2020 (9) TMI 776 - Commissioner - GST

Best Judgement Assessment - Levy of GST - allegation that the appellant has failed to respond to the above notices issued and failed to avail the opportunities of personal hearing provided to them in the present appeal - filing of GSTR-3B - wilful suppression of facts or not - levy of interest - penalty - January, 2019 to February, 2019 - CGST/APGST Act, 2017. Whether the best judgment orders through estimating the outward taxable supplies by A.A, are based on any dependable and authentic evidence/basis or not? - HELD THAT - The best judgment assessment under Section 62 can be made only when the dealer fails to file the return specified in Section 39(1) of the Act, read with Rule 61(1) of the Rules, that is the return in Form GSTR-3. Nothing else. Whether the appellant's contention that Section 62 cannot be invoked as GSTR-3B is not any return prescribed under Section 39 of the Act, hence these orders are legal or not? - HELD THAT - The best judgment assessment under Section 62 can be made by taking into account all the relevant material which are already available and/or the material available which is gathered from the other sources. It is also clear from the settled judicial principles on best judgment assessment that the estimations involved in the best judgment assessment should not be based on mere surmises and/or conjectures. Though estimations are involved in the best judgment assessment, the same cannot be without any basis or with some basis. In the instant case, uniformly the suppressed turnovers for a particular month are estimated either mostly on the basis of returns of the outward supplies of the dealer in Form GSTR-1 of that month or on the basis of the return in Form GSTR-3B for the preceding month. The quantum of the outward supplies declared by the dealer in such return is held to be incorrect and incomplete and the same is inflated to 150% of the declared outward supplies to arrive at the probable suppressed outward supplies for that month @ 50% - This cannot be treated as the correct basis for the estimation. No attempt is made by the CTO to gather any material to at least indicate, not to talk of establish, that the quantum of the outward supplies declared by the dealer/supplier in Form GSTR-1 for that month is incorrect and incomplete. It is not even rejected by the AA. But, still the best judgment of the quantum of the outward supplies is made declaring uniformly for all the months that the dealer has suppressed 50% of its declared outward supplies in the relevant months. Thus, the estimations involved in the best judgment assessment herein are not sustainable. They are whimsical. They have no basis. It is declared accordingly. The same are deleted. In view of the above emerged anomalies involving invoking of Section 62 unlawfully, because the relevant Section 39 does not speak of GSTR-3B in the listed returns for the disputed period, as clarified in the above discussed judgment and in view of the erroneous method adopted by A.A for estimating outward taxable supplies through best judgment without mentioning reasons/evidence, hence the tax so levied by the A.A of ₹ 3,43,96,432/- is annulled and modified as per actual tax liability of the appellant for the period from January, 2019 to February, 2019. In the result, the appeal is modified by fixing the actual tax liability from ₹ 3,43,96,432/- (annulled) (to be determined as per GSTR-1 returns of the appellant for the period from January, 2019 to February, 2019. Whether the willful suppression aspect and resultant levy of 100% penalty, is found to be having any basis and such willfulness, has been established by A.A or not? - HELD THAT - The additions made by the AA towards the probable suppressions that formed the basis for the levy of penalty should also fall to the ground. It is trite to say that when the tax is set aside the corresponding penalty should also be set aside. Hence, the penalty which is proportionate to the tax additions made towards the probable suppression is also set aside - Besides, there is not even an iota of evidence established by the AA pointing out the willfulness in the omission to file the return in Form GSTR-3B and/or in the determined suppression of outward tax. None of the facts that could give rise to the inferences of the 'willfulness' are specified in the very brief pre-common assessment Show-Cause Notice and also in the common assessment orders in Form GST ASMT-13. Hence, the levy of penalty @ 100% of determined turnovers are also to be deleted. Thus, a case is made in favour of the appellant to struck down the penalty as the levy is not justifiable. Hence, the total penalty of ₹ 3,43,96,432/- annulled and appeal allowed on this aspect in favour of the appellant. Whether the interest levied by A.A, is in tune with the provisions of the GST Act or not? - HELD THAT - The levy of interest is upheld, but the A.A is directed to compute leviable interest as on date against the actual tax to be paid by the appellant as discussed at above paras. In the end, appeal on this aspect is confirmed. The appellant also not advanced any objections on this aspect. The assessment is partly modified, partly annulled and partly confirmed on the levy made by the assessing authority.

Summary

Issues Involved:
1. Legality of best judgment orders.
2. Applicability of Section 62 for non-filing of GSTR-3B.
3. Justifiability of penalty under Section 122.
4. Legitimacy of interest levied under Section 50.

Analysis:
1. Legality of Best Judgment Orders:
The AA's determination of turnovers was based on mere guesswork without any substantial evidence or material. The AA failed to conduct thorough verifications or gather relevant material, which is a requirement under Section 62 of the CGST Act. The judgment cited several case laws emphasizing that best judgment assessments must be based on relevant material and not arbitrary estimations. The AA's assessment lacked any incriminating material to substantiate the assumed turnovers, making the orders unsustainable in law.

2. Applicability of Section 62 for Non-Filing of GSTR-3B:
The appellant argued that GSTR-3B is not a return prescribed under Section 39 of the CGST Act, and hence Section 62 cannot be invoked. The judgment referred to the Gujarat High Court's decision, which clarified that GSTR-3B is not a return required under Section 39. The AA's reliance on GSTR-3B for best judgment assessment was found to be without jurisdiction, rendering the assessment orders void.

3. Justifiability of Penalty under Section 122:
The AA imposed a 100% penalty under Section 122, alleging willful suppression of facts. However, the appellant had filed GSTR-1 returns, declaring the actual turnovers, negating any willful suppression. The judgment highlighted the necessity of a separate notice for penalty imposition, which the AA failed to issue. The penalty was deemed unjustifiable as the appellant's non-filing of GSTR-3B did not constitute willful suppression.

4. Legitimacy of Interest Levied under Section 50:
The judgment upheld the levy of interest under Section 50, which mandates interest on delayed payment of tax. The AA was directed to compute the interest based on the actual tax liability, as determined by the GSTR-1 returns filed by the appellant.

Conclusion:
The assessment was partly modified, with the tax and penalty annulled, and the interest levy confirmed. The AA's orders were found to be arbitrary and lacking in substantial evidence, and the invocation of Section 62 was deemed inappropriate for non-filing of GSTR-3B. The penalty under Section 122 was set aside due to the absence of willful suppression and procedural lapses in issuing a separate notice. The interest levy was upheld, subject to recalculation based on actual tax liability.