GST statutory enforcement prevails over contractual arrangements; directions to permit revised returns and waive statutory consequences were set aside.

GST liability and enforcement must follow the statutory scheme, and contractual arrangements between contractors and employers cannot justify directions contrary to the Act. Interest under Section 50 of the CGST Act was treated as mandatory, and there was no authority to permit revised returns or to waive statutory interest, penalty or limitation in the manner directed by the writ court. The reimbursement dispute over incremental tax burden was a matter between the contractors and their employers, not a basis for directions to the tax authorities. The Karnataka HC held the directions permitting revised returns, waiving statutory consequences and restraining enforcement were unsustainable and set them aside.

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Issues: Whether directions permitting filing of revised returns and waiving interest, penalty and limitation under the GST regime, and restraining the tax authorities from precipitative action, were sustainable.

Analysis: The liability to pay GST, and the consequences of assessment, recovery and enforcement, are governed strictly by the statutory scheme. Contractual arrangements between the contractors and the employers could not alter the operation of the GST laws or justify directions contrary to the statute. Interest under Section 50 of the Central Goods and Services Tax Act, 2017 was treated as mandatory, and there was no authority to permit revised returns or to waive statutory interest, penalty or limitation in the manner directed by the writ court. The dispute as to reimbursement of incremental tax burden was characterized as a matter between the contractors and their employers, not a basis for issuing directions to the tax authorities.

Conclusion: The directions issued to the tax authorities permitting revised returns, waiving statutory consequences and restraining enforcement were unsustainable and were set aside. The appeal succeeded to that extent.

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