Enforcement Wing Officials inspected the place of business on 24-4-2019 followed by inspection on various dates and the last of the dates being
28-5-2019. For 'Financial Year 2019-20', there were three heads of defects noticed and observation of the Court for three defects was as follows-
(a) Invoking Provision of Section 74 for alleged sales suppression- Petitioner contended that for 19-20, he had time for reconciling till the due
date of annual return i.e. 31-3-2021, whereas inspection was in April of 2019. High Court by referring section 74 held that as petitioner had
time till 31-3-2021 to reconcile, it may not really qualify as suppression. However, petitioner would then fall into rigour of penalty of Section 73
as penalty for the purported suppression under Section 74 was only Rs. 3890/- and if Section 73(9) was to be applied, it would become Rs.
10,000/-. This left the writ petitioner in a situation which was described by the Court as “fire to frying pan or devil to deep sea” and writ petitioner
was worse off by filing writ petition. Therefore, writ Court deemed it appropriate to leave it at that and say that interference was refused but it
was made clear that it cannot be put against the writ petitioner that there is 'suppression of facts to evade tax' within the meaning of section
74(1) and it is only a case of tax not being paid within the meaning of section 73(1).
(b) For contravention of statutory provisions which were 3 in number being (i) non-maintenance of particulars of name/complete
address of suppliers qua goods and services chargeable to tax; (ii) non-maintenance of particulars of name/complete
address qua entities to whom goods and services were supplied and (iii) monthly production accounts showing quantitative details
of raw materials used in the manufacture and quantitative details of goods manufactured including the waste and by-products not
maintained qua sub-Rule(12) of Rule 56 of CGST and TNGST Rules- High Court observed that a careful perusal of section 125 made it
clear that it is more in the nature of a residuary provision. In the case on hand, as there were three specific non-compliances qua statutory
requirements, it was well open to invoke Section 125 with regard to each of the non-compliances and levy Rs. 25,000/- each, which would
have added upto Rs. 75,000/-. However, Original Authority levied penalty of only Rs. 25,000/- for all three non-compliances put together.
Therefore, maximum penalty to which a general penalty under section 125 can extend, has been exercised in the case on hand.
(c) GSTR -1 filed upto 2019 but GSTR 3 B not filed, tax collected but not paid to the Government-For levy of 100% Penalty for failure to pay
collected tax to the Government beyond a period of three months from the date on which such payment becomes due, High Court held that
by no means provision of Section 122 fits into Section 126 in the light of Explanation thereat. Explanation thereat makes it clear that the tax
liability or the amount of tax involved should be less than Rs. 5,000/- or it should be a omission or mistake in documentation which is easily
rectifiable in the same as an error apparent on the face of record. Sub-section (6) makes it clear that section 126 will not be attracted, when
penalty is expressed as a fixed percentage. In the case on hand, section 122(1)(iii) read with section 122(1) makes it clear that it is expressed
in both units namely a fixed sum as well as a fixed percentage. On this ground also section 126 does not come to the aid of the writ petitioner.