Metal N Strips Vs Joint Commissioner of Commercial Tax (Karnataka High Court)
In this writ petition, the petitioner sought quashing of two orders: the order dated 30.06.2023 issued by the second respondent under Section 74 of the KGST Act read with Section 122(1)(vii), and the appellate order dated 07.10.2023 whereby the first respondent dismissed the petitioner’s appeal and affirmed the earlier order. The petitioner also requested any other appropriate relief.
The petitioner argued that although tax and interest were correctly reduced by the second respondent after considering the reply to the show cause notice dated 27.03.2023, the penalty imposed was illegal, arbitrary, and contrary to Sections 74 and 75 of the KGST Act. The petitioner submitted that it had no grievance regarding the confirmed tax of Rs.55,350 and interest of Rs.52,834 and was ready to deposit them. However, it disputed the penalty of Rs.6,05,17,933, which was substantially higher than the penalty proposed in the show cause notice. The petitioner contended that both the adjudicating authority and the appellate authority failed to properly apply Sections 74(1), 74(9), 75(7) and 75(13).
The revenue opposed the petition, reiterating the contentions in its statement of objections and asserting that the petition lacked merit.
The Court examined the show cause notice, which demanded tax of Rs.3,02,20,058 (SGST + CGST), interest of Rs.2,74,35,729, and penalty of Rs.3,02,20,058. After the petitioner replied, the second respondent’s order reduced tax and interest to Rs.55,350 and Rs.52,834 respectively. However, the penalty was increased to Rs.6,05,17,933, despite being lower in the show cause notice and despite the tax demand itself having been significantly reduced.
