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Case Law Details

Case Name : Tvl. M.S.V. Lakshmi Traders Vs Deputy Commissioner (State Tax) (Madras High Court)
Appeal Number : W.P. No. 4728 of 2024
Date of Judgement/Order : 27/02/2024
Related Assessment Year :

Tvl. M.S.V. Lakshmi Traders Vs Deputy Commissioner (State Tax) (Madras High Court)

Introduction: In a significant judgment, the Madras High Court addressed the issue of penalties for the non-generation of e-invoices in the case of Tvl. M.S.V. Lakshmi Traders Vs Deputy Commissioner (State Tax). This ruling has important implications for businesses grappling with GST compliance, particularly concerning e-invoice generation requirements.

Detailed Analysis: The case arose from an incident where the petitioner’s goods were intercepted and detained for not generating e-invoices as mandated by Rule 48(4) of the GST rules. The crux of the petitioner’s argument was that e-invoices were not obligatory for his business since his turnover was less than Rs.5 crore. This was a crucial point because the mandate for e-invoicing at the time applied only to businesses with a turnover exceeding Rs.5 crore.

The petitioner contended that an error in the returns filed for the financial year 2018-19 mistakenly indicated a turnover above the threshold, which was later corrected in the annual return filed through Form GSTR-9. Despite this rectification, a penalty was imposed, leading to the detention of goods, an action the petitioner challenged through the writ petition.

The Madras High Court’s decision to quash the penalty order underscores a vital principle in tax administration: penalties should reflect the taxpayer’s actual compliance intentions and circumstances. The Court recognized that the petitioner’s turnover, correctly reported in GSTR-9, exempted him from the e-invoice mandate, rendering the penalty inappropriate. Moreover, by allowing the petitioner to seek a refund for the penalty paid, the judgment reinforces the importance of accurate and timely rectification of filing errors.

Conclusion: The Madras High Court’s ruling in Tvl. M.S.V. Lakshmi Traders Vs Deputy Commissioner (State Tax) offers critical insights into the handling of e-invoice related penalties under GST. This judgment highlights the need for tax authorities to consider rectifications made in annual returns before imposing penalties for non-compliance with e-invoicing requirements. It also emphasizes the importance of businesses maintaining accurate records and promptly correcting any discrepancies in reported turnover. By setting aside the penalty order and permitting the refund of the penalty amount, the Court has affirmed the principle of fairness in tax administration, offering relief to businesses that rectify filing errors in good faith.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner assails an order dated 12.05.2023 imposing penalty of Rs.1,44,212/-.

2. The petitioner states that cotton bales transported by him were intercepted on 12.05.2023 on the basis that he had not generated e-invoices as per Rule 48(4) of the applicable GST rules. Thereafter, it is stated that the goods were detained. The petitioner asserts that e-invoices are not mandatory unless the turnover is more than Rs.5 crore. By asserting that the petitioner’s turnover is less than Rs.5 crore, the present writ petition was filed.

3. Mrs. Vasantha Mala, learned Government Advocate accepts notice for the respondents. She submits that the petitioner had wrongly indicated the turnover in the returns filed for 2018-19 and that this was subsequently rectified by filing the annual return in Form GSTR-9. She also submits that the petitioner should avail of the appellate remedy since an attachment order was also issued under Form MOV-09.

4. The admitted position is that the goods were released after the petitioner remitted the amount specified in the detention order. The petitioner asserts that the impugned order should not have been issued because his turnover is less than Rs.5 crore. In these facts and circumstances, the impugned order calls for interference. Consequently, the impugned order is quashed and the petitioner is permitted to seek refund of the amount paid towards penalty. If such application is filed, the respondents are directed to consider and dispose of the same expeditiously.

5. W.P.No.4728 of 2024 is disposed of on the above terms. Consequently, connected miscellaneous petition is closed. No costs.

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One Comment

  1. Kiran s Murthy says:

    i have a question if a applant unable to e invoice, cause of BSNL internet connection disruption, and he raised normal invoice with e way bill for transportation he had no malified intention for suppression, but penalty lived by mobile check post,

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