TaxTMI 
TaxTMI 
2022 (3) TMI 1047
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....earned counsel for the parties. 2. Initially, W.P (T) No. 1261/2020 was preferred by the petitioner. Vide order dated 04.01.2021, petitioner was allowed liberty to assail the respective demands for the Financial Years 2018-19 and 2019-20 in separate writ petitions as the consequential relief relating to challenge of the demand notices relating to Financial Years 2017-18, 2018-19 and 2019-20 had been combined in W.P(T) No. 1261/2020. Subject matter in W.P (T) No. 177//2021 relates to the tax period for Financial Year 2018-19 and the subject matter in W.P (T) No. 161/2021 is in respect of tax period for the Financial Year 2019-20, while W.P (T) No. 1261/2020 is now confined to the Financial Year 2017-18. 3. In all the three writ petitions, primarily challenge was to the Circular bearing F. No. CBEC-20/16/07/2020-GST dated 10.02.2020 (Annexure-1) issued by the Central Board of Indirect Taxes and Customs ('CBIC' in short) which prescribes that interest payable on delayed payment of taxes can be recovered under the provisions of Section 79 read with Section 75(12) of CGST Act. It was pointed out that the petitioner has been asked to pay the amount of interest applicable over the t....
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.... Versus Union of India [2020 (33) G.S.T.L 16 (Jhar.) (B) That, Interest under section 50(1) of the Act cannot be demanded for delay in filing monthly return in Form GSTR-3B, but for the delay in payment of the taxes. Section 50 deals with the liability to pay interest on "unpaid" tax when a person "fails to pay" tax. It does not speak anything when a person has paid tax in accordance with Section 49. Proviso to Section 50(1) cannot travel beyond or be inconsistent with or make addition to the main provision. It must be limited to the subject matter of enacting clause. Proviso to Section 50(1) merely says that the Input Tax Credit (ITC) is as good as tax paid, hence, no interest is payable thereon. It does not say anything about payment from Electronic Credit Ledger as Section 50(1) deals with cases of unpaid or failure to pay tax only. The word 'debiting' under section 50(1) is used for apportionment of an amount on which interest is payable if not paid in accordance with Section 49. This expression 'debiting' has to be read in the context of the word 'fails to pay' and 'unpaid' in sub-Section (1) and (2) of Section 50. In the instant case, by the impugned summary of the o....
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....the nature of advance tax. Therefore, while interpreting the provisions of Section 50, intention of the legislature can be gathered from the scope of the Act and other provisions of Section 9, 39, 49, 50, 51, 52, 54 and Rule 61. Learned counsel for the petitioner has relied upon the case of Manik Lal Majumdar and others versus Gauranga Chandra Dey and others [(2005) 2 SCC 400]. Learned counsel for the petitioner has also drawn attention to Section 54(12) of the Act which provides that if the amount in Electronic Cash Ledger is not refunded within the specified time by the Government, the registered person would be entitled to interest at the rate not exceeding 6% which shows that money goes into the coffers of the Government. Compensatory interest therefore cannot be demanded. For any delay in filing return, late fee can be levied under section 47 of the Act, but interest on delayed filing of return cannot be levied as it would be contrary to the concept of interest in taxing statute. It is further submitted that as per section 39 (1) of CGST Act / JGST Act read with Rule 61, the tax for a month is to be paid by 20th of the following month along with monthly return in GSTR-3B. If t....
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....ith effect from 01.07.2017 as a mere stopgap measure in lieu of return in Form GSTR-3 as prescribed under Section 39(1) of the Act read with Rule 61(1) of the Rules. Subsequently, vide Notification No. 17/2017-CT dated 27.07.2017, the Central Government amended sub-Rule (5) of Rule 61, whereby the words 'in lieu of GSTR-3' was omitted, meaning thereby that the return in GSTR-3B is not a return in lieu of return in Form GSTR-3. Similar amendment in Rule 61(5) was made in the JGST Rules, 2017 vide Notification dated 29.06.2017 and 31.07.2017 issued by the State Government under section 164 of JGST Act, 2017. Now, with retrospective effect from 01.07.2017, the Central Government vide Notification dated 09.10.2019, has substituted and prescribed the return in Form GSTR-3B under section 39(1) of the Act read with Rule 61(5) in place of return in Form GSTR-3 under Rule 61(1). A similar retrospective substitution has been made by the State Government in Rule 61(5) of JGST Rules, 2017 with effect from 01.07.2017 by Notification dated 27.12.2019. Therefore, proviso to Section 50 of the Act cannot be read in the context of Section 39(1) of JGST Act, 2017/ Rule 61(5) of JGST Rules, 2017 so as....
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....sus State of Jammu & Kashmir [AIR 1957 SC 281, equivalent citation 1957 S.C.R. 51], referred to in the book, that it is fundamental rule of construction that proviso must be considered in relation to the principal matter to which it stands as a proviso. Since the natural presumption is that but for the proviso, the enacting part of the section would have included the subject matter of the proviso, the enacting part should be generally given such a construction which would make the exceptions carved out by the proviso necessary and a construction which would make the exceptions unnecessary and redundant should be avoided. 5. Based on these submissions, learned counsel for the petitioner has prayed that the impugned notice issued in Form GST DRC-01A dated 28.01.2020 and Summary of the Order issued in Form GST DRC-07 dated 26.02.2020 be quashed. 6. Respondents have filed counter affidavit in the respective writ petitions and taken an objection to the maintainability of the writ petitions on the ground that the Act provides for an alternative remedy of statutory appeal under section 107 of JGST Act which the petitioner has not availed. Respondents have also taken a plea that inte....
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....the interest liability on that portion of the tax which is paid by debiting the Electronic Cash Ledger. The interest liability has not been given retrospective effect, rather the scope of liability has been limited with retrospective effect. Therefore, argument of learned counsel for the petitioner based on return in Form GSTR-3B / GSTR-3 with reference to Rule 39(1) read with Rule 61(5) is misplaced and not tenable. Petitioner had filed its return for the month of July 2017 on 07.09.2017 in Form GSTR-3B. Similarly, the return for the month of April 2018 has been filed on 19.06.2018 in Form GSTR-B and interest was paid on his own account. Petitioner was aware that he had to pay interest for delayed payment of tax. In answer to the contention relating to absence of rules framed under section 50(2) of JGST Rules, it is submitted that as per Section 50(2), interest is payable from the day succeeding the day on which such tax was due to be paid. Sub-section 50(1) provides the rate of interest for delayed payment of tax. Therefore, the substantive provision of the Act regarding interest is workable even without framing rules. He has placed reliance in the case of Jantia Hill Truck Owner....
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....charge of the interest has been disputed by the petitioner, the same can only be levied after an adjudication proceeding under section 73 or 74 of the Act after proper show-cause notice and opportunity to reply. In this regard, learned counsel for the petitioner has relied upon the case of Mahadeo Construction Co. (Supra) decided by a Coordinate Bench of this Court, of which one of us (Deepak Roshan, J) was a Member. 8. Following questions emerge for consideration in these writ petitions from the pleadings on record and the submissions of the parties. (i) Whether writ petition is maintainable? (ii) Whether liability of interest under section 50 of JGST Act, 2017 can be raised without initiating any adjudication process under section 73/74 of the Act in the event Assessee raising dispute towards the liability of interest. An incidental question also arises, whether recovery proceeding under section 79 of the Act can be initiated for recovery of interest under section 50 of the Act without conclusion of adjudication proceeding under the Act. For answer to the first question, it is necessary to refer to the relevant provisions of JGST Act, 2017 and the decisions o....
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.... why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in subsection (10) for issuance of order. (3) Where a notice has been issued for any period under subsection (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along....
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....125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01, (b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable. [(1A) The proper officer shall, before service of notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, shall communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.] (2) Where, before the service of notice or statement, the person chargeable with tax makes payment of the tax and interest in accordance with the provisions of sub-section (5) of section 73 or, as the case may be, tax, interest and penalty in accordance with the provisions of sub-section (5) of section 74, or where any person makes payment of tax, interest, penalty or any other amount due in accordance with the provisions of the Act [whether on his own ascertainment or, as communicated by the proper officer under sub rule (1A),] he shall ....
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....ection 74(5) ..... failing which Show Cause Notice will be issued under section 74 (1). N.A In case you wish to file any submissions against the above ascertainment, the same may be furnished by 05.02.2020 in Part-B of this Form. Signature DCST ADITYAPUR CIRCLE, JAMSHEDPUR" 10. As per the intimation under DRC-01A, petitioner has been advised to pay the amount of applicable interest in full by 05.02.2020, failing which show-cause notice will be issued under section 73(1). It further states that in case the Assessee wishes to file any submission against the above ascertainment, the same should be furnished by 05.02.2020 in Part-B of this Form. According to the petitioner, it furnished a reply on 03.02.2020 which is enclosed as Annexure-B to the counter affidavit in W.P (T) No. 161/2021. It took the plea that for the subject period they have discharged output tax liability from the Electronic Credit Ledger and Electronic Cash Ledger amounting to Rs. 29,71,71,253/- . According to them, Taxing statute being substantive in nature and not procedural, interest on delayed payment cannot be levied. They inter-alia took a number of pleas as to the chargeability of interes....
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.... Adityapur Jurisdiction: Adityapur: Jamshedpur: Jharkhand" 12. A perusal of Rule 142 (1A), quoted above, shows that the proper officer may, before service of notice to the person chargeable with tax, interest and penalty under sub-section (1) of Section 73 or sub-Section (1) of Section 74 or sub-section (2) of Section 76, as the case may be, communicate the details of such tax, interest and penalty, as ascertained by the State Officer in Part-A of Form GST DRC-01. Sub-rule (2A) provides that where the person referred to in sub-rule (1A) has made partial payment of the amount communicated to him or desires to file any submissions against the proposed liability, he may make such submission in Part-B of Form GST DRC-01A. In the present case, the Proper Officer has issued the statement in Form GST DRC-01A upon the petitioner intimating him to pay the amount of tax ascertained along with the amount of applicable interest in full by 05.02.2020, failing which show-cause notice will be issued under section 73(1). Petitioner instead of making the payment, filed a reply before the proper officer which has been enclosed and acknowledged by the Respondent in their counter affidavit a....
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....er of the High Court is where an effective alternate remedy is available to the aggrieved person; (iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged; (iv) An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law; (v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questi....
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....assesse and the same has to be discharged on his own. Thus, there cannot be any two view on the liability to pay interest under Section 50(1) of the said Act. In other words, such liability is undoubtedly an automatic liability fastened on the assesse to pay on his own for the period for which tax or any part thereof remains unpaid. 28. Sub-section (2) of Section 50 contemplates that the interest under Sub-section (1) shall be calculated in such manner as prescribed from the day succeeding the day on which such tax was due to be paid. Sub-section (3) of Section 50 further contemplates that a taxable person who makes an undue or excess claim of input tax credit under Section 42(10) or undue or excess reduction in output tax liability under Section 43 (10) shall have to pay interest on undue or excess claim or such undue or excess reduction, at the rate not exceeding 24 percent. 29. A careful perusal of sub Sections (2) and (3) of Section 50 thus would show that though the liability to pay interest under Section 50 is an automatic liability, still the quantification of such liability, certainly, cannot be by way of an unilateral action, more particularly, when the a....
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....n of interest liability cannot be justified especially when the assesse has something to say on such quantum. The Writ Court, thus, in the above line, has disposed the writ petitions, that too, on a condition that the petitioner in each case should pay the admitted liability of interest. 33. A careful perusal of the direction issued by the Writ Court does not indicate anywhere as to how the Revenue is prejudiced by the said order, especially when the Revenue is given liberty to pass an order in a manner known to law and communicate the same to the petitioners, after considering their objections. Thus, I find that the Writ Appeals preferred against the said orders of the Writ Court, as observed by Dr. Vineet Kothari, J, are wholly unnecessary. Therefore, I am in agreement with the view expressed by Dr. Vineet Kothari, J., as I find that entertaining the writ appeal is not warranted, since the Writ Court has not determined the interest liability of each petitioners against the interest of the Revenue in any manner and on the other hand, it only remitted the matter back to the concerned Officer to determine the quantum of such liability. Thus, the second question with regard ....
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....d for any reason other than fraud. In the present case, though it is submitted by learned counsel for CGST that since the tax was paid, Section 73 (1) of the Act shall not be attracted in the case of the petitioner, but the fact remains that the tax was not paid by the petitioner Company in the Government account within the due date, and accordingly it is a case of tax not being paid, within the period prescribed, or when due. In that view of the matter, we are unable to accept the contention of learned counsel for CGST that no show-cause notice was required to be given in this case. Even otherwise, if any penal action is taken against the petitioner, irrespective of the fact whether there is provision under the Act or not, the minimum requirement is that the principles of natural justice must be followed. In the present case admittedly, prior to the issuance of letter dated 6.2.2019, no show-cause notice or an opportunity of being heard was given to the petitioner and no adjudication order was passed." 15. We are thus satisfied that the Respondents have failed to follow the procedure prescribed in law before issuing Summary of the Order in Form GST DRC-07 holding the petitioner....