2020 (4) TMI 56 - HC - GST

Waiver of interest - Regularization of the Petitioner s GSTR-3B for August, 2017 by bringing it in line with GSTR-1 furnished by the Petitioner - The petitioner s case was not that of furnishing erroneous details in GSTR-3B, but it was a case where the System had crashed - HELD THAT - The respondents, in an affidavit dated 3.9.2019, had taken a stand that in the interest of smooth functioning of GST, it is desirable and necessary that manual filing is not permitted. However, subsequently the learned senior standing counsel for the respondents had submitted before the court that in the case of the petitioner, while filing GSTR-3B for September, 2019 in October, 2019, the tax amount of August, 2017 may also be added and thereupon the details submitted in electronic GSTR-3B shall be accepted by the portal. The learned senior standing counsel also submitted that only the principal amount of tax liability of August, 2017 may be declared in such return, and not the liability of interest, subject to the outcome of the petition - Accordingly, it appears that the petitioner was permitted to file FORM GSTR-3B for September, 2019 with taxes payable for August, 2017 and the same has been accepted by the system and, accordingly, the amount of tax payable for August, 2017, which was lying with the designated bank has now been credited to the Government account and the taxes payable are now shown as nil. Thus, the principal grievance voiced in the petition, therefore, no longer survives. Liability to pay interest for eighteen months from 21.9.2017 to October 2019 at a substantially high rate of 18% per annum - HELD THAT - Despite the fact that the petitioner had approached them at the earliest point of time, the respondent authorities maintained silence for a considerable period of time and did not provide remedial measures till directed by this court. The errors in uploading the return were not on account of any fault on the part of the petitioner but on account of error in the system. In these circumstances, it would be unreasonable and inequitable on the part of the respondents to saddle the petitioner with interest on the amount of tax payable for August 2017, despite the fact that the petitioner had discharged its tax liability for such period well within time. Thus, the petitioner had duly discharged the tax liability of August, 2017 within the period prescribed therefor; however, it was only on account of technical glitches in the System that the amount of tax paid by the petitioner for August 2017 had not been credited to the Government account. Hence, the interests of justice would best be served if the declaration submitted by the petitioner in October, 2019 along with the return of September, 2019 is treated as discharge of the petitioner s tax liability of August, 2017 within the period stipulated under the GST laws. Consequently, the petitioner would not be liable to pay any interest on such tax amount for the period from 21.9.2017 to October, 2019. It is held that the declaration submitted by the petitioner in October, 2019 along with the return of September, 2019 shall be treated as the petitioner having discharged its tax liability of August, 2017 within the period stipulated under the GST laws. The petitioner shall not be liable to pay any interest on such tax amount for the period from 21.9.2017 to October, 2019 - Petition allowed.

Summary

Issues Involved:
1. Validity of the Respondents' decision conveyed via letter dated 7.3.2019.
2. Regularization of the Petitioner’s GSTR-3B for August 2017.
3. Entry in the Petitioner’s electronic liability register for August 2017.
4. Liability to pay interest for the period from 21.9.2017 to October 2019.

Detailed Analysis:

1. Validity of the Respondents' Decision:
The petitioners challenged the decision conveyed via letter dated 7.3.2019, seeking its quashing and setting aside. The court noted that the respondents failed to provide timely remedial measures despite the petitioner's continuous follow-ups. The decision to keep the scheme of correction/amendment of errors in GSTR-3B in abeyance as per Circular dated 29.12.2017 further complicated the matter for the petitioner, who had already discharged the tax liability for August 2017.

2. Regularization of the Petitioner’s GSTR-3B for August 2017:
The petitioner faced difficulties in uploading GSTR-3B due to system glitches and crashing of the common portal in September 2017. Consequently, the system accepted GSTR-3B with all columns showing zero, despite the petitioner having paid the tax liability. The court acknowledged that the petitioner had complied with the procedural requirements and discharged the tax liability within the prescribed time.

3. Entry in the Petitioner’s Electronic Liability Register:
The petitioner’s tax payments were not reflected in the electronic liability register due to system errors. Despite the petitioner’s efforts and multiple representations to various authorities, the issue remained unresolved until the court's intervention. The court recognized that the petitioner had paid the tax liability through internet banking, generating CPINs and CINs, which confirmed the payment.

4. Liability to Pay Interest:
The petitioner was informed in March 2019 that it would have to pay interest for the period from 21.9.2017 to October 2019. The court found it unreasonable and inequitable to saddle the petitioner with interest, as the delay was due to system errors and not any fault on the petitioner’s part. The court held that the petitioner had discharged the tax liability within the stipulated period and should not be liable for interest.

Conclusion:
The court allowed the petition, holding that the declaration submitted by the petitioner in October 2019 along with the return of September 2019 shall be treated as discharge of the petitioner’s tax liability for August 2017 within the period stipulated under the GST laws. Consequently, the petitioner was not liable to pay any interest on such tax amount for the period from 21.9.2017 to October 2019. The rule was made absolute with no order as to costs.