2022 (10) TMI 132 - HC - GST

Issuance of notice under proviso to sub-section (1) of Section 50 of the CGST Act demanding interest on delayed payment of tax - initiation of recovery proceedings under Section 79 of CGST Act even without issuing a notice under Section 73 of the CGST Act - HELD THAT - Stay is granted to the effect and operation of impugned notice. Accordingly, it is directed that the effect and operation of the impugned notice dated 25.03.2022 (Annexure P/1) shall remain stayed till the next date of hearing.

Summary

Issues:

1. Validity of notice issued under Section 50 of the CGST Act without a show-cause notice under Section 73.
2. Interpretation of the acknowledgment of receipt of tax in relation to the filing date of return.
3. Authority to initiate recovery proceedings under Section 79 without issuing a notice under Section 73.

Analysis:

1. The petitioner argued that the notice dated 25.03.2022 issued under Section 50 of the CGST Act without a show-cause notice under Section 73 is not sustainable in law since the tax due was paid under Section 39(7) of the CGST Act. The petitioner sought a stay on the notice. The respondents contended that filing the return after the due date does not affect the acknowledgment of receipt of tax and justified the notice under Section 50 for demanding interest on delayed payment. The court, after considering the arguments, stayed the effect and operation of the impugned notice until the next hearing.

2. The dispute also involved the interpretation of the acknowledgment of receipt of tax concerning the filing date of the return. The respondents argued that filing the return after the due date does not impact the acknowledgment of receipt of tax. However, the petitioner's counsel highlighted the payment of tax under Section 39(7) and its relation to the notice issued under Section 50. The court's decision to stay the notice indicates a consideration of this interpretation and its impact on the case.

3. Another issue raised was the authority to initiate recovery proceedings under Section 79 without issuing a notice under Section 73 of the CGST Act. The respondents argued that recovery proceedings can be initiated under Section 79 even without a notice under Section 73, citing Section 75(12) of the CGST Act. The petitioner sought interim relief based on the alleged lack of infirmity in the notice issued under Section 50. The court's decision to stay the notice suggests a need for further examination of the authority to initiate recovery proceedings without a notice under Section 73.

In conclusion, the judgment by the Chhattisgarh High Court addressed the validity of the notice issued under Section 50 of the CGST Act, the interpretation of acknowledgment of receipt of tax in relation to filing the return, and the authority to initiate recovery proceedings without a notice under Section 73. The court's decision to stay the notice indicates a preliminary assessment of these issues, with further consideration scheduled for the next hearing after the summer vacation.