GST Update No 269 on right of filing appeal after voluntary payment of GST/penalty

It is well known that filing of appeal by the taxpayer is statutory and substantive right wherein intention of legislation is to grant relief to the aggrieved. Yet, the revenue authorities time and again harass the taxpayers by not admitting and deciding the appeal filed by the taxpayers. One case on similar lines was recently reported before the hon’ble Kerala High Court in the case of M/S HINDUSTAN STEEL AND CEMENT [W.P. NO. 17454 OF 2022] wherein the departmental authorities opined that all the proceedings stand concluded and no further appeal can be filed by taxpayer in case any payment is made in accordance with the provisions of Section 129(1)(a) of CGST Act, 2017. The analysis of the decision is subject matter of discussion of our present update. The petitioner opted to make payment in terms of provisions of Section 129(1)(a) of CGST Act, 2017 to release the seized goods/conveyance. On payment of the same, the goods and the conveyance were released by issuing Form GST MOV-05 and an order was issued under Form MOV-09. However, a summary order was not issued in DRC07. Consequently, no appeal could be filed under Section 107 of CGST Act, 2017. It was submitted that as per Section 129 of the Act and Circular No. 41/15/2018-GST dated 13.04.2018, the order in Form MOV-09 should be accompanied by Summary order under DRC-07. Without this, no appeal can be filed since system accepts an appeal only if summary order in DRC-07 is issued. The Counsel of revenue argued that in case assessee opts to pay tax and penalty under Section 129(1)(a) of the CGST Act, 2017, the proceedings are deemed to be concluded. It was further contended that the payment is made voluntarily in DRC-03 by the taxpayer and thus, cannot be refunded back. Further, on payment the entire proceedings should be treated as concluded. Reference was drawn to CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??5 Rule 142 of CGST Rules, 2017 wherein the concerned person seeks to continue the proceedings by opting a bank guarantee under Section 129 of CGST Act, 2017 meaning thereby that the proceedings cannot be deemed t be concluded. It was argued that no proceedings under DRC-07 can be initiated if in case payment is made voluntarily. The provisions of Section 107 of the CGST Act, 2017 do not make a distinction between the persons who opt to provide security and who opts to make payment under Section 129 of the Act. The Court held that whether the aggrieved chooses to make payment under Section 129 of the Act or provide security in terms of Section 129 of the Act, the officer detaining or seizing goods or conveyance has to issue a notice specifying tax and penalty. Therefore, the responsibility of concerned officer to issue and upload the summary order in DRC-07 continues. It was stated that the proceedings can be challenged by the concerned taxpayer if demand is illegally raised on him. Failing this will result into violation of Article 265 of the Constitution of India. Further, appeal can be preferred within a period of 3 months from the date on which such order or decision is communicated to the aggrieved person. It was therefore held that the payment of tax and penalty under Section 129 of the Act does not deprives the right of assessee to file an appeal. The fact that the system does not generate a demand or contemplates filing of appeal without demand does not means that the intention of the legislature was different. It was directed to the SGST department to issue an appropriate Circular in this respect to avoid any future litigations on the subject matter. The above decision is a welcoming initiative wherein the already settled subject matter is upheld that the right of filing appeal is statutory right of the assessee which cannot be deprived on frivolous grounds. The revenue authorities cannot refrain from issuing an order even if the tax amount along with interest and penalty stands deposited by the taxpayer voluntarily as without issuance of order, the right of appeal of the taxpayer is being compromised which is not the intention of the legislature. It is hoped that the revenue authorities proactively follow the settled principles of law so as to avoid any unwanted litigations in the future.

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GST Update No 269 on right of filing appeal after voluntary payment of GST/penalty

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