2023 (12) TMI 555 - HC - GST

Tax Authorities Wrongly Penalized Taxpayer for Timely GST Return Submission, Order Quashed Under Section 125

HC found that tax authorities erroneously imposed penalty under Section 125 of GST Act despite petitioner's timely submission of returns within prescribed ... Validity of penalty under the GST regime for failure to furnish returns - Show cause notice offering conditional withdrawal upon compliance - Compliance with notice by tendering returns within prescribed time - Non application of mind in adjudicatory ordersValidity of penalty under the GST regime for failure to furnish returns - Show cause notice offering conditional withdrawal upon compliance - Compliance with notice by tendering returns within prescribed time - Non application of mind in adjudicatory orders - Whether imposition of penalty was permissible after the petitioner complied with the show cause notice by furnishing returns within the period stated therein, and whether the assessing authority's contrary finding was vitiated by non application of mind. - HELD THAT: - The show cause notice dated 28.01.2023 expressly stipulated that if the returns were tendered within the time stated, the proceedings would be withdrawn. The petitioner furnished the returns on 07.02.2023, within the period specified. Notwithstanding this compliance, the assessing authority imposed a penalty by the order dated 10.02.2023 and simultaneously recorded a finding that no reply had been tendered. The Court found that the assessing authority failed to apply its mind to the material on record which established compliance with the terms of the notice. Given that the petitioner had complied with the condition that would have led to withdrawal of proceedings, there was no lawful justification for imposing the penalty. The impugned orders were therefore contrary to law and passed without proper application of mind.Impugned orders dated 10.02.2023 and 14.03.2023 are set aside; writ petition allowed.Final Conclusion: The petition succeeds: because the petitioner tendered the returns within the period stipulated in the show cause notice and the assessing authority acted without applying its mind, the orders imposing penalty and the subsequent order are set aside. Issues involved: The issues involved in the judgment are imposition of penalty under Section 125 of the GST Act despite compliance with show cause notice and submission of returns within the stipulated time frame.Summary:The petitioner received a notice under Section 46 of the GST Act, directing them to furnish returns within 15 days, with the assurance that proceedings would be withdrawn upon compliance. The petitioner submitted the returns on 07.02.2023, meeting the requirements of the notice. However, the authorities proceeded to impose a penalty under Section 125 of the GST Act through an order dated 10.02.2023, despite the petitioner's timely response. The respondent's counsel did not contest these facts.The impugned order noted that the petitioner had indeed replied on 07.02.2023. Nevertheless, the assessing authority, in the same order dated 10.02.2023, erroneously concluded that no reply had been received, indicating a lack of proper consideration of the available facts.Given that the petitioner had adhered to the show cause notice by submitting the required returns, there was no valid basis for the imposition of a penalty. Consequently, the impugned orders dated 10.02.2023 and 14.03.2023 were deemed legally flawed and passed without due consideration.In light of the above, the High Court ruled in favor of the petitioner, setting aside the impugned orders dated 10.02.2023 and 14.03.2023. The writ petition (tax) was allowed, providing relief to the petitioner.