Zero Discharge Technologies VS The State Tax Officer

The case presented in this Writ Petition (Civil) revolves around a petitioner who is an assessee to GST in Tamil Nadu. The petitioner conducted an interstate supply to a customer in Kerala, issuing Ext.P-1 invoice and collecting tax payable under the IGST Act. The goods were transported to Kerala with supporting documentation, including an invoice and an e-way bill. However, during transportation, the goods were detained under Sec. 129 of the Act due to the e-way bill’s Part B not being filled up. Consequently, a sum of Rs. 8,10,000/- was collected from the petitioner as tax, along with an equal amount as a penalty. Subsequently, a final order at Ext.P-3 was issued.

Despite the petitioner’s request, the 1st respondent, as per Ext.P-5 order dated 19.11.2019, refused to credit the Rs. 8,10,000/- towards the petitioner’s GST registration number. Dissatisfied with this decision, the petitioner filed the Writ Petition (Civil), seeking the following reliefs:

1. To quash Ext.P-5 issued by the 1st respondent through the issuance of a writ of certiorari or any other suitable writ, order, or direction.

2. To direct the 1st respondent to credit the amount of Rs. 8,10,000/- collected from the petitioner under section 129 of the Act towards its GST registration No. 33AAACZ9069RIZE through the issuance of a writ.

In essence, the petitioner is challenging the decision of the 1st respondent regarding the refusal to credit the amount collected towards their GST registration number and seeks judicial intervention to rectify the situation.

This writ petition revolves around a dispute concerning the detention of goods by the tax authorities under Section 129 of the Integrated Goods and Services Tax (IGST) Act. The petitioner, an assessee to the Goods and Services Tax (GST) in Tamil Nadu, made an interstate supply to a customer in Kerala, collecting the applicable tax under the IGST Act and arranging transportation supported by an invoice and an e-way bill.

However, during transport, the goods were detained by the authorities due to an alleged non-compliance with e-way bill requirements, resulting in the imposition of a significant amount in tax and penalty. Despite the petitioner’s request, the authorities refused to credit the amount collected towards the petitioner’s GST registration number.

The petitioner filed a writ petition seeking several reliefs, including the quashing of the order refusing to credit the amount and directing the authorities to credit the sum towards the petitioner’s GST registration number.

In court, the petitioner argued that Section 129 of the CGST Act allows authorities to detain goods for violations and collect taxes and penalties. They contended that since the authorities collected taxes under the IGST Act from the petitioner, they were duty-bound to credit this amount towards the petitioner’s IGST liability. The petitioner further argued that the authorities’ refusal to credit the amount was illegal and arbitrary.

Additionally, the petitioner addressed the authorities’ reliance on Section 17(5)(i) to reject their prayer. Section 17(5)(i) disallows input tax credit for taxes paid under Sections 74, 129, and 130. However, the petitioner argued that Section 17 pertains to input tax credit under Section 16 of the Act, which is distinct from the tax collected under Section 129. Therefore, they asserted that the prohibition on input tax credit under Section 17(5)(i) should not apply to the tax collected under Section 129.

The petitioner’s contentions highlight the legal intricacies surrounding the collection and crediting of taxes under the GST regime, emphasizing the need for clarity and consistency in its application.

The case outlined in this Writ Petition (Civil) revolves around the petitioner, who is a GST assessee in Tamil Nadu. The petitioner engaged in an interstate supply to a customer in Kerala, issuing invoice Ext.P-1 and collecting tax under the IGST Act. The goods were transported to Kerala with an invoice and an e-way bill. However, the transport was detained under Section 129 of the Act due to incomplete details in the e-way bill, resulting in the collection of Rs. 8,10,000/- towards tax and an equal amount as penalty. Subsequently, a final order (Ext.P-3) was issued. Despite the petitioner’s request, the 1st respondent, through order Ext.P-5, refused to credit the collected amount to the petitioner’s GST registration number.

In response, the petitioner filed this Writ Petition (Civil), seeking the following reliefs:

(i) Quashing of Ext.P-5 issued by the 1st respondent.

(ii) Directing the 1st respondent to credit Rs. 8,10,000/- to the petitioner’s GST registration number by issuing a writ of mandamus or similar direction.

(iii) Granting any other incidental reliefs, including costs.

During the hearing, arguments were presented by Sri.Harisankar V.Menon, representing the petitioner, and Dr.Thushara James, representing the official respondents. The petitioner’s contentions, as outlined in paragraphs 15 and 16 of the Writ Petition, focused on two main points:

1. The duty of the 1st respondent to credit the amount collected towards the petitioner’s IGST liability, as per Section 129 of the CGST Act.

2. The interpretation of Section 17(5)(i) regarding input tax credit, arguing that the petitioner is not claiming input tax credit but seeking credit towards output tax liability.

The petitioner argued that while Section 17(5)(i) prohibits input tax credit for tax paid under Section 129, it doesn’t bar crediting the amount towards output tax liability. Thus, the refusal to credit the amount by the 1st respondent was deemed illegal and arbitrary.

After considering the arguments and evaluating the case’s facts and circumstances, the Court concluded that the matter warrants serious reconsideration by the 1st respondent. It highlighted that crucial aspects raised in the petition had not been adequately addressed by the respondent. As a result, the Court called for a reevaluation of the matter by the 1st respondent.

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