TaxTMI 
TaxTMI 
2020 (9) TMI 776
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....eof are as under: 3. This office has issued notices for appeal hearings to appear and argue the case, but neither the appellant nor their authorized representative has appeared for the hearings except filing adjournments. From the above, it can be concluded that the appellant has failed to respond to the above notices issued and failed to avail the opportunities of personal hearing provided to them in the present appeal. In the circumstances, there is no other alternative except to dispose off the appeal on merits considering the material/information available in the appeal file. Statement of facts:- 4. The appellant is an assessee on the rolls of the AA and doing the business of supplying the security services. 5. The A.A stated in his assessment orders (GST assessment 13), which were passed separately for each month from January, 2019 to February, 2019, that the appellant has been filing the returns in Form GSTR-1 by declaring the outward taxable supplies under the GST Act, but not filed the returns in Form GSTR-3B for the above tax periods, and not paid liable tax on its outward supplies as declared in the returns in Form GSTR-1. The A.A stated that he has issued ....
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....hem. The interest/finance cost on the overheads (mainly salaries to the security personnel) is almost shelling out the margins of the appellant. Adding to the above difficulties, the GST at the rate of 18% has to be paid immediately on raising of the invoice which is becoming an added burden to the appellant. All these led to huge working capital crisis, ultimately leading to cash crunch in the hands of the appellant. Further, the main reason of bringing the security services under reverse charge (w.e.f. 1-1-2019) is relieve the suppliers of 'security services' from the above mentioned difficulties. Further, the bank accounts were frozen which had further added to the difficulties of the appellant in remitting the salaries to the security personnel affecting the livelihood of the 20,000 employees of the appellant. (4) Though the client was facing cash crunch, it prioritized the revenue of the government over business needs and started depositing cash into the electronic cash ledger as and when the collections were made from the debtors. The same can be evidenced from the Electronic cash ledger which is enclosed herewith as Annexure- (5) Therefore, the alle....
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....tes, relating to such supplies before the 15th day of the month succeeding the tax period. (c) Form GSTR-3 - As per Section 39 of the CGST Act, 2017, read with Rule 61 of the CGST Rules, 2017, a person has to file a return in Form GSTR-3 mentioning details of inward and outward supplies of goods and services mentioning details about input tax credit availed, tax payable and tax paid on or before the 20th day of the month succeeding the tax period. (9) Due to the difficulty in the implementation of GST, returns which were designed to be implemented as per the scheme explained supra were not implemented by the Government and a new form called FORM GSTR-3B was prescribed in lieu of return in FORM GSTR-3 under rule 61(5) of CGST Rules, 2017. The extract of the rule is given below: "Where the time limit for furnishing of details in FORM GSTR-1 under Section 37 and in FORM GSTR-2 under Section 38 has been extended and the circumstances so warrant, return in FORM GSTR-3B, in lieu of FORM GSTR-02 may be furnished in such manner and subject to such conditions as may be notified by the Commissioner." (10) From the above, it can be substantiated that FORM G....
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....orm GSTR-3. However, considering technical glitches in the GSTN portal as well as difficulty faced by the taxpayers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayers for some time, it was decided in the 18th GST Council meeting to allow filing of a shorter return in Form GSTR-3B for initial period. It was not introduced as a return in lieu of return required to be filed in Form GSTR-3. The return in Form GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 is notified. Notifications are being issued from time to time extending the due date of filing of the return in Form GSTR-3 i.e., return required to be filed under Section 39 of CGST Act. It was notified vide Notification No. 44/2018-Central Tax dated 10th September, 2018 that the due date of filing the return under Section 39 of the Act, for the months of July, 2017 to March, 2019 shall be subsequently notified in the Official Gazette. 31. It would also be apposite to point out that the Notification No. 10/2017-Central Tax dated 28th June, 2017 which introduced mandatory filing of the return in Form GSTR-3....
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....i.e. Assistant Commissioner (ST), Patamata Circle, No. II Division. 11. The fundamental objection of it against the orders is that the non-filing of the returns in Form GSTR-3B is actually due to the financial crunch and inability to discharge the tax liability by it, and no suppression of outward supplies of services is involved. The appellant further explained that the main reason for the delayed/Non-payment of the admitted GST is due to huge delay in the realisation of the proceeds of its supply of services due from the clients. The ideal average time taken for the realisation is 90 days from the date of raising the invoice, whereas the appellant has to pay the salaries to the security personnel on monthly basis and certain clients allow raising invoice only after the payment of salaries to them. The interest/finance cost on the overheads (mainly salaries to the security personnel) is almost shelling out the margins of it. Adding to the above difficulties, the GST at the rate of 18% has to be paid immediately on raising of the invoices, which is becoming an added burden to it. All these led to huge working capital crisis, ultimately leading to cash crunch in its hands. 12.....
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....er Section 37 and in FORM GSTR-2 under Section 38 has been extended and the circumstances so warrant, return in FORM GSTK-3B. in lieu of FORM GSTR-3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner." 15. From the above, it can be substantiated that the returns in FORM GSTR-3B can be considered as a return filed in lieu of FORM GSTR-3 and accordingly it can be said that FORM GSTR-3B is a return filed under Section 39 of the CGST Act, 2017. 16. However, subsequently, the aforesaid sub-rule is amended vide Notification No. 17/2017-Central Tax dated 27-7-2017 w.e.f. 1-7-2017, by way of substitution. The substituted sub-rule reads as under: "Where the time limit for furnishing of details in FORM GSTR-1 under Section 37 and in FORM GSTR-2 under Section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify the manner and conditions subject to which the return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner." 17. Thus, from the above retrospective amendment (i.e. w.e....
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....lowing a different analogy which is not followed for the present impugned tax periods, for the reasons not known. 22. Regarding the penalty levied, the appellant strongly contended that since it has already disclosed the outward taxable supplies turnover through the returns in Form GSTR-1, charging it with wilfulness/mala fades is not logical and lacking justifiability. Hence, the penalty under Section 122 of the Act, does not arise and such levy of penalty treating it as willful suppression of the outward supplies is erroneous. Issues for adjudication; (1) Whether the best judgment orders through estimating the outward taxable supplies by A.A, are based on any dependable and authentic evidence/basis or not? (2) Whether the appellant's contention that Section 62 cannot be invoked as GSTR-3B is not any return prescribed under Section 39 of the Act, hence these orders are legal or not? (3) Whether the willful suppression aspect and resultant levy of 100% penalty, is found to be having any basis and such willfulness, has been established by A.A or not? (4) Whether the interest levied by A.A, is in tune with the provisions of the GST Act or....
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....on'ble Supreme Court held that the power to levy assessment on the best of judgment basis is not an arbitrary power, but such assessment must be based on best judgment or on relevant material. It is not a power that can be exercised on the sweet will and pleasure of the concerned authorities. (ii) State of A.P. v. Ravuri Narasimhulu (1965) (16 STC 54) (APHC) "The Legislature has confined the power of the department under this sub-section to assessing such turnover as is shown to have escaped assessment and has not extended it to estimate depending upon inferences to be drawn by the department from certain circumstances. It does not clothe the department with power to make a best judgment assessment." (iii) The Privy Council in the case of Commissioner of Income Tax, Central and United Provisions v. Laxminarain Badridas (1937) (5 ITR 170, 180) observed that the Assessing Authority must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the matter. (iv) Honorable STAT in the case of M/s. Sri Krishna Timber Depot, jammalamadugu v. State of A.P. (14 APSTJ 238), wherein it was held that "A presumption without....
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....e reason is the heart beat of any conclusion and fetches clarity in conclusion of any order, as such, without the reason best judgment orders becomes lifeless and amounts to denial of fundamental justice. The reason/evidence would act as live link between the mind of assessing authority and the resultant conclusion arrived at. In the impugned orders, it is an apparent failure on the part of the AA that he has not recorded any reason or basis in estimating the quantum of the outward taxable supplies. It is also clear from the findings that the A.A has not discussed anything about the appellant's contentions and not recorded any reasons. In this connection, it needs to be emphasized that every litigant, who approaches the A.A for relief is entitled to know the reason for acceptance or rejection of his prayer, particularly when either of the parties to the list has a right of further appeal. Unless the litigant is made aware of the reasons which weighed with the A.A in denying him the relief prayed for, the remedy of appeal will not be meaningful. It is that reasoning, which can be subjected to examination at the higher forums. The appellant also averred before m....
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.... issue herein is whether the best judgment assessment under Section 62(1) can be made in respect of the non-filers of the returns in Form GSTR-3B? To answer this question, it is appropriate to extract the Section 62(1) of the Act and Rules 61(1) of the Rules hereunder. "Section 62. Assessment of non-filers of returns. - (1) Notwithstanding anything to the contrary contained in Section 73 or Section 74, where a registered person fails to furnish the return under Section 39 or Section 45, even after the service of a notice under Section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under Section 44 for furnishing of the annual return for the financial year to which the tax not paid relates. (2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest u....
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....th GST Council meeting to allow filing of a shorter return in Form GSTR-3B for initial period. It was not introduced as a return in lieu of return required to be filed in Form GSTR-3. The return in Form GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 is notified. Notifications are being issued from time to time extending the due date of filing of the return in Form GSTR-3, i.e. return required to be filed under Section 39 of the CGST Act/GGST Act. It was notified vide Notification No. 44/2018-Central Tax dated 10th September, 2018 that the due date of filing the return under Section 39 of the Act, for the months of July, 2017 to March, 2019 shall be subsequently notified in the Official Gazette." Their lordships of the High Court of Gujarat were examining the legality or otherwise/validity or otherwise of the said press release which considered both GSTR-3B and GSTR-3 as one the same. The question is framed in para 28 of the said judgment and the same is answered in negative at para 33 therein. Thereby their lordships declared that for the purpose Section 39, the return means the return in Form GSTR-3 only, but not Form GS....
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....ent assessment herein are not sustainable. They are whimsical. They have no basis. It is declared accordingly. The same are deleted. Besides, it is judicially settled law that the estimations fall foul of law if they are smacked off factors like wildness, vindictiveness, arbitrariness, capriciousness, etc., The best judgment orders in issue cannot be sustained even on these touch stones laid down by the Apex Court in the catena of cases starting from the case of Commissioner of Sales Tax, M.P. v. H.M. Esuf Ali Abdulla (way back in 1973) 32 STC 77 SC. Conclusion: Therefore, in view of the above emerged anomalies involving invoking of Section 62 unlawfully, because the relevant Section 39 does not speak of GSTR-3B in the listed returns for the disputed period, as clarified in the above discussed judgment and in view of the erroneous method adopted by A.A for estimating outward taxable supplies through best judgment without mentioning reasons/evidence, hence the tax so levied by the A.A of Rs. 3,43,96,432/- is annulled and modified as per actual tax liability of the appellant for the period from January, 2019 to February, 2019. In the result, the appeal is m....
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....along with interest payable under Section 50 and a penalty equivalent to 15% of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer, and inform the proper officer in writing of such payment. Section 74(1) of the APGST Act stipulates that, where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been short paid or to whom refund has erroneously been made, or who has wrongly availed or utilised input tax credit requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50, and a penalty equivalent to the tax specified in the notice. While a show cause notice is required to be issued under Section 74(1) of the APGST Act for recovery of penalty equivalent to the tax specified in the notice, Section 74(5) of the said Act enables the dealer to pay 15% pen....
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.... to have a comprehensive understanding of Section 122(1 & 2) of GST Act, 2017, which are abstracted below: Section 122. (1) Where a taxable person who- (i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply; (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder; (iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax; (vi) fails to collect tax in a....
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....t deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher. (2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,- (a) for any reason, other than the reason of fraud or any willful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent, of the tax due from such person, whichever is higher; (b) for reason of fraud or any willful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher. The A.A has invoked Section 122, on which he has supposedly relied and treated the appellant non-submission of GSTR-3B as a means for fraudulent and willful attempt for suppression of liable ....
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.... appellant. (3) Regarding, levy of interest of Rs. 8,30,115/-: Before embarking on adjudication of this issue, it is very much essential to have a comprehensive understanding of Section 50 of GST Act, 2017, which are abstracted below: Section 50. (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified by the Government on the recommendations of the Council. Interest on delayed payment of tax. (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid. (3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on su....