Order Date – 05 May 2023

Parties: Haresh Kumar, Proprietor, Mahalaxmi Metal Company Vs The Assistant Commissioner (ST), Adjudication and The Deputy Commissioner of ST (Appeals)

Facts – 

• The Petitioner, Haresh Kumar, Proprietor, Mahalaxmi Metal Company, had transported consignment of goods vide tax invoice dated 18.04.2023, which was intercepted and detained by the first respondent.
• Though the consignment was accompanied the E-Way Bill as is required. The goods have detained on the ground that the supplier, had wrongly passed on the Input Tax Credit and thereby entailing the petitioner to avail and utilize the same for discharging tax liability on the supplies made by the supplier.
• The petitioner has filed an appeal before the Appellate Authority and has paid 25% of the disputed penalty, whereas, the respondents have imposed penalty equivalent to 100% value of the goods that was detained.

Issue – 

• Whether the petitioner is required to pay penalty equivalent to 100% value of goods that detained?

Order – 

• The Single Bench of Hon’ble High Court observed that the very purpose of fixing the mandatory pre-deposit is to do away with the procedure of granting stay after hearing, which was delaying the disposal of the appeal earlier. Mandatory pre-deposit was made so that the interest of the revenue can be safeguarded as the appeal would take longer time for final disposal.
• Although the Officer who detained the goods has become functus officio, once there is a mandatory pre-deposit, the order has no force and all further recovery proceedings will be subject to the final outcome of the appeal.
• Therefore, to balance the interest of the revenue and the petitioner, there can be a direction to the petitioner to deposit the maximum penalty of 200% of the tax after adjusting the amount already deposited to safeguard the interest of the revenue.
• In the alternative, the petitioner can be directed to furnish Bank Guarantee in terms of Section 129(c) of the respective GST enactments and the Rules made thereunder. On furnishing Bank Guarantee for the balance amount of penalty or payment of the same in cash, the goods shall be released forthwith.
• The writ petition disposed of.