The Kerala High Court, last week held that the department cannot insist the assessee to make payment in cash or demand draft to release goods under the Kerala Goods and Services Tax (KGST) Act, 2017 when the penalty amount has already been remitted by the assessee using the GST portal.
The petitioner, M/s Fashion Marble And Granite Company Pvt.Ltd is a dealer registered under the Kerala Goods and Services Tax (KGST) Act, 2017. The goods belong to the petitioner was detained by the department and demanded tax and penalty of Rs.22,880/-.
The petitioner paid the penalty in the portal of GST under Section 49 of the Act. However, the department insisted that the petitioner ought to have paid the amount either in cash or through demand draft.
Before the High Court, the petitioner argued that the petitioner faced proceedings under Section 129 and decided to pay the tax and penalty as demanded. Therefore, it invoked Section 49 and paid the tax and penalty in the portal of GST maintained by the Central Government.
It was contended that Section 129 itself does not indicate the manner of payment. Under these circumstances, the petitioner was rightly invoked the residuary provision of Section 49.
The department, on the other hand, contended that Section 17(5) of the Act is categoric that any payment paid under Section 129 will not entail input tax credit. According to him, it ought to have been under Section 130. Therefore, it was held that the stand taken by the department was correct.
Justice Dama Seshadri Naidu observed that “the 1 st respondent’s insistence that the petitioner should pay the amount either in cash or through demand draft cannot be sustained. As is further evident from Ext.P7, the petitioner is a dealer registered under the CGST. Cumulatively viewed, the petitioner’s paying the penalty under Ext.P5 receipt to the portal of GST is eminently sustainable. Therefore, I direct that the 1st respondent authority, release the goods, after receiving Ext.P5 receipt.”
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