TaxTMI 
TaxTMI 
2021 (6) TMI 155
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....he project. 2.2 The adjudicating authority has issued a show cause notice Reference Number WM060109193A0713, dated 19-11-2019 in Form GSTR-3A under Section 46 of the CGST Act, 2017 stating the reason being "Non-filing of GST returns" (GSTR-3B) for the period October, 2018 to March, 2019 and April, 2019 to September, 2019. Further, the adjudicating authority has passed the best judgment Assessment Order C.No. CGST-20/R-XXVI/Non-filing NBD/178/19/8287, dated 30-1-2020 in Form GST ASMT-13 under Section 62 of the CGST Act, 2017 for non-filing of GSTR-1 statement and GSTR-3B return for the months of January, 2019 to December, 2019 are also appellant not discharged/set-off their outward liability amounting to Rs. 73,96,872/- (GST amounting to Rs. 62,27,256/- + Interest Rs. 5,46,890/- and Penalty Rs. 6,22,726/-). 3. Being aggrieved with the best judgment Assessment Order in Form GST ASMT-13 vide C.No. CGST-20/R-XXVI/Non-filing NBD/178/19/8287, dated 30-1-2020, the appellant has filed the appeal on 19-6-2020 along with proof of mandatory pre-deposit in terms of sub-section (6)(b) of Section 107 of the CGST Act, 2017 vide DRC-03, dated 16-12-2020 on the following grounds :- ....
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.... be done in an arbitrary and mechanical manner without proper application of mind. The appellants submit that the Department is bound to follow the relevant provisions of the law while issuing any judgment or order in present case best judgment assessment under Section 62 of the CGST Act, 2017. (A.4) It is imperative to go into the nitty-gritty of the provisions of Section 62 to determine whether best judgment assessment has been done within the four corners of the law or not. Section 62 reads as under : "62. (1) Notwithstanding anything to the contrary contained in section 73 or section 74 here 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." (A.5) One of the key con....
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....as available with the assessing authority. (B.1) The impugned assessment order has been issued by the Superintendent for demanding CGST Rs. 31,13,628/- and SGST Rs. 31,13,628/- on best judgment basis under Section 62 of the CGST Act, 2017. It is pertinent to understand the scope of Section 62 and manner in which best judgment assessment can be done by the Department. The relevant portion of Section 62 reads as under : "62. (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 unde....
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.... by the Department to serve the intended purpose of administration of GST law by the revenue authorities within their jurisdiction and power delegated to them. (B.5) The appellants submit that the Department in the present case completely failed to understand the seriousness and gravity of the provisions of Section 52 while applying best judgment assessment and could not do justification with his assessment order which is arbitrary, without any basis and fallacious. The term 'best judgment' itself suggest that it is an assessment which emerges out of thorough and detailed examination of all relevant aspects in a minute manner so as to call the judgment inferior to none, unquestionable and best to his knowledge, wisdom and information which is made available or which can be gathered within the terms of the provisions of the law. (B.6) The crucial aspect of Section 62(1) which is to be kept in mind while using best judgment is taking into account all relevant information which is either available or which can be gathered by the Department. The intended purpose of giving a power to the Department by Section 62(2) to gather any further relevant information....
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....tled to claim input tax credit of GST paid on goods or services availed by him and used in the course of his business or furtherance of his business. The appellants are currently generating revenue only from maintenance activity of residential building wherein flats have already been delivered to the flat buyers. To provide the maintenance services, the appellant procures various taxable goods or services like housekeeping, security, gardening lift, electricians, plumbing etc. which are used to provide taxable activity of maintenance services. The appellant are also in possession of tax paid documents based on which they are entitled to avail input tax credit. The input tax credit has already been recorded in the books of account and also set-off on monthly basis in books of account against GST liability for that month and any GST liability payable in cash is shown under 'Liabilities' in the Balance Sheet. (B.10) The appellants submit that as per the Section 16 of the CGST Act, 2017 a registered person is entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services pertaining to the FY 2018-19 up to 30-9-2019 and for FY 20....
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....January, 2019 to December, 2019 has been worked out by the appellant after availing input tax credit as per duty paid documents available with the appellant and the same has been recorded in books of account and also adjusted on a monthly basis in the books of account. The Statement showing the month-wise GST liability is enclosed. As per the above Statement, the actual GST liability for the period January, 2019 to December, 2019 works out at CGST Rs. 21,37,591/- and SGST Rs. 21,75,233/- after utilizing input tax credit of GST on invoices of vendors and GST payable under reverse charge mechanism as against the GST demand of CGST Rs. 31,13,628/- and SGST Rs. 31,13,628/- assessed by the Department. The appellants are also enclosing Chartered Accountant certificate certifying that the input tax credit has been duly recorded in books of account for the period January, 2019 to December, 2019. Hence, the appellant submits that the impugned order should be set aside to fail to gather the actual data for the relevant period as empowered under Section 62, non-consideration of input tax credit in spite of details available in GSTR-3B filed for the base period July, 2018 to December, 2018. ....
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....ppellant before the due date of filing the returns and liability to the extent payable through ITC was discharged in our books within the due date of filing of returns. (C.2) It is due to the limitations of GST portal that no appropriate mechanism is provided for making payment of taxes by debiting Electronic Credit Ledger and update the portal accordingly regarding payment of tax. Therefore such payment though made earlier to the extent to availability of credit can be reported and informed only during filing of GSTR-3B returns which is nothing but an information to the department of summary of transactions taken place during a particular month. It is emphasized that the date of filing of return is not date of payment of GST. It is only a summary of the month whereas actual date of payment is the date when we debited the amount in the books of account for which summary is reported in the monthly GSTR-3B returns. Therefore, calculation of interest provided in the impugned Order needs to be revisited by excluding portion of GST which would be treated as paid through ITC and interest would be calculated only on the net amount payable by Electronic Cash ledger. ....
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....tion 50(2) reads as under : 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 in terms of Sec. 50(2), method for calculation will be prescribed As per Sec. 2(87). "prescribed" means prescribed by rules made under this Act on the recommendations of the Council. (C.6) The appellant submits that till date no such rules have been formulated to prescribe the manner for calculation of the interest u/s. 50(1) and in absence of methodology to calculate, interest cannot be charged. There is failure to prescribe the method of calculation of interest by way of the suitable rule as mandated by Section 50(2). Therefore the demanding of interest is not in accordance with Sec. 50(2) in absence of any rule for determination of interest. (C.7) Without prejudice to the above submissions, the appellants submit that Section 62 empowers the proper officer to assess only tax liability and does not empower the proper officer to assess interest on GST liability. The interest cannot be demanded without following principles of natural justice under Sec....
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....estate industry. (D.3) Moreover, determination of taxable value for 12 months by taking average of taxable value of merely 6 months does not hold water at all. In order to apply averaging, taxable value of at least 12 months should have been taken as the base to apply best judgment. Applying best judgment merely based on 6 months taxable value and that too in a real estate sector cannot sustain and cannot be said as 'best Judgment' at all. It is nothing but a complete mockery of Section 62 of CGST Act, 2017 by not justifying the yardsticks set by Section 62 and seeking recovery of revenue as the only intention which is against principles of natural justice. The purpose of best judgment assessment which overrides Sections 73 and 74 of CGST Act, 2017 i.e. bypassing adjudication proceedings is to recover the tax from the assessee in case of non-filing of returns. Hence, it is imperative that correct data and information is gathered to recover the tax from the assessee. (D.4) The Department should have asked the accurate information about the supplies undertaken by the appellant for the relevant period i.e. January, 2019 to December, 2019 as they hav....
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.... or where any adverse decision is contemplated against such person. (E.3) The above Section is not subject to any other Section and does not override or specify its applicability to certain situations, in such a case it is applicable to any adverse decision which is contemplated against such person. (E.4) The impugned order is adverse in nature as much as it arbitrarily directs the appellant to pay GST as per best judgment basis by taking taxable values of previous years as base. Hence, the Superintendent was duty bound to first grant an opportunity of personal hearing to the appellant before passing any decision or order against them. (E.5) The appellant have submitted in above paras that the impugned order has been passed in an arbitrary manner without application of mind. The appellants place reliance on following case laws in this regard. (F) The penalty imposed under Section 73(9) of CGST Act, 2017 cannot be sustained in absence of any provision of penalty under Section 62. (F.1) The impugned order has imposed a penalty of 10% under Section 73(9) of CGST Act, 2017 on the GST dema....
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....est judgment assessment under Section 62. Section 62 overrides Section 73. Section 73(9) reads as under : (9) The proper officer shall,, after considering the representation, if any, made by person chargeable with tax determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees whichever is higher, due from such person and issue an order. (F.4) The perusal of the above provision is amply clear that Section 73(9) is subject to Section 73(1) which is the main provision of Section 73 from where adjudication proceedings are initiated by the Department by issuing show cause notice. There is no mechanism wherein direct penalty under Section 73(9) can be imposed. For imposing penalty under Section 73(9) show cause notice under Section 73(1) is purported to be issued by the Department to the assessee. It is a settled principle of law that any penalty in a law can be imposed by following principles of natural justice. And in current case there is express provision in Section 73 to first issue show cause notice and only then after obtaining representation from the Noticee, penalty can be imposed. &nb....
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....Central Tax, Bank Manager, Indian Overseas Bank, Bank Manager, ICICI Bank reported in 2020 (2) TMI 794-MADRAS HIGH COURT = 2020 (34) G.S.T.L. 588 (Mad.) M/s. LC Infra Projects Pvt. Ltd. v. Union of India reported in 2019 (8) TMI 84-KARNATAKA HIGH COURT = 2019 (28) G.S.T.L. 3 (Kar.) M/s. Mahadeo Construction Company v. The Union of India & Others, reported in 2020-TIOL-850-HC-JHARKHAND-GST = 2020 (36) G.S.T.L. 343 (Jhar.) M/s. Shubham Electricals v. CST & ST, Rohtak - 2015 (6) TMI 786 = 2015 (40) S.T.R. 1034 (Tri. - Del.) Dhillon Aviation Pvt. Ltd. v. CCE, Delhi-11 reported in 2018 (12) TMI 260-CESTAT, New Delhi = 2020 (37) G.S.T.L. 434 (Tri. - Del.) Income-tax Commissioner v. Badridas Ramrai Shop, Akola [1937] 64 I.A. 102, 114-115; 5 I.T.R. 170. Lord Russell of Killowen M/s. Raghubar Mandal v. State of Bihar - 1957 (5) TMI 28-SUPREME COURT OF INDIA, Kathyayini Hotels v. ACCT - 2002 (1) TMI 1134-SUPREME COURT OF INDIA, M/s. Kachwala Gems v. JCIT - 2006 (12) TMI 33-SUPREME COURT State of Kerala v. C. Velukutty - 1965 (12) TMI 32-SUPREME COURT. 4. Personal hearing in the case was held on 17-12-202....
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....iple of natural justice. 7. In the above context, I find the relevant provisions of CGST Act, 2017 are as under : SECTION 46. Notice to return defaulters. - Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed. 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....