2019 (12) TMI 48 - HC - GST

Recovery proceedings under GST - Scope of section 73 - Legal validity of GSTR-3B returns - it has been stated that Revenue has not followed the prescribed procedure relating to demand and recovery, as provided under the Act of 2017 - It has also been contended that without determination of tax payable by taxable person, no recovery could have been initiated under Section 79 (1)(c) of the Act of 2017 - HELD THAT - The petitioner has certainly not paid the GST. It is noteworthy to mention that GSTR-1 is declaration of tax liability and GSTR-3B is evidence of actual payment. The petitioner has stated that GSTR-1 cannot be termed or classified as self assessed liability, it is only a declaration made for limited purpose. The said issued stands concluded on account of notification dated 09.10.2019 bearing No.49/2019, wherein an amendment has been made in Rule 61 of the GST Rules with retrospective effect and filing of GSTR-3B has been made compulsory. It was mandatory for the petitioner to file GSTR-3B Return - Not only this, bare perusal of the statutory provision as contained under Section 79 of the Act of 2017 and procedure adopted by the respondents reveal that the procedure contemplated under Chapter 15 of the Act of 2017 has been followed as Section 79 (1)(c) falls in Chapter 15 of the Act of 2017 and the same has rightly been invoked. The petitioner has contended that in absence of tax determination under Section 73, no recovery could have been ordered in the manner and method it has been done in the present case - This Court is of the considered opinion that the tax determination has already been done in the present case, as the petitioner itself has quantified its tax liability under the GSTR-1 Returns. The petitioner's contention that in absence of determination of tax under Section 73 no recovery can be made, is unfounded and in fact Section 73 has got no application in the facts and circumstances of the present case. In the present case, there is no necessity to determine the taxable person, as the liability has been self assessed by the petitioner itself. So far as the determination of taxable person in the present case is concerned, the case of revenue rests on the GSTR declaration made by the petitioner itself, and therefore, there was no need of determination of taxable person. Since the liability has already been quantified by the petitioner itself, only attempts are being made for recovering revenue dues under Section 79 (1)(c) of the Act of 2017. It was the petitioner itself, who did not receive the notice issued by the Department, and now, at this juncture cannot blame the Department - The petitioner cannot escape his liability of payment of GST under Act of 2017, especially when he has filed GSTR-1 and has quantified the tax payable by him while submitting the GSTR-1. Petition dismissed.

Summary

Issues Involved:
1. Legality of the notice/order dated 08.07.2019 issued by the Deputy Commissioner, CGST & Central Excise.
2. Compliance with the prescribed procedure for demand and recovery under the CGST Act, 2017.
3. Requirement of tax determination under Section 73 of the CGST Act, 2017.
4. Validity of recovery proceedings initiated under Section 79 (1)(c) of the CGST Act, 2017.
5. Opportunity of hearing before passing the impugned order/notice.
6. Self-assessment and filing of GSTR-1 and GSTR-3B returns.

Detailed Analysis:

1. Legality of the Notice/Order Dated 08.07.2019:
The petitioner, a company registered under the Companies Act, 1956, challenged the notice dated 08.07.2019 issued by the Deputy Commissioner, CGST & Central Excise, which directed the tenants to deposit the rent with the State Exchequer for recovery of dues amounting to ?44,43,804/-. The petitioner contended that the notice was per se illegal and issued contrary to the statutory provisions of the CGST Act, 2017.

2. Compliance with the Prescribed Procedure for Demand and Recovery:
The petitioner argued that the respondent did not follow the prescribed procedure for demand and recovery under the CGST Act, 2017. The petitioner emphasized that without determining the tax payable by the taxable person, no recovery could be initiated under Section 79 (1)(c) of the Act. The respondents countered that the petitioner failed to file mandatory GSTR-1 and GSTR-3B returns, and hence, the recovery was initiated under Section 79 of the Act.

3. Requirement of Tax Determination under Section 73:
The petitioner contended that in the absence of determination of tax under Section 73, no recovery could be made, as no notice of demand was ever issued to the petitioner. The court found this contention unfounded, stating that the tax determination had already been done through the petitioner’s self-assessment in the GSTR-1 returns.

4. Validity of Recovery Proceedings under Section 79 (1)(c):
The respondents argued that Section 79 empowers them to initiate the recovery of government dues. The court upheld this view, stating that the procedure under Chapter 15 of the CGST Act, 2017, was followed correctly, and the recovery proceedings under Section 79 (1)(c) were valid.

5. Opportunity of Hearing:
The petitioner argued that no opportunity of hearing was provided before passing the impugned order/notice. The court noted that the petitioner had not filed GSTR-3B returns and had not deposited the self-assessed tax, thus justifying the recovery action by the respondents.

6. Self-Assessment and Filing of GSTR-1 and GSTR-3B Returns:
The petitioner claimed that GSTR-1 cannot be classified as a self-assessed liability and is only a declaration for limited purposes. The court referred to the notification dated 09.10.2019, which made filing of GSTR-3B mandatory with retrospective effect, thus concluding that the petitioner was required to file GSTR-3B returns. The court noted that the petitioner had not paid GST despite filing GSTR-1 returns, which declared tax liability.

Conclusion:
The court dismissed the writ petition, stating that the petitioner was a chronic defaulter and had not complied with the statutory requirements of filing GSTR-3B returns and paying the self-assessed tax. The court upheld the recovery proceedings initiated by the respondents under Section 79 (1)(c) of the CGST Act, 2017, and found no reason to interfere with the action taken by the respondents.