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2024 (9) TMI 46 - HC - GSTValidity of demand raised due to one-day delay in filing GSTR-3B for September 2020 - reversal of ITC - HELD THAT - Admittedly, the petitioner after availing ITC, filed its GSTR 3B for September, 2020, on 23.10.2020, i.e., with a delay of one day. Though the petitioner stated that due to covid-19 situation, the delay had occurred, the respondent refused to accept the same and issued Form GST DRC 01A on 22.03.2024, proposing to levy tax along with applicable interest and directing the petitioner to pay the same by 05.04.2024. On the failure of the petitioner to pay the amount demanded, the respondent initiated section 73(1) proceedings and issued the show cause notice dated 16.05.2024 which is impugned herein. It is seen from the records that the GST Council in its 53rd meeting, recommended to extend the deadline for filing GSTR-3B returns for the financial years 2017-18, 2018-19, 2019-20, and 2020-21 and the said extension applies retrospectively from 01.07.2017. The case of the petitioner, that too, one day delay in filing GSTR 3B, deserves for consideration. However, the respondent refused to condone the delay and also proposed to reverse the ITC under section 73(1) of the GST Act, which in the opinion of this court, is detrimental to the interest of the petitioner and is hence, liable to be set aside. The show cause notice dated 16.05.2024 passed by the respondent is set aside and this writ petition stands allowed.
Issues:
1. Validity of demand raised due to one-day delay in filing GSTR-3B for September 2020. 2. Interpretation of Section 16(4) of the CGST/TNGST Act, 2017 as procedural or mandatory. 3. Impact of the 53rd GST Council recommendation on extending the deadline for availing ITC. 4. Consideration of COVID-19 as a valid reason for the delay in filing returns. 5. Implications of the show cause notice issued under section 73(1) of the GST Act. Analysis: 1. The petitioner challenged a notice issued by the respondent for tax demand and interest due to a one-day delay in filing GSTR-3B for September 2020, attributing the delay to the COVID-19 pandemic. The respondent proceeded under Section 16(4) of the CGST/TNGST Act, 2017, without condoning the delay, leading to the initiation of proceedings. The petitioner sought to quash the show cause notice dated 16.05.2024, claiming the provisions of Section 16(4) as unconstitutional. The court noted the petitioner's argument that the delay was minimal and due to exceptional circumstances, emphasizing the need for a fair consideration of the case. 2. The petitioner's senior counsel argued that Section 16(4) should be viewed as procedural and not mandatory. Referring to the 53rd GST Council's recommendation to extend the deadline for availing ITC and the proposed retrospective amendment to Section 16(4) of the CGST Act, the counsel contended that the petitioner could benefit from the amendment if it came into effect. Citing a previous court order supporting their stance, the petitioner sought relief based on the potential impact of the proposed amendment on their case. 3. In contrast, the standing counsel for the respondent maintained that the demand was valid, emphasizing the strict application of Section 16(4) and the statutory limitations on claiming input tax credit. The standing counsel argued against the petitioner's entitlement to ITC beyond the prescribed period, advocating for the dismissal of the writ petition. 4. After hearing arguments from both sides and reviewing the case details, the court acknowledged the one-day delay in filing the return and the petitioner's explanation regarding the COVID-19 situation. The court observed that the 53rd GST Council's recommendation to extend deadlines for filing returns warranted consideration, especially in cases of minimal delays like the petitioner's. The court found the respondent's refusal to condone the delay and the proposed reversal of ITC under section 73(1) of the GST Act as prejudicial to the petitioner's interests, leading to the decision to set aside the show cause notice dated 16.05.2024 and allow the writ petition. 5. Consequently, the court ruled in favor of the petitioner, setting aside the impugned show cause notice and allowing the writ petition without imposing any costs. The judgment highlighted the importance of considering exceptional circumstances, such as the COVID-19 pandemic, in cases involving minor delays in compliance with tax regulations.
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