Facts of the Case

M/s. Dayalal Meghji and Company, represented by its Incharge Manager Ajit Balappa Kurbetti, filed this writ petition under Articles 226 and 227 challenging an order dated 03.12.2018 passed by the Commercial Tax Officer (Enforcement)-3, Belagavi, in FORM GST MOV-09, demanding tax and penalty. The petitioner's grievance was that a substantial sum of tax and penalty had been levied for what was, in substance, an inconsequential error in the mentioning of the vehicle number on the relevant document. The petitioner pointed out that a Circular dated 14.09.2018 issued by the Government of India specifically covered such minor lapses, prescribing a payment of Rs.1,000 as adequate in such cases, and sought quashing of the demand order with a direction to reconsider the matter in light of the Circular.

Issues Involved

  1. Whether a demand of tax and penalty for a minor, inconsequential error in the vehicle number is sustainable in view of the Circular dated 14.09.2018 covering minor lapses.
  2. Whether the writ petition should be entertained despite the availability of an alternative statutory appellate remedy.

Petitioner's Arguments

  • The error in mentioning the vehicle number was inconsequential, yet the authorities levied a substantial sum as tax and penalty.
  • The Government of India's Circular dated 14.09.2018 specifically covers such minor lapses and prescribes that a payment of Rs.1,000 would be adequate.
  • The impugned order ought to be quashed with a direction to the respondent to reconsider the matter in light of the Circular.

Respondent's Arguments

  • The respondent submitted that an alternative remedy of appeal was available against the impugned order, and the writ petition ought not to be entertained on that ground.

Court Order/Findings

  • Notwithstanding the availability of the appellate remedy, the Court held this to be an appropriate case to bypass the alternative remedy, since the petitioner's contention that the order was contrary to a squarely applicable Circular went to the root of the matter.
  • The impugned demand order was set aside, and the matter remanded to the respondent with a direction to reconsider the demand of tax and penalty in light of the Circular dated 14.09.2018.
  • Liberty was given to the respondent to pass a fresh order of demand if, on reconsideration, it was of the view that the Circular did not cover the case.
  • The writ petition was allowed; the bank guarantee furnished by the petitioner for release of the conveyance was directed to continue until the respondent takes a fresh decision.

Important Clarification

  • Availability of an alternative statutory appellate remedy does not bar writ jurisdiction where the impugned order is demonstrably contrary to a binding departmental Circular covering the very situation.
  • Minor, inconsequential errors such as an incorrect vehicle number, covered by the Circular dated 14.09.2018, are not to be treated as automatically attracting a full tax-and-penalty demand.

Sections Involved

  • Section 129, Central Goods and Services Tax Act, 2017 — detention, seizure and demand of tax/penalty for goods in transit (Form GST MOV-09).
  • Article 226 and Article 227, Constitution of India — writ jurisdiction invoked by the petitioner.
  • CBIC Circular dated 14.09.2018 — clarifying treatment of minor/inconsequential discrepancies in transit documentation.

Decision – In Favour of

The writ petition was allowed, the demand order was set aside, and the matter was remanded for fresh consideration in light of the Circular dated 14.09.2018 — a decision in favour of the Assessee, though the final outcome depends on the respondent's fresh order on remand.

Related Case Laws

No related case laws are available on this site at present.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: Writ Petition No.113021/2019 (T-RES)
  • Coram: Hon'ble Mr. Justice N.S. Sanjay Gowda
  • Date of Order: 20 April 2022

Link to Download the Order

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