Page 162 - GSTL_18th June 2020_Vol 37_Part 3

376 GST LAW TIMES [ Vol. 37
While a show cause notice is required to be issued under Section
74(1) of the APGST Act for recovery of penalty equivalent to the tax
specified in the notice, Section 74(5) of the said Act enables the
dealer to pay 15% penalty on his own accord before receipt of a no-
tice under Section 74(1) of the Act. Section 74(5) of the APGST Act
enables the dealer to avoid payment of penalty beyond 15%, if pen-
alty at 15% is paid before receipt of a show cause notice. That does
not mean that, even without a show cause notice being issued, the
dealer is obligated to pay penalty at 15% under Section 74(5) of the
Act. Section 74(5) of the Act merely enables the petitioner to pay
penalty at 15% on his own accord, in which event the assessing au-
thority cannot thereafter issue a notice seeking recovery of the bal-
ance 85% penalty (i.e. penalty equivalent to the tax specified in the
notice). Whether penalty at 15% should be paid or not is for the as-
sessee to decide. While he would, undoubtedly, run the risk of be-
ing subjected to penalty at 100% of the tax specified, the power con-
ferred on the assessing authority to recover penalty, equivalent to
the tax specified in the notice, is only after a notice is issued calling
upon the petitioner to show cause why penalty should not be im-
posed on him.
The impugned order, to the limited extent the petitioner was called
upon to pay penalty at 15%, is set aside. As the validity of the order
is not subjected to challenge in this Writ Petition on any other
ground, it is wholly unnecessary for us to examine the said order on
its merits.
Suffice it, therefore, to set aside the impugned order to the limited
extent the petitioner was called upon to pay penalty at 15%. The
Writ Petition stands disposed of accordingly. Needless to state that
this order shall not disable the respondent from issuing a penalty
notice and recover the penalty payable in terms of Section 74(1) of
the APGST Act. There shall be no order as to costs. Miscellaneous
petitions, if any, pending shall stand closed.
The Hon’ble High Court of Andhra Pradesh has discretely thrown
light on the penalty orders discussed above, where in penalty levied
in the same orders of assessment, and struck down such orders
mandating that a separate notice for passing penalty orders shall
always be issued before levy. In the instant case, the A.A has not fol-
lowed such procedure and arbitrarily clubbed the tax & penalty or-
ders without putting a notice to appellant, thus making it liable for
setting aside.
Before embarking on adjudication of this issue, it is very much es-
sential to have a comprehensive understanding of Section 122(1 & 2)
of GST Act, 2017, which are abstracted below :
Section 122.
(1) Where a taxable person who -
(i) supplies any goods or services or both without issue of
any invoice or issues an incorrect or false invoice with
regard to any such supply;
(ii) issues any invoice or bill without supply of goods or ser-
vices or both in violation of the provisions of this Act or
the rules made thereunder;
(iii) collects any amount as tax but fails to pay the same to the
Government beyond a period of three months from the
date on which such payment becomes due;
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