9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 666 - HC - GSTLiability of Interest u/s 50 of CGST Act - Interpretation of statute - Section 73 of CGST Act - whether interest can be determined without initiating any adjudication process either u/s 73 or 74 of the CGST Act in the event of an assesse raising dispute towards liability of interest? - initiation of recovery proceedings u/s 79 of the CGST Act without initiation and completion of the adjudication proceedings under the Act - HELD THAT - A bare reading of Section 73(1) of the Act reveals that where it appears to the Proper Officer that any tax has not been paid or short paid the Proper Officer shall serve notice on the person chargeable with tax, which has not been so paid or which has been short paid requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 of the Act and a penalty leviable under the provisions of the Act and Rules. Thus, a bare reading of Section 73(1) would reveal that if tax has not been paid or has been short paid, a notice is required to be served by the Proper Officer on the assesse not only requiring him to show cause as to why tax be not recovered from it, but also specifying in the notice the interest payable under Section 50 also to be recovered along with penalty. Thus, if there is a short payment of tax or non- payment of tax, a notice is required to be issued even for recovery of interest under Section 50 of the CGST Act. This Court, while interpreting the term tax not paid has held that if a tax has not been paid within the prescribed period, the same would fall with the expression tax not paid as mentioned under Section 73 of the CGST Act. The aforesaid interpretation further finds support from other sub- sections of Section 73, particularly sub-sections (5), (6) and (7) of Section 73 - On going through entire section 73, it would be evident that even in a case where an assesse files his return as per his own ascertainment, pays the tax and even pays interest, but if the said amount paid by the assesse is falling short of the amount actually payable, the Proper Officer is required to initiate proceedings under Section 73(1) for recovery of the said amount of tax and interest. It is not a true that liability of interest under Section 50 of the CGST Act is automatic, but the said amount of interest is required to be calculated and intimated to an assesse. If an assesse disputes the liability of interest i.e. either disputes its calculation or even the leviability of interest, then the only option left for the Assessing Officer is to initiate proceedings either under Section 73 or 74 of the Act for adjudication of the liability of interest. Whether garnishee proceedings under Section 79 of the CGST Act can be initiated for recovery of interest without adjudicating the liability of interest, when the same is admittedly disputed by the assesse? - HELD THAT - Section 79 of the CGST Act empowers the authorities to initiate garnishee proceedings for recovery of tax where any amount payable by a person to the Government under any of the provisions of the Act and Rules made thereunder is not paid . Since in the preceding paragraphs of our Judgment, we have already held that though the liability of interest is automatic, but the same is required to be adjudicated in the event an assesse disputes the computation or very leviability of interest, by initiation of adjudication proceedings under Section 73 or 74 of the CGST Act, till such adjudication is completed by the Proper Officer, the amount of interest cannot be termed as an amount payable under the Act or the Rules - Thus, without initiation of any adjudication proceedings, no recovery proceeding under Section 79 of the Act can be initiated for recovery of the interest amount. Application allowed.
Issues Involved:
1. Whether interest liability under Section 50 of the CGST Act can be determined without initiating any adjudication process either under Section 73 or 74 of the CGST Act in the event of an assessee raising a dispute towards liability of interest. 2. Whether recovery proceedings under Section 79 of the CGST Act can be initiated for recovery of interest under Section 50 of the said Act without initiation and completion of the adjudication proceedings under the Act. Detailed Analysis: Issue 1: Determination of Interest Liability Without Adjudication Process The primary issue is whether the interest liability under Section 50 of the CGST Act can be determined without initiating any adjudication process under Sections 73 or 74 of the CGST Act when there is a dispute raised by the assessee. The petitioner, a partnership firm, argued that the demand for interest amounting to ?19,59,721/- for delayed filing of GSTR-3B Return for February and March 2018 was invalid as it was determined without any adjudication process. The petitioner contended that the interest liability requires determination through an adjudication process as per Section 73 of the CGST Act, especially when the liability is disputed. The respondent argued that the liability to pay interest on delayed payment of tax is automatic under Section 50, and no separate proceedings are required for determining such interest liability. The respondent further contended that the due date reflected on the GSTN Portal as 31st March 2019 was due to a waiver of late fees notified by the Central Government and not an extension of the due date for filing GSTR-3B Return. The court, referring to Section 73 of the CGST Act, concluded that if an assessee disputes the liability of interest, the proper officer must initiate proceedings under Section 73 or 74 for adjudication. The court emphasized that the interest liability under Section 50 is automatic, but its quantification requires an arithmetic exercise, especially when disputed by the assessee. The court cited the Madras High Court's decision in The Assistant Commissioner of CGST & Central Excise vs. Daejung Moparts Pvt. Ltd., which held that while the liability to pay interest is automatic, quantification must be done after considering the assessee's objections. Issue 2: Initiation of Recovery Proceedings Without Adjudication The second issue is whether recovery proceedings under Section 79 of the CGST Act can be initiated for recovery of interest without adjudication when the interest liability is disputed. The petitioner argued that the initiation of garnishee proceedings under Section 79 for recovery of interest was arbitrary and illegal since the interest liability was not adjudicated. The respondent justified the initiation of garnishee proceedings, stating that the liability for payment of interest is automatic on delayed payment of tax, making the interest amount payable under the Act. The respondent relied on two Supreme Court decisions to support their contention that the interest liability does not require adjudication. The court held that without adjudication of the interest liability, the amount cannot be termed as an amount payable under the Act or the Rules. Therefore, recovery proceedings under Section 79 cannot be initiated without initiating and completing the adjudication process under Section 73 or 74 of the CGST Act. Conclusion: The court quashed the impugned letter dated 08.03.2019 demanding interest and the garnishee notice dated 22.05.2019 issued under Section 79 of the CGST Act. The court allowed the respondent authorities to initiate appropriate adjudication proceedings under Sections 73 or 74 of the CGST Act to determine the liability of interest, if any, after providing an opportunity of hearing to the petitioner. The writ application was allowed without any order as to costs.
|
