Luminous Power Technologies Private Limited Vs State Tax Officer (Madras High Court)
Madras High Court held that Credit note u/s 34 of the Central Goods and Services Tax Act, 2017 not required when goods were being returned without even being received by the recipient. Accordingly, detention of goods for non-issuance of Credit note unwarranted.
Facts- The petitioner had transported the consignment of solar power generating systems/solar panels of different descriptions to the buyer in Tiruppur. When the goods were being transported from Chennai to Tiruppur, due to heavy down pour, the solar panels got wet and therefore, the buyer namely Attrib System, Tiruppur, refused to take delivery of the goods.
Therefore, the petitioner generated fresh e-way bills, all dated 28.12.2022, valid up to 31.12.2022 and re-transported to its factory, which was intercepted by the second respondent on its way back.
It is submitted that the detention was incorrect, as the consignee namely Attrib System, refused to take delivery. Therefore, issuance of Credit Notes under Section 34 of the respective GST enactments does not arise.
Conclusion- Held that Credit note under Section 34 is not required to be issued at the stage, when the goods were being returned without even they having been received by the recipient. Issuance of Credit Note and/or Debit Note under Section 34(1) of the CGST Act, is only for adjustment of tax liability. Accordingly, detention of goods unwarranted.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner has challenged the impugned notice dated 30.12.2022 issued under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017 read with the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017, seeking to impose the penalty on the petitioner.
2. Relevant portion of the impugned notice reads as under:-
“2. The goods in movement were inspected under the provisions of sub-section (3) of section 68 of the Central Goods and Services Tax Act, 2017 read with sub-section (3) of section 68 of the State/Union Territory Goods and Services Tax Act, 2017 or under section 20 of the Integrated Goods and Services Tax Act, 2017 read with sub-section (3) of section 68 of the Central Goods and Services Tax Act, 2017 on 29.12.2022 and the following discrepancies were noticed.
As per the invoice goods are transported from Chennai to Tiruppur. At the time of interception, goods are moving from Tiruppur to Chennai. It is presumed that goods are returnable due to unfructified sales. However in terms of sec 34 of the Act any goods returned due to unfructified sales it should accompanied with delivery challan/credit/debit note.
In this case the taxable person has failed to issue the credit/debit note. Therefore, the goods under movement is treated as movement without document prescribed under sec 34 read with rule 55 of the Act thereby invoking sect 129 is warranted. Accordingly penalty under sec 129 of the Act is levied.
3. In view of the above, the goods and the conveyance used for the movement of goods were detained under subsection (3) of section 68 of the Central Goods and Services Tax Act, 2017 and sub-section (1) of section 129 of the Central Goods and Services Tax Act, 2017 read with subsection (3) of section 68 of the State/Union Territory Goods and Services Tax Act, 2017 or under section 20 of the Integrated Goods and Services Tax Act, 2017 read with subsection (3) of section 68 of the Central Goods and Services Tax Act, 2017 by issuing an order of detention in FORM GST MOV 06 and the same was served on the person in charge of the conveyance on 30.12.2022(date).”
3. The case of the petitioner is that the petitioner had transported the consignment of solar power generating systems/solar panels of different descriptions to the buyer in Tiruppur under four different invoices as detailed below:
