Page No.# 1/ vs The State Of Assam And 2 Ors on 20 September, 2024

Summary of Judgment: TNS Express Pvt Ltd vs The State of Assam

Case No.: WP(C)/3392/2024 & WP(C)/3417/2024
Court: The Gauhati High Court
Date of Judgment: 20 September, 2024
Bench: Hon’ble Mr. Justice Devashis Baruah

1. Outcome

The writ petitions were disposed of in favour of the Petitioners. The Court directed the Respondent authorities to permit the Petitioners to file their statutory appeals against the orders passed under Section 129(3) of the Assam GST Act, 2017, without raising the issue of limitation, through the following specific directions:
* Petitioners are granted 10 days to file the appeals on the GST portal.
* Respondent authorities must ensure the portal's infrastructure is available to accept the appeals.
* If the portal remains non-functional, Petitioners are granted a further 7 days to file the appeals manually, which the Respondents must accept.

2. Core Issue

Whether an assessee's statutory right to file an appeal under Section 107 of the GST Act is extinguished under Section 129(5) merely because the entire amount of tax and penalty demanded in an order under Section 129(3) has been paid, especially when the payment was made under protest to secure the release of detained goods and the appeal could not be filed due to a technical glitch on the GST portal.

3. Key Facts

The case involves two similar writ petitions filed by TNS Express Pvt Ltd.

• Background: In two separate incidents, transport vehicles of the Petitioner carrying Pan Masala were intercepted and detained by the GST authorities for alleged discrepancies.
• Detention & Demand: Proceedings were initiated under Section 129(3) of the Assam GST Act, 2017 (State Act), and orders were passed demanding tax and penalty amounting to ₹16,35,840/- in the first case and ₹16,08,192/- in the second.
• Payment Under Protest: To secure the release of the detained goods (which were noted as perishable in one instance) and avoid further detention, the Petitioner paid the entire demanded amounts under protest. The goods were subsequently released.
• Portal Glitch: When the Petitioner attempted to file statutory appeals against the orders within the limitation period, the GST portal displayed an alert notification stating that an appeal could only be filed after the complete payment of taxes, despite the full payment having been made and acknowledged.
• Representations: The Petitioner submitted multiple communications to the authorities regarding this technical glitch, suspecting that the officer had not set off the deposited amount in the system, but received no resolution.
• Writ Petitions: Faced with the denial of their right to appeal due to the portal's malfunction, the Petitioners approached the High Court.

4. Arguments

• Petitioners' Arguments:

  • They are being unlawfully deprived of their valuable statutory right to appeal due to a technical glitch on the GST portal, which is beyond their control.
  • The full payment was made under protest and out of commercial necessity to secure the release of their goods, not as an admission of liability.
  • The failure of the Respondent authorities to rectify the portal error and reflect the payment made has prevented them from exercising their legal remedy.

• Respondents' (Tax Department's) Arguments:

  • Relying on Section 129(5) of the State Act, the department argued that since the Petitioner paid the demanded tax and penalty in full, the proceedings are "deemed to have been concluded."
  • Consequently, there is no surviving cause of action, and nothing remains to be adjudicated upon in an appeal. This stand was formally taken by the authorities after the writ petitions were filed.

5. Court’s Reasoning

The Court rejected the Respondents' arguments and reasoned as follows:

• Inherent Right to Appeal: Section 107 of the CGST Act grants a clear statutory right to any person aggrieved by an order to file an appeal. The law does not bar an appeal if the entire demand is paid.
• Interpretation of Section 129(5): The Court narrowly interpreted Section 129(5). It opined that the provision for "deemed conclusion" of proceedings would apply when an assessee pays the demanded amount in response to a show cause notice issued under Section 129(3). The Court pointed out that Section 129(5) explicitly refers to the "notice" and not the "order". Therefore, once an adjudication order is passed, the right to appeal against it remains intact.
• Payment Doesn't Invalidate Appeal Right: The Court held that the right to file an appeal cannot be taken away simply because the Petitioner paid the full demanded amount. The pre-deposit condition for an appeal under Section 107(6) (proviso) requires only 25% of the penalty amount. The Petitioner, by paying 100%, has more than satisfied this condition.
• Fault of the Department: The inability of the Petitioners to file their appeals was solely due to the fault of the Respondent authorities, i.e., the non-functioning of the GST portal. An assessee cannot be penalized for a failure of the department's administrative or technical infrastructure.

6. Statutory References

• Assam Goods and Services Tax Act, 2017 (State Act):
  • Section 129(1): Detention, seizure and release of goods and conveyances in transit.
  • Section 129(3): Issuance of notice and passing of an order for tax and penalty.
  • Section 129(5): Stipulates that on payment of the amount referred to in sub-section (1), all proceedings in respect of the notice under sub-section (3) shall be deemed to be concluded.
• Central Goods and Services Tax Act, 2017 (CGST Act):
  • Section 107: Provision for Appeals to Appellate Authority.
  • Section 107(6): Pre-deposit requirements for filing an appeal, with a specific proviso for orders under Section 129(3) requiring a payment equal to 25% of the penalty.

7. Precedents Cited

None were cited in the provided text of the judgment. The decision was based on the direct interpretation of the statutory provisions.