The Supreme Court upheld an interim stay on a penalty imposed for not mentioning the “biltee number” (consignment note number) on a tax invoice.

The Supreme Court upheld an interim stay on a penalty imposed for not mentioning the “biltee number” (consignment note number) on a tax invoice.

Issue

Is it legally valid for the GST department to impose a penalty on a taxpayer for not mentioning the “biltee number” on a tax invoice, especially when Rule 46 of the GST Rules, which details the mandatory contents of a tax invoice, does not appear to prescribe such a requirement?

Facts

• The GST department imposed a penalty on the assessee.
• The sole reason for this penalty was that the tax invoice accompanying the goods did not mention the “biltee number” (the transporter’s consignment note number).
• The assessee challenged this penalty by filing a writ petition in the High Court. Their argument was straightforward: Rule 46 of the GST Rules lists all the mandatory details that must be included in a tax invoice, and the biltee number is not one of them. Therefore, there was no violation of the law to justify a penalty.
• The High Court, finding this to be a strong and arguable point (prima facie case), passed an interim order. It stayed any coercive recovery of the penalty amount from the assessee, on the condition that the assessee deposit 20% of the disputed penalty amount.
• The revenue department was not satisfied with this interim stay and appealed the order to the Supreme Court.

Decision

The Supreme Court ruled in favour of the assessee.

• It found “no reason to interfere” with the well-reasoned interim order that had been passed by the High Court.
• The revenue department’s Special Leave Petition (SLP) was dismissed. This means the interim stay granted by the High Court remains in effect, and the case will now go back to the High Court for a final hearing on the main legal issue.

Key Takeways

1. A Penalty Requires a Clear Violation of the Law: You can’t be penalized for not doing something that the law doesn’t actually require you to do. If Rule 46 does not mandate mentioning the biltee number on an invoice, a penalty for its absence is, on the face of it, invalid.
2. Interim Relief is Granted for a Strong Case: When a taxpayer presents a strong, arguable case before a High Court, the court is likely to grant interim relief, such as a stay on recovery. This protects the taxpayer from coercive action while the complex legal question is being decided.
3. The Supreme Court’s Reluctance to Interfere with Interim Orders: The Supreme Court generally does not interfere with discretionary, interim orders passed by High Courts unless there is a gross error of law, a question of national importance, or a serious miscarriage of justice.
4. Conditional Stays are a Standard Practice: The High Court’s direction to deposit 20% of the disputed penalty is a common and standard practice in tax matters. It’s a way of balancing the interests of both the taxpayer (who gets protection from full recovery) and the revenue (which secures a portion of the disputed amount pending the final outcome).