2024 (1) TMI 1465 - HC - GST

Tax Recovery Upheld: One-Day Late Return Triggers Section 62 BGST Act, Alternative Appeal Pathway Suggested

SIS Cash Services Pvt. Ltd. Versus Union of India, Commissioner of Central GST and Central Excise, Patna-1 and Assistant Commisioner, State Taxes Special Circle, Patna.

SIS Cash Services Pvt. Ltd. Versus Union of India, Commissioner of Central GST and Central Excise, Patna-1 and Assistant Commisioner, State Taxes Special ... 1. ISSUES PRESENTED and CONSIDERED- Whether the recovery of tax under Section 62 of the Bihar Goods and Services Tax Act (BGST Act) is valid despite the petitioner having filed the return and paid the tax after a delay beyond the stipulated thirty-day period.- Whether the order passed under Section 62 on best judgment assessment is amenable to review or interference under Article 226 of the Constitution of India.- The applicability and effect of the Central Board of Indirect Taxes and Customs (CBIC) Notification No. 53 of 2023, dated 02.11.2023, extending the time for filing appeals against orders passed under Sections 73 and 74 of the BGST Act, and its impact on appeals under Section 62.- The conditions prescribed under the CBIC Notification for filing delayed appeals and their compliance requirements.- The entitlement to interest on delayed refund in case the appeal is decided within or beyond a specified timeframe.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of Tax Recovery under Section 62 despite Delayed PaymentThe legal framework under consideration is Section 62 of the BGST Act, which empowers the Assessing Officer to determine tax liability on the basis of best judgment assessment if the taxpayer fails to file a return or pay tax within the due date. The provision explicitly mandates that if the taxpayer pays the tax and files the return within thirty days from the date of the order, the order stands withdrawn.On the facts, the petitioner failed to file the return and pay the tax by the due date of 20.07.2019. Consequently, the Assessing Officer passed the best judgment assessment order on 02.09.2019, fixing a tax liability of Rs. 22,16,963.44/-. The petitioner subsequently filed the return and paid Rs. 20,35,031/- on 04.10.2019, which was one day beyond the thirty-day window from the date the order was served (03.09.2019).The Court interpreted the statutory requirement strictly, emphasizing that the payment and filing within thirty days is a mandatory condition to withdraw the order. The fact that the payment was made on 04.10.2019, one day late beyond the due date of 03.10.2019 (adjusted for the holiday on 02.10.2019), meant that the statutory consequence under Section 62 followed, and the order could not be withdrawn.The Court found no reason to interfere with the recovery order under Article 226, as such interference would contravene the express statutory provisions. The competing argument of the petitioner, seeking leniency for a minimal delay, was rejected on the basis that the law prescribes a clear timeline and the Court must uphold the statutory mandate.Issue 2: Reviewability of Best Judgment Assessment Order under Article 226The petitioner contended that the recovery was unjustified since the tax and interest had been paid along with the return, albeit late. The Government Advocate argued that an order under Section 62 is final unless the taxpayer complies with the thirty-day payment condition, and thus no review is permissible at this stage.The Court agreed with the Government Advocate's submission, holding that the statutory scheme under Section 62 does not permit review or interference if the taxpayer fails to meet the prescribed timeline for payment and filing. The best judgment assessment order is binding unless set aside or modified through the appellate process.Issue 3: Applicability of CBIC Notification No. 53 of 2023 Extending Time for Filing AppealsThe Court took note of the CBIC Notification dated 02.11.2023, which extends the time for filing appeals against orders passed under Sections 73 and 74 of the BGST Act up to 31.01.2024. The Notification also provides for condonation of delay in filing appeals if certain conditions are met, including payment of admitted tax and a portion of disputed tax.Though Section 62 is a distinct provision for best judgment assessment, the Court observed that the Notification's extension and procedural relaxations apply mutatis mutandis to appeals under Section 62 as well, given that it is a mode of assessment notwithstanding anything contrary in Sections 73 or 74.This interpretation broadens the petitioner's remedy, allowing the filing of a delayed appeal subject to compliance with the Notification's conditions.Issue 4: Conditions for Filing Delayed Appeals under the NotificationThe Notification prescribes that no appeal shall be entertained unless the appellant has paid:In full, the admitted amount of tax, interest, fine, fee, and penalty arising from the impugned order;A sum equal to 12.5% of the remaining disputed tax amount, capped at Rs. 25 crore, with at least 20% paid from the Electronic Cash Ledger.Additionally, no refund shall be granted on account of the Notification until the appeal is disposed of, and appeals against demands not involving tax are not admissible.The Court underscored that the petitioner must comply with these conditions to have the appeal considered on merits. The appellate authority is directed to consider such appeals expeditiously.Issue 5: Entitlement to Interest on Delayed RefundThe Court balanced the equities between the parties by ruling that if the appellate order disposing of the appeal is passed within three months from the date of filing, no interest shall be payable on the refund amount for the period between the date of payment (04.10.2019) and the date of refund.However, if the appeal is not disposed of within three months, interest will be payable from the expiry of the three-month period until the refund is made. This approach aims to ensure fairness and discourage undue delay in disposal of appeals.3. SIGNIFICANT HOLDINGS'The requirement under Section 62 of the Act is to make the deposit within a period of thirty days; which if not made, the statutory consequence will follow.''Though there is only one days delay, we find no reason to interfere with the order in proceedings under Article 226 of the Constitution of India, since any interference caused will go against the statutory provision.''The petitioner thus, has a remedy of appeal from the best judgment assessment carried out under Section 62. Though the petitioner has filed return and paid the amounts, the Appellate Authority could definitely invoke its jurisdiction to interfere with the best judgment assessment in which event, the department would be liable to return the amounts paid as interest.''The Notification permits an appeal on or before 31.01.2024 on certain conditions, mentioned above, which has to be complied with. If the said conditions are complied with, definitely the appeal will be considered on merits.''Since equity has to be applied to both parties, there shall be no interest payable to the petitioner on refund between 04.10.2019 and the date on which the refund is made, if the appellate order is passed within a period of three months. If the appeal is not disposed of within three months, necessarily the interest would be payable from the date of expiry of three month period.'The Court's final determination is that the recovery under Section 62 stands valid due to the petitioner's failure to comply with the thirty-day payment condition. However, the petitioner is entitled to file a delayed appeal under the extended timeline prescribed by the CBIC Notification, subject to compliance with specified conditions. The appellate authority is mandated to consider such appeals expeditiously, and interest on any refund is governed by the timeline of appeal disposal.