Symed Labs Limited vs. Appellate Joint Commissioner (St) And 2 Others

Facts

The petitioner, Symed Labs Limited, a company registered under GST in Telangana, is challenging an order dated January 31, 2022, passed by the Appellate Joint Commissioner (ST), Hyderabad Rural Division. This order dismissed the petitioner's appeal against an order dated November 26, 2020, passed by the Deputy State Tax Officer. The original order imposed a demand of tax of Rs. 9,19,626/- and an equal penalty of Rs. 9,19,626/-. The dispute arose when a vehicle transporting 'Pregabalin' in bulk from one unit to another was intercepted by the Deputy State Tax Officer on November 25, 2020. The grounds for detention were a mismatch between the vehicle number in the e-way bill and the actual vehicle, and an unsatisfactory statement from the driver. The petitioner had filed an appeal against the order levying tax and penalty.

Held

The Court held that the Appellate Joint Commissioner should reconsider the order dated January 31, 2022. The Court set aside the order and remanded the matter back to the Appellate Joint Commissioner. The Appellate Joint Commissioner is directed to hear both sides, including the petitioner, and pass a fresh order in accordance with the law and in light of the decision rendered by this Court in SAME DEUTZFHR INDIA P. LTD. V. STATE OF TELANGANA. The Court noted that the petitioner was forced to approach the High Court due to the absence of a GST Tribunal. The Court also acknowledged the petitioner's submission that no GST is leviable on stock transfers, referencing the SAME DEUTZFHR INDIA P. LTD. case, which held that tax and penalty collected on stock transfers to an additional place of business are not permissible. The Court did not specifically address the applicability of Section 125 versus Section 129(3) in detail, but the remand implies a reconsideration of the penalty imposition in light of the stock transfer argument.

Key Issues

1. Whether the gross mismatch in the vehicle number between the e-way bill and the actual vehicle constitutes a 'minor mistake' as contemplated by the Circular dated September 14, 2018, issued by the Central Board of Indirect Taxes and Customs, thereby making Section 125 of the CGST Act applicable for a lesser penalty? 2. Whether the tax and penalty imposed on the petitioner for stock transfer between its own units is permissible under the GST law, considering the petitioner has an additional place of business in Telangana? Petitioner's arguments: The petitioner contended that the mismatch in the vehicle number was a minor error and should be treated as such under the relevant circular. They also argued that no GST is leviable on stock transfers, citing a previous judgment of this Court in SAME DEUTZFHR INDIA P. LTD. V. STATE OF TELANGANA. The petitioner was compelled to approach the High Court due to the non-constitution of a GST Tribunal. Revenue's arguments: The revenue, through the Appellate Joint Commissioner's order, argued that the mismatch in the vehicle number was a 'gross mismatch' and not a minor mistake, indicating potential tax evasion. They distinguished the case from the cited precedent of Bhushan Power & Steel Limited, stating that it related to Part-B of the e-way bill, not vehicle number mismatches. The revenue also took the view that the mismatch was not covered by the circular.