TaxTMI 
TaxTMI 
2026 (10) TMI 562
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....tion is whether, and to what extent, the appellant is liable to pay the interest confirmed against it for the financial year 2021-22. 2. The appellant, M/s Groma Infrastructure Limited (formerly MVPR Infrastructure Limited), is a public limited company registered at Raichur under GSTIN: 29AADCM4626Q1ZU. It executes works contracts, such as lift irrigation and electrical works, for Government undertakings in Karnataka. 3. The appellant challenges Order-in-Appeal No. GST: AP:445/2024-25 dated 19.02.2026 (Ref. ZD2902260984324) ("the Order-in-Appeal") of the Joint Commissioner of Commercial Taxes (Appeals), Kalaburagi ("the First Appellate Authority"). By that order, the First Appellate Authority dismissed the appellant's appeal against Order No. ACCT/Audit-4/KLB/2024-25 dated 13.08.2024 (Ref. ZD290824047815V) ("the Order-in-Original"), passed under Section 73(9) by the Assistant Commissioner of Commercial Taxes (Audit)-4, Kalaburagi ("the Adjudicating Authority"). 4. The Order-in-Original confirmed no tax and no penalty. It confirmed interest alone, Rs.44,46,989 in all, under two heads: interest on differential tax paid late through Form GST DRC-03 after the rate of tax on th....
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....e show cause notice 9. On Assignment No. 82/2024-25 dated 03.05.2024, the Adjudicating Authority issued an intimation in Form GST DRC-01A on 05.05.2024 under Rule 142(1A) of the CGST Rules, inviting a response by 13.05.2024. The show cause notice records that the appellant filed a response in Part B of that form but did not pay. 10. A show cause notice in Form GST DRC-01 (Ref. ZD290524085909M) dated 24.05.2024 followed under Section 73(1). It proposed IGST of Rs.10,92,863 on the first finding; interest of Rs.4,09,852 under IGST, Rs.22,24,670 under CGST and Rs.22,22,319 under SGST; and a penalty of IGST Rs.1,09,286. The interest under CGST and SGST was made up of Rs.21,96,829 under each head on the second finding, which is the figure the appellant had itself worked out before the audit, and Rs.27,841 and Rs.25,490 on the third. The reply 11. The appellant replied by an undated letter, described in the appeal memorandum as dated 27.06.2024. Its case was this: (i). At the outset (paragraph 4), it denied the allegations and stated that it was "not liable to pay interest or penalty". (ii). On the credit (paragraph 5), it showed that it had taken the credit ....
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....en paid. It confirmed no IGST interest; and (iv). imposed no penalty. 13. The order closes each finding with the same sentence: that the "submission of the Auditee ... is acceptable and sustainable", followed by "Hence the observation is hereby dropped" for the first finding and "hereby confirmed" for the other two. The sentence fits the first finding. It does not explain the third, where the appellant's claim was in substance rejected. The demand confirmed was as follows (in rupees): Head of interest IGST CGST SGST Total On differential tax paid through DRC-03 Nil 21,96,829 21,96,829 43,93,658 On tax paid late in cash through GSTR-3B Nil 27,841 25,490 53,331 Total Nil 22,24,670 22,22,319 44,46,989 The first appeal 14. The appellant filed its appeal in Form GST APL-01 on the common portal on 04.12.2024 (Ack. AD291224003552F), and a physical copy on 21.12.2024. The appellant itself stated in the appeal that the order was communicated to it on 13.08.2024. The three months under Section 107(1) thus ended on 13.11.2024, and the appeal was 21 days late (22 days on the appellant's own count). With the appeal, t....
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.... (iv). that the appellant had admitted interest of Rs.21,96,829 under each head, in paragraph 6.5 of its reply and in its submission reproduced at page 8 of the Order-in-Original, and had not paid it, so that the appeal was "deemed to have not filed" under Section 107(6)(a). 18. The Order-in-Appeal describes the GSTR-3B interest as "Rs 27841-00 CGST and Rs 27841-00 SGST totaling to Rs 53331-00". The SGST figure is a slip for Rs.25,490, as the total shows. The order does not refer to the petition for condonation, or to any of the grounds on the merits. C. THE APPEAL BEFORE US 19. The General Manager verified the appeal in Form GST APL-05 on 28.04.2026. The Order-in-Appeal was communicated on 19.02.2026. The appeal is within the three months allowed by Section 112(1), which reads: "(1) Any person aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal or ....
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....ce was placed on State of Orissa v. Dr. (Miss) Binapani Dei, AIR 1967 SC 1269; Maneka Gandhi v. Union of India, (1978) 1 SCC 248; Shri Keshav Cements and Infra Ltd. v. Deputy Commissioner of Commercial Taxes (Audit), Bagalkot, 2026 (1) TMI 1431 (Karnataka High Court); DSP Metalliks v. State of Gujarat, 2026 (4) TMI 749 (Gujarat High Court); Harsheel Auto Planet v. Commissioner (Appeals), CGST, Central Excise & Customs, 2025 (5) TMI 765 (Orissa High Court); GAEA Engineers and Contractors (P) Ltd. v. Chief Commissioner of CGST & Central Excise, Odisha, 2025 (11) TMI 493 (Orissa High Court); and CBIC Circular No. 1053/02/2017-CX dated 10.03.2017. 24. It was submitted that a petition for condonation was filed with the appeal, and that the contrary finding is against the record. The delay was short and bona fide, and within the period the First Appellate Authority could condone. Reliance was placed on Collector, Land Acquisition, Anantnag v. Mst. Katiji, (1987) 2 SCC 107; N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123; State of Haryana v. Chandra Mani, (1996) 3 SCC 132; and Sheo Raj Singh v. Union of India, 2023 (11) TMI 814 (SC). 25. It was submitted that the General Manag....
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....o answer. The appellant charged and collected GST at 12% separately on its invoices, so the consideration cannot be treated as cum-tax. Karnataka Golf Association is distinguishable, because no tax had been collected there. 33. It was submitted that the show cause notice carried the audit findings, including the GSTR-3B interest, and that the appellant answered that finding on the merits. 34. At the hearing, the Bench asked the learned State Representative to point out any error in the appellant's reconciliation of the GSTR-3B interest. None was pointed out. F. POINTS FOR DETERMINATION 35. The following points arise: (i). Could the First Appellate Authority dismiss the appeal without hearing the appellant? (ii). Ought the delay of 21 days to have been condoned? (iii). Was the appeal validly signed and verified on behalf of the company? (iv). Was the appeal barred by Section 107(6) for want of payment of an "admitted" amount or of a pre-deposit? (v). Should this Tribunal decide the merits of the first appeal? (vi). Is interest payable on the differential tax paid through DRC-03, and does Rule 35 reduce it? (v....
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....ationship between the company and its advisers. It has nothing to do with the company's own right to be heard. Finding on Point (i): The Order-in-Appeal was passed in breach of Section 107(8) and of the principles of natural justice. It cannot stand on that ground alone. As both sides have argued each of the three threshold grounds fully, we decide them as well. Point (ii): Condonation of delay 39. Sub-sections (1) and (4) of Section 107 read: "(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person. ... (4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month." 40. Sub-section (4) empowers the Appellate Authority to condone a delay of up to....
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.... Point (iii): Authority of the signatory 44. Sub-rules (1) and (2) of Rule 108 of the CGST Rules, so far as relevant, read: "(1) An appeal to the Appellate Authority under sub-section (1) of section 107 shall be filed in FORM GST APL-01, along with the relevant documents, electronically and a provisional acknowledgement shall be issued to the appellant immediately: (2) The grounds of appeal and the form of verification as contained in FORM GST APL-01 shall be signed in the manner specified in rule 26." 45. Rule 26, so far as relevant, reads: "(1) All applications, including reply, if any, to the notices, returns including the details of outward and inward supplies, appeals or any other document required to be submitted under the provisions of these rules shall be so submitted electronically with digital signature certificate or through e-signature as specified under the provisions of the Information Technology Act, 2000 (21 of 2000) or verified by any other mode of signature or verification as notified by the Board in this behalf: Provided that a registered person registered under the provisions of the Companies Act, 2013 (18 of 2013) sha....
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....oceeding; and that procedural defects which do not go to the root of the matter should not be allowed to defeat a just cause. Kingston Computers does not hold otherwise. There, the person who issued the letter of authority was not himself shown to hold any authority from the company, and the suit rested on nothing more. Here, the authority flows from an instrument executed for the company by its Managing Director, and the company's conduct confirms it at every step. 50. The First Appellate Authority noted that the reply to the show cause notice was signed by another authorised signatory. The Order-in-Original also records that another person, Sri Sandeep Prasad, represented the company at adjudication. That shows only that more than one person acted for the company. It does not show that the General Manager lacked authority. The further observation, that the General Manager "cannot depose to the facts of the case" because the appeal did not mention the supposed admission, confuses the merits of a plea with the authority of the person who makes it. Whether the reply contained an admission was a question to be decided. A party's disagreement with the authority's view of it says no....
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.... paid". That is the language of a party arguing in the alternative. A taxpayer who says "you have computed the wrong figure, and even on your own premise it can be no more than this" does not admit the premise. 55. The submission before the audit, reproduced at page 8 of the Order-in-Original, stands on a different footing, and we have considered it with care. There the appellant said, without qualification, that the "liability of interest shall be" Rs.21,96,829 under each head. But it said so in answer to a higher figure, and in the same breath it asked to be relieved of the whole of that interest. Read fairly, the statement accepts the Department's method of computation; it does not concede that the interest is owed. Even if it is read as an admission, it is not an admission in a pleading. It is a statement made in the course of an audit, which the appellant qualified in its reply before adjudication and contested outright in its appeal, on grounds that, if accepted, would leave no interest payable at all. Such a statement is not conclusive. It cannot fix an "admitted" amount under clause (a) against the stand the appellant took when it appealed. That the Adjudicating Authorit....
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.... in the Order-in-Original. No fact that we need is in dispute, and no further inquiry is required. The dispute concerns a single year and interest alone, and it has been pending since 2024. Finding on Point (v): This Tribunal decides the merits of the first appeal in this order. Point (vi): Interest on the differential tax 61. Sub-sections (1) and (2) of Section 50, as they stood at the relevant time, read: "(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: Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in ....
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....it paid the tax from its own funds. That explains its hardship. It does not affect its liability. The tax is owed by the supplier to the Government, and it falls due at the time of supply fixed by the Act, not when the customer chooses to pay. The dispute between a contractor and its customer is theirs to settle; it cannot postpone the Government's entitlement. Nor does the Act give any authority the power to waive interest on the ground of hardship. 65. The only statutory waiver of interest is in Section 128A, and it is confined to the period from 01.07.2017 to 31.03.2020. Sub-section (1) of Section 128A, so far as relevant, reads: "(1) Notwithstanding anything to the contrary contained in this Act, where any amount of tax is payable by a person chargeable with tax in accordance with,- (a) a notice issued under sub-section (1) of section 73 or a statement issued under sub-section (3) of section 73, and where no order under sub-section (9) of section 73 has been issued; or (b) an order passed under subsection (9) of section 73, and where no order under sub-section (11) of section 107 or sub-section (1) of section 108 has been passed; or (c) an....
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....receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:" 68. Sub-section (5) of Section 31 reads: "(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,- (a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment; (b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment; (c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event." 69. The appellant issued its running account bills for the full value of the work measured. Those bills are the invoices on which the differential was computed, by the Adjudicating Authority and by the appellant itself in its own working. Where the invoice is issued within the period prescribed under Section 31, Section 13(2)(a) fixes the time of supply as the date of the invoice or the date of receipt of payment, whichever is earli....
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....he differential tax at the full rate and has not sought to recompute it. Interest follows the tax actually paid late. Finding on Point (vi): Interest under Section 50(1) is payable on the differential tax paid through DRC-03. The cum-tax contention under Rule 35 is rejected. The interest of Rs.21,96,829 under CGST and Rs.21,96,829 under SGST, computed invoice by invoice from the due dates to the dates of payment, is confirmed. Point (vii): Interest on the GSTR-3B payments 73. Sub-section (1) of Section 73, and sub-sections (6) and (7) of Section 75, read: "73. (1) 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 for any reason, other than the 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 so short paid or to whom the 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 inte....
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....Rs.27,890, more than eight days' interest, and deducts, as interest already discharged, only Rs.1,017 under CGST and Rs.3,368 under SGST. It gives no credit for the Rs.24,451. The Revenue has had the appellant's reconciliation since 2024. When asked at the hearing to point out any error in it, it pointed out none. 77. The appellant's working shows a balance of IGST Rs.63, CGST Rs.418 and SGST Rs.419. The Order-in-Original confirmed no IGST interest, and in the appellant's own appeal the demand cannot be enhanced. The IGST figure is therefore left out of account. Finding on Point (vii): The GSTR-3B interest was within the show cause notice. The appellant is entitled to credit for the interest already paid. The interest under this head is reduced from CGST Rs.27,841 and SGST Rs.25,490 to CGST Rs.418 and SGST Rs.419. H. CONCLUSIONS 78. We state our conclusions as follows: (i). Section 107(8) obliges the Appellate Authority to hear the appellant before deciding the appeal, whether on a threshold objection or on the merits. A dismissal on limitation, authorisation or pre-deposit without a hearing cannot be sustained. (ii). Neither the Act nor the Rules pres....