Court modifies tax assessment, cancels penalty, upholds interest levy. Best judgment orders unsustainable.

The court partially modified the assessment, annulling the tax and penalty while confirming the interest levy. The court found the best judgment orders unsustainable as they lacked substantial evidence and were based on arbitrary estimations. It ruled that Section 62 could not be invoked for non-filing of GSTR-3B, rendering the assessment void. The penalty under Section 122 was set aside due to the absence of willful suppression and procedural lapses. However, the court upheld the interest levy under Section 50, directing recalculations based on actual tax liability.

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Issues Involved:
1. Legality of best judgment orders.
2. Applicability of Section 62 for non-filing of GSTR-3B.
3. Justifiability of penalty under Section 122.
4. Legitimacy of interest levied under Section 50.

Analysis:
1. Legality of Best Judgment Orders:
The AA's determination of turnovers was based on mere guesswork without any substantial evidence or material. The AA failed to conduct thorough verifications or gather relevant material, which is a requirement under Section 62 of the CGST Act. The judgment cited several case laws emphasizing that best judgment assessments must be based on relevant material and not arbitrary estimations. The AA's assessment lacked any incriminating material to substantiate the assumed turnovers, making the orders unsustainable in law.

2. Applicability of Section 62 for Non-Filing of GSTR-3B:
The appellant argued that GSTR-3B is not a return prescribed under Section 39 of the CGST Act, and hence Section 62 cannot be invoked. The judgment referred to the Gujarat High Court's decision, which clarified that GSTR-3B is not a return required under Section 39. The AA's reliance on GSTR-3B for best judgment assessment was found to be without jurisdiction, rendering the assessment orders void.

3. Justifiability of Penalty under Section 122:
The AA imposed a 100% penalty under Section 122, alleging willful suppression of facts. However, the appellant had filed GSTR-1 returns, declaring the actual turnovers, negating any willful suppression. The judgment highlighted the necessity of a separate notice for penalty imposition, which the AA failed to issue. The penalty was deemed unjustifiable as the appellant's non-filing of GSTR-3B did not constitute willful suppression.

4. Legitimacy of Interest Levied under Section 50:
The judgment upheld the levy of interest under Section 50, which mandates interest on delayed payment of tax. The AA was directed to compute the interest based on the actual tax liability, as determined by the GSTR-1 returns filed by the appellant.

Conclusion:
The assessment was partly modified, with the tax and penalty annulled, and the interest levy confirmed. The AA's orders were found to be arbitrary and lacking in substantial evidence, and the invocation of Section 62 was deemed inappropriate for non-filing of GSTR-3B. The penalty under Section 122 was set aside due to the absence of willful suppression and procedural lapses in issuing a separate notice. The interest levy was upheld, subject to recalculation based on actual tax liability.

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