In the matter of, Ideal Movers (P) Ltd Vs state tax Officer (High Court of Madras) it is held that the case would be covered under Para 10 of circular no.10 of 2019 dated 31.05.2019 issued by office of commissioner of commercial taxes , Chennai , where the Commissioner reduces the penalty payable in certain circumstances to Rs.5000/.

https://ctd.tn.gov.in/documents/10184/249230/Circular%20No.10_2019/134510ce-68bc-4d58-bb7a-8a31ddccb5a0

As per para 10 of circular 10 dt 31.05.2019 – where the movement of goods is accompanied by any one of the basic document such as invoice / bill of supply / delivery challan etc indicating clearly tax related to particular transaction , a penalty upto Rs 5000/- shall be levied so as to deter the recurrence of offence.

In Ideal Movers (P) Ltd Vs state tax Officer, the petitioner is a transporter and had been engaged to transport a consignment from Kancheepuram District to Krishnagiri District.

An e-way bill had been generated on 12.01.2020 at 7:23 p.m., valid till 16.01.2020. However, the lorry had broken down on 13.01.2020 with major gear box damage near Vellore and was thus lying in garage. After repair, the lorry proceeded to deliver the goods to the destination, however, accompanied by the e-way bill that had expired/lapsed on 16.01.2020 itself. The lorry was intercepted at Vellore and detained for non-possession of valid e-way bill.

Section 129 of the CGST Act dealing with the procedure for ‘detention, seizure and release of goods and conveyances in transit‘ .

As per sec 129(1) of CGST Act , where any person transports any goods in contravention of the provisions of this Act or the rules made there under, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-

(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;

(b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;

(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty

Some discussions took place on the phrase owner of the goods coming forward/not coming forward to pay tax and penalty and whether the phrase come forward could include an offer by the consignor to make the payment.

However, department was of the view , since clauses (a) and (b) of sub-section (1) commence with the phrase on payment, it is not sufficient for the consignor to merely make an offer or undertake to remit the tax as in the present case, but actually remit the payment.

The petitioner submitted that the offence in this case is only the lapsing of e-way bill, and that too for bonafide reasons, and this offence may not be viewed very harshly

Rule 138(10) permits a transporter to extend the validity of the expired e-way after updating the details in the relevant Form and this benefit would be available in a case such as the present.

In fine, the amount of tax works out to Rs 86,700/- each towards CGST and SGST to be remitted, in terms of Section 129(1)(b). As for penalty, the petitioner enjoys the benefit of Circular no.10 of 2019 dated 31.05.2019 where at para 10, the Commissioner reduces the penalty payable in certain circumstances to Rs.5000/-.

It was agreed that the case on hand would be covered by this beneficial provision. Thus upon remittance of the taxes of a sum of Rs.86,700/- each towards Central and State Taxes and penalty of Rs.5000/-, the consignment shall be released forthwith.

The author can reached at caanitabhadra@gmail.com

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