The Tripura High Court (Agartala Bench) ruled that a payment of penalty under economic duress cannot be treated as a voluntary payment of penalty, exonerating the Revenue Department from passing an order as mandated under Section 129(3) of the Tripura State Goods and Services Tax Act, 2017, justifying the imposition of a penalty on the taxpayer.
The Court clarified that in the absence of an order passed by Superintendent of State Taxes, confirming the penalty proposed on the taxpayer (with reasons after considering taxpayer’s representation to the show cause notice), the very levy and collection of penalty under Section 129(1) of the Tripura SGST Act on/from the taxpayer, is without authority of law and violates Articles 14, 19(1) (g), 265 and 300-A of the Constitution of India.
The Division Bench comprising the Chief Justice M.S. Ramachandra Rao and Justice S. Datta Purkayastha was shocked to found that the Revenue Department did not pass an order under Section 129(3) of the Tripura SGST Act, 2017, in MOV-09, justifying the levy of penalty even after 16 months, in complete defiance of the statutory mandate under Section 129(3) of the Tripura SGST Act, 2017, simply on the premise that the petitioner had paid the penalty voluntarily, and the goods were released.
The Bench found this act of the respondent completely unjustified, when the petitioner-taxpayer had paid the full penalty amount in dispute and specifically requested the officer to pass an order confirming the penalty in Form MOV-09 within the time frame so that he could challenge it in appeal before the appellate authority.
The Bench therefore directed the respondent to refund to the petitioner the entire amount of penalty paid to them with interest @9% per annum from the date of such payment till the date of refund, within two months. The Bench also imposed a cost of Rs 25,000 on the Superintendent of State Taxes to be paid to the petitioner for not passing an order justifying the penalty under Sub-Section (3) of Section 129 of the Tripura SGST Act, and rather compelling it to pay the penalty to secure the release of the goods.
Briefly, the petitioner was transporting a consignment of electrical goods when the same were detained, and the Superintendent of State Taxes issued Form GST MOV-01 and MOV-02 stating that the person-in-charge of the goods/conveyance tendered documents such as expired E-Waybills and there was a mismatch with the vehicle. This culminated in a detention order under Section 129 of the CGST Act, 2017. When a show cause notice was issued in Form MOV-07 proposing to impose a penalty of Rs. 4.96 lacs, the petitioner alleged that there was no bifurcation of penalty calculations, and prayed that the allegation of evasion of Tax should be dropped.
Since there was no final order in Form GST MOV-09 passed under Section 129(3) of the CGST Act, 2017 and the goods and vehicle continued to be in detention causing demurrage costs to him, the petitioner filed a writ, and this Court directed the respondent-Department to conclude the proceedings strictly in accordance with law, after granting to the petitioner an opportunity of hearing.
In the meantime, to secure the release of the goods and vehicle, the petitioner paid the penalty of Rs. 4.96 lacs instead of giving security for it as directed by the High Court. The petitioner, therefore, requested the respondent to pass the MOV-09 order within the time frame, so that he can challenge it in appeal, as the penalty was paid only to secure the release of goods and under economic duress, which has not been done yet.
Appearances:
Advocates Samar Das and Kaushik Paul, for the Petitioner/ Taxpayer
Senior Advocate P. Gautam, Deputy SGI B. Majumder, and Advocate S. Choudhury, for the Respondent/ Revenue
