The Tax Publishers

GST--Penalty

Taxpayer Paid Amount Under Section 129(1)--Whether Officer is Relieved of Passing Order Under Section 129(3)

P. Narayanan

The learned author seeks to make an analytical study of the issue as to whether merely because a taxpayer makes payment of penalty under section 129(1) for getting the goods released, relieves the GST authority from passing order under section 129(3) and thereby depriving the taxpayers to file appeal against such proceeding. The discussion is based on the relevant statutory provisions and two contradictory decisions of the Allahabad High Court as well as Kerala High Court.

1. Introduction

Section 129 of the CGST Act deals with the provisions relating to detention, seizure and release of goods and conveyance in transit. Sub-section (1) of section 129 provides that where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of the Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, --

(a) on payment of penalty equal to two hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;

(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;]

(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed.

Sub-rule (3) of rule 129 provides that where the person concerned makes payment of the amount referred to in sub-section (1) of section 129 within seven days of the notice issued under sub-section (3) of section 129 but before the issuance of order under the said sub-section (3), he shall intimate the proper officer of such payment in Form GST DRC-03 and the proper officer shall issue an order in Form GST DRC-05 concluding the proceedings in respect of the said notice.

As per sub-section (4) of section 129 provides that no penalty shall by determined under sub-section (3) without giving the person concerned an opportunity of being heard.

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