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2023 (11) TMI 1339 - HC - GSTImposition of a penalty under Section 73(11) of the Central Goods and Services Tax Act (CGST Act) and State Goods and Services Tax Act - It was the case of the appellant that the show cause notice did not specifically refer to the provisions of Section 73(11) of the CGST/SGST Act but had proceeded on the assumption that what the appellant was liable to was only a penalty under Section 73(8) of the CGST/SGST Act which on the facts of the instant case did not apply. HELD THAT - It is not in dispute that the differential tax amount demanded from the appellant pertains to transactions covered by invoices in which the appellant had clearly shown the price of the goods and also the tax amounts due from the customer concerned. While paying the tax due to the State along with the returns filed by the appellant the appellant had failed to include the tax amounts covered by the invoices considered by the Assessing Authority for the issuance of the demand for differential tax and it was under those circumstances that the demand for differential tax came to be made as against the appellant. While it may be a fact that Ext.P1 notice issued to the appellant did not specifically refer to Section 73(11) of the CGST/SGST Act when we find that on the admitted facts the appellant had not paid tax due to the State despite collecting the same from its customers then as per the statutory provisions it is the provision of Section 73(11) and not the provision of Section 73(8) that will apply to determine the penal liability of the appellant. The Assessing Authority having found that as per the provisions of Section 73(11) of the CGST/SGST Act the appellant would be liable to penalty in view of the non-payment of tax collected from its customers there are no reason to interfere with the findings of the learned Single Judge that upheld the order of the Assessing Authority laying down the correct position in law. Merely because the show cause notice issued to the appellant did not refer to a particular statutory provision the appellant cannot be said to have been prejudiced when the facts leading to the invocation of the statutory provision concerned were admitted by the appellant. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDERED The core legal questions presented and considered in this judgment are as follows:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justification of Penalty under Section 73(11) Relevant legal framework and precedents: The relevant provisions are Sections 73(8), 73(9), and 73(11) of the CGST/SGST Act. Section 73(11) specifically deals with the penalty for non-payment of tax collected from customers. Court's interpretation and reasoning: The court interpreted that the penalty under Section 73(11) was applicable because the appellant had collected tax from its customers but failed to remit it to the state. The court emphasized that the statutory provision applicable is determined by the factual matrix of the case, not merely by the references in the show cause notice. Key evidence and findings: The evidence showed that the appellant had issued invoices indicating tax amounts but did not include these amounts in the tax returns filed, leading to a demand for differential tax. Application of law to facts: The court applied Section 73(11) based on the fact that the appellant collected tax but did not pay it to the state, thus justifying the penalty under this section. Treatment of competing arguments: The appellant argued that the penalty could not be imposed under Section 73(11) since the show cause notice did not mention it. The court rejected this argument, stating that the absence of a specific statutory reference in the notice did not prejudice the appellant, given the admitted facts. Conclusions: The court concluded that the imposition of the penalty under Section 73(11) was justified and that the learned Single Judge's decision to uphold the penalty was correct. Issue 2: Alleged Violation of Natural Justice Relevant legal framework and precedents: Principles of natural justice require that parties be informed of the case against them and have an opportunity to respond. Court's interpretation and reasoning: The court reasoned that the principles of natural justice were not violated because the appellant was aware of the factual basis for the penalty, even if the specific statutory provision was not mentioned in the notice. Key evidence and findings: The court noted that the appellant admitted to the facts that led to the invocation of Section 73(11), and thus, there was no procedural unfairness. Application of law to facts: The court applied the principles of natural justice, determining that the appellant had adequate notice of the factual allegations and an opportunity to contest them, satisfying the requirements of fairness. Treatment of competing arguments: The appellant's argument that the lack of specific statutory reference violated natural justice was dismissed as unpersuasive, given the appellant's admission of the underlying facts. Conclusions: The court concluded that there was no violation of natural justice, and the appellant was not prejudiced by the lack of specific statutory reference in the notice. 3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "Merely because the show cause notice issued to the appellant did not refer to a particular statutory provision, the appellant cannot be said to have been prejudiced when the facts leading to the invocation of the statutory provision concerned were admitted by the appellant." Core principles established: The applicability of a statutory provision for penalty is determined by the factual circumstances, not merely by the wording of the notice. The principles of natural justice are satisfied if the party is aware of the factual basis for the action and has an opportunity to respond. Final determinations on each issue: The court upheld the penalty under Section 73(11) of the CGST/SGST Act, finding no violation of natural justice and concluding that the appellant was not prejudiced by the lack of specific statutory reference in the show cause notice.
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