Section 129(1)(a) VS Section107 Under GST ACT

Voluntary Payment of Tax/Penalty U/S. 129 Does Not Debar A Dealer From Filing Appeal U/S.107

Kerala High Court held:

A reading of sub-section (3) of Section 129 of the CGST/SGST Acts, the provisions of Rule 142 referred to above and the provisions of the circular, cumulatively, compel me to hold that whether or not a person opts to make payment under section 129(1)(a) or to provide security under Section 129(1)(c), the responsibility of the officer to pass an order under sub-section (3) of Section 129 and to upload a summary of the order/demand in Form MOV 7 continues. The provisions of sub-section (5) or Section 129 which were pointed out by the learned Senior Government Pleader only contemplate that the procedure for detention on seizure of goods or documents or conveyances come to an end and it is always open to the person who suffers proceedings under 129 of the CGST/SGST Acts to challenge those proceedings if he feels that the demand has been illegally raised on him. This can be the only reasonable interpretation that can be placed on the provisions referred to above. Any other interpretation would clearly violate Article 265 of the Constitution of Further, Section 107 of the CGST Act is widely worded and provides that any person aggrieved by any decision, or order passed under the CGST/SGST Acts or Union Territory Goods and Services Tax Act, by an adjudicating authority, may appeal to such appellate authority as may be prescribed, within three months from the date on which such decision or order is communicated to such a person.

It is obvious that the learned counsel for the petitioners in these cases is correct and contenting that whether or not a payment is made U/s. 129(1)(a) or security is provided U/s. 129 (1) (c), the person who is the subject matter of proceedings U/s.129 of the CGST Act has the right to challenge those proceedings, culminating in an order under sub-section (3) of Section 129, before the duly constituted Appellate Authority U/s. 107 of that The fact that the culmination of proceedings in respect of a person who seeks to make payment of Tax and Penalty U/s. 129(1)(a) does not result in the generation of a summary of an order under Form DRC-07 cannot result in the right of the person to file an appeal U/s.107 being deprived. The fact that the system does not generate a demand or that the system does not contemplate the filing of an appeal without a demand does not mean that the intention of the legislature was different.

In the light of the above finding, these writ petitions will stand allowed in terms of prayer (i) in both cases. The concerned among the respondents shall do the needful within one month from the date of receipt of a certified copy of this judgment. In order to prevent the recurrence of such issues, the Commissioner, Office of the State Goods & Services Tax Department, Thiruvananthapuram will issue an appropriate circular taking note of the aforesaid findings.

Title: Hindustan Steel and Cement vs Asstt. STO

Court: Kerala High Court

Citation: Writ Petition (C) No 17454/2022

Dated: 18-Jul-2022

In our View:

Whenever Assessee makes payment through Form DRC-03 Department usually says that this is Voluntary payment by the Person himself and therefore, he has no right to file appeal against such voluntary payment.

This is correct that payment is made through DRC-03 but it can never be considered as Voluntary factoring the Pressure is built up by Officers.