Fashion Marble And Granite Company Pvt Ltd VS Assistant State Tax Officer

The case revolves around a petitioner, originally operating under the Kerala Value Added Tax Act as a dealer in Marble and Granite, who later transitioned to the General Sales Tax Act (GST Act). An incident occurred when the petitioner supplied a consignment of goods to another dealer, during which the first respondent intervened, issuing detention proceedings and subsequently a show cause notice under Section 129(3) of the GST Act, marked as Ext.P3 and Ext.P4 respectively. Through Ext.P4, the first respondent demanded a sum totaling Rs. 22,880 in tax and penalties.

To comply, the petitioner paid the penalty, as evidenced by Ext.P5, a receipt recorded in the GST portal under Section 49 of the Act. However, despite this payment, when seeking the release of the detained goods, the first respondent maintained that the petitioner should have also paid the amount specified in Ext.P4 either in cash or another method.

such as through a demand draft to the first respondent. Dissatisfied with this demand, the petitioner filed a writ petition. Counsel for the petitioner, Sri. Deepu Thankan, argued that the petitioner opted to settle the tax and penalty as per the demand outlined in Ext.P4, utilizing Section 49 to make the payment through the GST portal maintained by the Central Government. He pointed out that Section 129 of the Act doesn’t specify the payment method, suggesting that the residual provision of Section 49 should apply, which the petitioner followed. Additionally, he referenced Circular No. 41/15/2018-GST dated April 13, 2018, issued by the Government of India to support his argument.

The petitioner contends that they complied with the law by paying through the GST portal and that the demand for an additional payment in cash or through demand draft lacks legal basis. Thus, the writ petition challenges the requirement for further payment beyond what was made through the prescribed method.

The petitioner asserts that the first respondent’s stance is untenable and requests judicial intervention to secure the release of the detained goods.

Conversely, the learned Government Pleader argues that Section 17(5) of the Act explicitly states that any payment made under Section 129 does not qualify for input tax credit, indicating that payment should have been made under Section 130 instead. Consequently, he contends that as the first respondent insists on the release of the goods, the petitioner should make payment either in cash or via demand draft.

After hearing arguments from both sides, it’s established that the facts are undisputed. The petitioner received Ext.P4, the show cause notice, and subsequently made payment through the GST portal, relying on Section 49 and Circular No. 41/15/2018-GST to support their position. They assert that this fulfills their legal obligations and challenges the first respondent’s demand for additional payment.

In light of these arguments, the petitioner seeks relief through the writ petition, maintaining that they have complied with the law by utilizing the prescribed payment method.

under Section 129(3) of the Act. Therefore, the petitioner decided to pay the demanded tax and penalty. Accordingly, they paid the amount through the GST portal. Section 49 of the Act, which governs the payment of tax, interest, penalty, and other amounts, specifies that deposits made via internet banking, credit or debit cards, National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), or any other prescribed mode shall be credited to the electronic cash ledger of the person making the payment. This ledger can then be used for making payments towards various obligations under the Act or its rules.

In essence, the petitioner argues that their payment through the GST portal aligns with the provisions of Section 49, and therefore fulfills their legal obligation. They maintain that the first respondent’s insistence on additional payment is unfounded, and they seek judicial intervention to secure the release of the detained goods based on their compliance with the law as per the relevant sections and circulars.

Both Section 49, read in conjunction with Section 129, and the referenced circular shed light on the process. The circular outlines procedures concerning the interception of conveyances, inspection of goods in movement, their detention, release, and confiscation. Notably, Clause 2(h) states that when the owner of the goods or an authorized person comes forward to make payment of tax and penalty under Section 129(1)(a) of the CGST Act, or if the owner fails to do so under Section 129(1)(b), upon payment in accordance with the Act and rules, the proper officer must release the goods and conveyance. This release is formalized through an order in FORM GST MOV-05, and the corresponding FORM GST MOV-09 order is uploaded to the common portal. Importantly, the circular emphasizes that the payment made shall be credited to the electronic liability register by debiting the electronic cash ledger or electronic credit ledger of the concerned person as per the provisions of Section 49 of the CGST Act.

In light of these provisions, the petitioner contends that their payment via the GST portal fulfills their obligation. They argue that the first respondent’s demand for additional payment lacks legal basis, and they seek judicial intervention to secure the release of the detained goods based on their compliance with the law as outlined in Section 49 and the associated circular.

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