71,200/- (Rupees Five Lakhs Seventy One Thousand and Two Hundred only) has been imposed.
It is submitted by the learned Senior Counsel for the Petitioner that Petitioner is a limited company engaged in the manufacture of two wheeler and four wheeler batteries having its 1/4 https://www.mhc.tn.gov.in/judis registered office at Chennai and factory/warehouse at Maraimalai Nagar, Kancheepuram District. The supply of batteries are with a fixed period of warranty and under the warranty policy, the defective batteries are replaced free of charge during the warranty period. It is submitted that the goods seized represents replacement for defective batteries, which would be evident from the delivery challan, which says nature of transaction, Warranty FOC. However, by mistake, it is submitted that in the E-way bill, it was indicated as “outward supply”.
These goods are meant as replacement for defective batteries to dealers in Kerala from Chennai via Madurai. The consignment was intercepted at Madurai and it was found that the consignment was not supported by valid invoices and without appropriate GST documents. It was thus seized in terms of Section 129 of the Tamil Nadu Goods and Services Tax Act. It may be relevant to note that interception took place on 19.10.2022, show cause notice was issued on 22.10.2022 and reply was submitted by the Petitioner on 26.10.2022 and the order came to be passed after affording personal hearing on 02.11.2022. 4. It is pointed by the learned Senior Counsel for the Petitioner that in terms of Section 129(3) of the Tamil Nadu Goods and Services Tax Act, the order ought to have been passed within 7 days from 26.10.2022. However, impugned order, dated 02.11.2022 is beyond the period prescribed under Section 129(3) of the Tamil Nadu Goods and Services Act. It was thus submitted that the proceedings are bad in law inasmuch as it is barred by limitation prescribed under Section 129(3) of the Tamil Nadu Goods and Services Tax Act.
It is submitted by the learned Government Advocate for the Respondents that the provisions are intended to serve as an anti- evasion measure and the reason for seizure was only in view of the fact that it was not supported by appropriate documents including invoices. It was further submitted that by way of an interim measure, the Petitioner may be directed to pay one time tax although provision of Section 129(1) of the Act would indicate that these goods shall be released on payment of penalty equal to 200%, in view of the fact that impugned order itself is prima facie contrary to the limitation prescribed under Section 129(3) of the Act.
It is submitted that consignment shall be released on payment of penalty of one time tax i.e., 100% tax and it is open to the Petitioner to agitate the rights finally by way of filing an appeal, if they are so advised. The learned counsel for the Petitioner submitted that they are willing to pay one time tax for the limited purpose of release of consignment and submit that the payment of 100% of tax as penalty may be adjusted towards 25% pre- deposit for filing an appeal, which was consented to by the learned Government Advocate for the Respondents. 2/4 https://www.mhc.tn.gov.in/judis (*)“7. Recording the same, the writ petition stands disposed of with the following directions: a) The Respondents shall release the consignment on the petitioner paying 100% tax forthwith. b) In the event of the petitioner filing an appeal, 100% taxes paid shall be adjusted towards 25% pre- deposit for filing appeal. c) Registry is directed to return the original copy of impugned order to the petitioner, after retaining the Photostat copy. No costs. Consequently, connected miscellaneous petitions are closed. Assistant Registrar (CS III) (*)corrected as per order of this court dated 09/02/2023 made in WP (MD).No. 25322 of 2022 Assistant Registrar (CS III) //// /11/2022 Sub Assistant Registrar(CS) sn (*) TO be substituted the order already despatched on 21.11.2022 To 1.The State Tax Officer (Intl.), Adjudication-1, Madurai. 2.The State Tax Officer (Intl.), RS (Main), Madurai. Copy to The Section Officer, E.R.Section, Madurai Bench of Madras High Court, Madurai +1 CC to M/s.S.RAJA JEYA CHANDRA PAUL, Advocate ( SR-53543[F] dated 08/11/2022 ) 3/4 https://www.mhc.tn.gov.in/judis +1 CC to M/s.SPL.GP ( SR-53675[F] dated 09/11/2022 )
2022 SS/18/11/2022/ 4P 5C KB/23/02/2023/ 4P 6C 4/4 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.