Mohammed Shereef VS State of Kerala   

This Review Petition has been filed by the State seeking to review the judgment dated 02.11.2020 in W.P(C).No.23397 of 2020. The original judgment addressed the legality of detaining a consignment of goods at Muthanga, Wynad, during interstate transportation. The Court had noted that the consignment was not covered by a valid delivery chalan, a required document for transporting exempted goods, and therefore, found the detention justified. However, the Court held that the petitioner would only need to pay the lesser of either 5% of the value of the goods or Rs.25,000/-, as stipulated under Section 129(1)(b) of the CGST Act, to secure the release of the goods and the vehicle.

In the Review Petition, the State argues that once the detention was deemed justified, the petitioner should be required to pay not only the Rs.25,000/- under Section 129(1)(b) of the CGST Act but also an equivalent amount under Section 129(1)(b) of the SGST Act. The State contends that the tax payment under the IGST Act includes components of the taxes payable under both the CGST and SGST Acts. The Review Petition has been filed to correct this alleged error in the original judgment.

This Review Petition has been filed by the State seeking to review the judgment dated 02.11.2020 in W.P(C).No.23397 of 2020. The judgment addressed the legality of the detention of a consignment of goods at Muthanga, Wynad, during interstate transportation. The Court had noted that the consignment lacked a valid delivery challan, a required document for the transportation of exempted goods. Consequently, the Court found the detention justified. However, it was held that the petitioner would need to pay the lesser of either 5% of the value of the goods or Rs.25,000/- in accordance with Section 129 (1)(b) of the CGST Act to secure the release of the goods and the vehicle.

In the Review Petition, the State argued that since the detention was justified, the petitioner should have been required to pay not only Rs.25,000/- under Section 129(1)(b) of the CGST Act but also an equivalent amount under Section 129(1)(b) of the SGST Act. The State contended that the tax payment under the IGST Act includes components from both the CGST and SGST Acts, necessitating payment under both sections. The State sought to correct what it perceived as an error in the judgment.

During the review proceedings, Dr. Smt. Thushara James, the learned Government Pleader, represented the review petitioner, while Dr. Sri. K.P. Pradeep, the learned counsel, represented the respondents.

After considering the facts and circumstances of the case and the arguments presented, the Court concluded that the impugned judgment did not warrant a review. The Court emphasized that when goods are detained during interstate transportation, the authority to detain arises from Section 20 of the IGST Act. This section makes the provisions of the CGST Act applicable mutatis mutandis to integrated tax matters, including offences, penalties, inspection, search, seizure, and arrest, as if they were enacted under the IGST Act. The 4th proviso to Section 20 of the IGST Act specifies that if a penalty is applicable under both the CGST Act and the SGST Act, the penalty under the IGST Act shall be the sum total of the penalties under both acts.

In summary, the Court determined that the original judgment, which required payment of the lesser of 5% of the goods’ value or Rs.25,000/- under the CGST Act for the release of the detained goods, did not require revision. The petitioner’s obligation to pay an equivalent amount under the SGST Act, as argued by the State, was not supported by the provisions of the IGST Act.

The State has filed a Review Petition seeking to review the judgment dated November 2, 2020, in W.P(C).No.23397 of 2020. The original judgment pertained to the legality of detaining a consignment of goods at Muthanga, Wayanad, during interstate transportation. The Court had determined that the detention was justified because the consignment lacked a valid delivery challan, which is one of the prescribed documents for transporting exempted goods. Consequently, the Court ruled that the petitioner needed to pay the lesser of 5% of the goods’ value or Rs.25,000, as stipulated by Section 129(1)(b) of the CGST Act, to secure the release of the goods and the vehicle.

In the Review Petition, the State argues that once the detention was deemed justified, the petitioner should have been required to pay not only the Rs.25,000 under Section 129(1)(b) of the CGST Act but also an equivalent amount under Section 129(1)(b) of the SGST Act. This is because the tax payment under the IGST Act includes components of the tax payable under both the CGST and SGST Acts. The State seeks to correct this alleged error in the original judgment.

Dr. Smt. Thushara James, the learned Government Pleader for the review petitioner, and Dr. Sri. K.P. Pradeep, the learned counsel for the respondents Writ Petitioner, presented their arguments. After considering the facts, circumstances, and submissions, the Court concluded that the impugned judgment does not require a review. It is important to note that when goods are detained during interstate transportation, the power to detain arises from Section 20 of the IGST Act. This section applies the provisions of the CGST Act concerning offences, penalties, inspection, search, seizure, and arrest to the integrated tax, as if they were enacted under the IGST Act.

The 4th proviso to Section 20 of the IGST Act states that where penalties are leviable under both the CGST Act and the SGST Act, the penalty under the IGST Act shall be the sum total of these penalties. The key issue in this case is whether this 4th proviso applies to the detention in question, especially in the context of interstate transportation.

This Review Petition has been filed by the State seeking to review the judgment dated November 2, 2020, in W.P(C).No.23397 of 2020. The original judgment addressed the legality of the detention of a consignment of goods at Muthanga, Wayanad, during interstate transportation. The court found the detention justified due to the absence of a valid delivery chalan, a required document for transporting exempted goods. However, the court ruled that the petitioner needed to pay the lesser of 5% of the goods’ value or Rs. 25,000/- under Section 129(1)(b) of the CGST Act to release the goods and the vehicle.

In the Review Petition, the State argued that the petitioner should also pay a similar amount under Section 129(1)(b) of the SGST Act. This is because the tax payment under the IGST Act includes components of both the CGST and SGST Acts. The State sought to correct what it perceived as an error in the original judgment.

The court heard arguments from Dr. Smt. Thushara James, the Government Pleader for the review petitioner, and Dr. Sri. K.P. Pradeep, counsel for the respondents.

Upon reviewing the facts and submissions, the court concluded that the impugned judgment did not warrant a review. The power to detain goods during interstate transportation comes from Section 20 of the IGST Act, which applies provisions of the CGST Act to integrated tax. The fourth proviso to Section 20 of the IGST Act states that penalties under the CGST and SGST Acts sum up under the IGST Act.

The court examined whether the fourth proviso applied to the detention in question, particularly since the goods were exempted. It referred to Section 129(1)(b) of the CGST Act, which stipulates that for exempted goods, the penalty is the lesser of 5% of the goods’ value or Rs. 25,000/-. The court upheld that this provision was correctly applied in the original judgment, and no additional penalty under the SGST Act was warranted.

In this case, the State filed a Review Petition challenging a judgment dated November 2, 2020, which addressed the legality of detaining a consignment of goods during interstate transportation at Muthanga, Wynad. The Court, in its original judgment, found the detention justified due to the absence of a valid delivery chalan for the exempted goods. However, the Court ruled that the petitioner needed to pay the lesser of 5% of the goods’ value or Rs. 25,000 under Section 129(1)(b) of the CGST Act for the release of the goods and the vehicle.

In the Review Petition, the State argued that the petitioner should pay an additional Rs. 25,000 under Section 129(1)(b) of the SGST Act, claiming that the IGST Act includes components of both CGST and SGST taxes. The State sought to correct this perceived error in the original judgment.

The Court considered the submissions from both sides and examined the relevant legal provisions. It noted that the power to detain goods in interstate transportation stems from Section 20 of the IGST Act, which applies the provisions of the CGST Act mutatis mutandis. The 4th proviso to Section 20 of the IGST Act states that the penalty under the IGST Act should be the sum total of penalties under both the CGST and SGST Acts.

However, the Court found that in cases involving the transportation of exempted goods, Section 129(1)(b) of the CGST Act specifies the penalty as 5% of the value of the goods or Rs. 25,000, whichever is less, if the owner of the goods does not come forward to pay. In this case, it was undisputed that the goods were exempted, and the owner did not come forward to pay the tax and penalty.

The Court concluded that the applicable statute in interstate transactions is the IGST Act, and the detention power is exercised under Section 20 of the IGST Act read with Section 129 of the CGST Act. It held that the original judgment did not require review as the penalty was correctly assessed as per the provisions applicable to exempted goods under the CGST Act. The petitioner was liable only for the amount mandated under Section 129(1)(b) of the CGST Act, and there was no additional liability under the SGST Act.

The Review Petition was dismissed, and the original judgment was upheld, confirming that the petitioner needed to pay only the lesser of 5% of the goods’ value or Rs. 25,000 for the release of the detained goods and vehicle.

This Review Petition, filed by the State, seeks to review a judgment from November 2, 2020, in W.P(C).No.23397 of 2020. The original judgment addressed the legality of detaining a consignment of goods at Muthanga, Wynad, during interstate transportation. The Court found that the detention was justified due to the consignment not being covered by a valid delivery chalan, a required document for transporting exempted goods. The Court held that the petitioner only needed to pay the lesser of 5% of the value of the goods or Rs.25,000 in accordance with Section 129(1)(b) of the CGST Act for the release of the goods and the vehicle.

In the Review Petition, the State argued that the petitioner should have been required to pay Rs.25,000 under both the CGST Act and the SGST Act, as the IGST Act’s tax payment includes components from both the CGST and SGST Acts. The State sought to correct what it considered an error in the original judgment.

Dr. Smt. Thushara James, representing the State, and Dr. K.P. Pradeep, representing the respondents, presented their arguments. Upon reviewing the facts and submissions, the Court concluded that the original judgment did not require a review. The Court noted that the power to detain goods during interstate transportation is derived from Section 20 of the IGST Act, which applies the provisions of the CGST Act to integrated tax matters. The fourth proviso to Section 20 of the IGST Act states that the penalty under the IGST Act should be the sum of penalties under the CGST and SGST Acts.

The Court then examined whether the fourth proviso applied to the detention in this case, especially since the transportation involved exempted goods. Section 129(1)(b) of the CGST Act specifies that exempted goods transported in contravention of the Act can be released upon payment of 5% of the value of the goods or Rs.25,000, whichever is less, if the owner does not pay the tax and penalty. It was undisputed that the owner did not come forward to pay, and no tax and penalty were due since the goods were exempt under the IGST Act. Therefore, the only amount payable was the one specified in Section 129(1)(b) of the CGST Act.

The Court emphasized that in interstate transactions, the IGST Act applies, and the detention power comes from Section 20 of the IGST Act, which refers to Section 129 of the CGST Act, not the SGST Act. The fourth proviso to Section 20 would apply only when there is a liability to pay tax under the IGST Act, including components from the CGST and SGST Acts, or when a penalty is based on tax liability under both acts. For interstate transportation of exempted goods, Section 129 of the CGST Act, made applicable to the IGST Act, mandates payment of 5% of the value of goods or Rs.25,000, whichever is less.

The Court clarified that the terms “penalty” and “amount” used in the legislation have distinct meanings. The term “amount” refers to a civil liability for the person responsible for the interstate transportation of goods in violation

The discussion revolves around the liability of a person who, despite not owning the goods, has transported exempted goods in violation of the Integrated Goods and Services Tax (IGST) Act. According to the Central Goods and Services Tax (CGST) Act, such a person is liable for a penalty that amounts to either 5% of the value of the goods or 25,000 rupees, whichever is lesser. Importantly, this penalty is specified under the CGST Act alone.

The argument is made that this person cannot be subjected to a similar penalty under the State Goods and Services Tax (SGST) Act because the SGST Act’s provisions for tax and penalties do not apply to inter-state transactions involving exempted goods, which are governed by the IGST Act.

Therefore, there is no legal basis for imposing an additional penalty under the SGST Act for such inter-state transactions. Consequently, the judgment under review is upheld, and the review petition challenging it is dismissed, as there are no grounds to alter the original decision.

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