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TMI Blog2022 (3) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Officer in Part-A of Form GST DRC-01. Sub-rule (2A) provides that where the person referred to in sub-rule (1A) has made partial payment of the amount communicated to him or desires to file any submissions against the proposed liability, he may make such submission in Part-B of Form GST DRC-01A. In the present case, the Proper Officer has issued the statement in Form GST DRC-01A upon the petitioner intimating him to pay the amount of tax ascertained along with the amount of applicable interest in full by 05.02.2020, failing which show-cause notice will be issued under section 73(1). Petitioner instead of making the payment, filed a reply before the proper officer which has been enclosed and acknowledged by the Respondent in their counter affidavit also. However, no show-cause notice under section 73(1) was issued thereafter. It is clear that though the petitioner did not pay the amount of tax and interest intimated to him in Form GST DRC-01A and instead submitted his reply thereto, the Respondent despite the stipulation contained in Form GST DRC-01 failed to issue any show-cause notice upon him under section 73(1) of JGST Act, 2017. When the petitioner had disputed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST DRC-07 dated 26.02.2020 in the respective writ petitions relating to different tax periods in question are accordingly quashed. Petition allowed. - W.P (T) No. 177 of 2021 With W.P (T) No. 1261 of 2020 With W.P (T) No. 161 of 2021 - - - Dated:- 22-3-2022 - Hon ble Mr. Justice Aparesh Kumar Singh and Hon ble Mr. Justice Deepak Roshan For the Petitioner: M/s K. Kurmi, N.K. Pasari, Sidhi Jalan, Advocates For the Resp.-CGST: M/s Amit Kumar, Ashish Kr. Shekhar, Advocates For the Resp.-State: Mr. Sachin Kumar, A.A.G-II Mr. Ashok Kr. Yadav, G.A-I Mr. P.A.S. Pati, G.A-II For the Resp.-Union of India:M/s Prabhat Kr. Sinha, Vibha Bakshi, CGC Heard learned counsel for the parties. 2. Initially, W.P (T) No. 1261/2020 was preferred by the petitioner. Vide order dated 04.01.2021, petitioner was allowed liberty to assail the respective demands for the Financial Years 2018-19 and 2019-20 in separate writ petitions as the consequential relief relating to challenge of the demand notices relating to Financial Years 2017-18, 2018-19 and 2019-20 had been combined in W.P(T) No. 1261/2020. Subject matter in W.P (T) No. 177//2021 relates to the tax period for Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titions under Article 226 / 227 of Constitution of India are maintainable as the present proceedings have been initiated without issuing a proper show cause notice. It is contended that no show cause notice under section 73 of 74 of the JGST Act, 2017 has been issued before passing the adjudication order in spite of clear mention in Form GST DRC-01 dated 28.01.2020. In support of the submission, petitioner has relied upon the following decision. i. Magadh Sugar Energy Ltd. Versus State of Bihar others [2021 SCC Online SC 801] ii. Mahadeo Construction Co. Versus Union of India [2020 (36) G.S.T.L 343 (Jhar.]. iii. Godavari Commodities Ltd. Versus Union of India [2020 (33) G.S.T.L 16 (Jhar.) (B) That, Interest under section 50(1) of the Act cannot be demanded for delay in filing monthly return in Form GSTR-3B, but for the delay in payment of the taxes. Section 50 deals with the liability to pay interest on unpaid tax when a person fails to pay tax. It does not speak anything when a person has paid tax in accordance with Section 49. Proviso to Section 50(1) cannot travel beyond or be inconsistent with or make addition to the main provision. It must be li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Same analogy will apply to Electronic Cash Ledger because new Proviso does not expand the main enactment. For the purposes of this Section, date of credit in Electronic Cash Ledger is relevant and for the purposes of Section 9(1), date of filing return is relevant. Therefore, once the amount is deposited in the Electronic Cash Ledger within 20th of the next month, any delay in filing GSTR-3B would not attract interest. It is submitted that TDS deducted under Section 51 and TCS collected under section 52 of JGST Act are taxes credited into the Electronic Cash Ledger. The advance deposit in the Electronic Cash Ledger, TDS and TCS go to the common pool and are in the nature of advance tax. Therefore, while interpreting the provisions of Section 50, intention of the legislature can be gathered from the scope of the Act and other provisions of Section 9, 39, 49, 50, 51, 52, 54 and Rule 61. Learned counsel for the petitioner has relied upon the case of Manik Lal Majumdar and others versus Gauranga Chandra Dey and others [(2005) 2 SCC 400]. Learned counsel for the petitioner has also drawn attention to Section 54(12) of the Act which provides that if the amount in Electronic Cash L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not make levy of interest retrospective. The liability towards interest is substantive and therefore, cannot apply retrospectively. Levy of interest under a taxing statute is substantive and not procedural. Proviso to Section 50(1) provides for payment of interest on tax which is not discharged as per return filed in GSTR-3 under Section 39(1) read with Rule 61(1) prior to retrospective amendment as above and not as per return in GSTR-3B under Rule 61(5). Return in Form GSTR-3B was initially brought into operation by way of insertion of Rule 61 of CGST (Fourth Amendment) Rules, 2017 vide Notification No. 10/2017 dated 28.06.2017 issued by the Central Government with effect from 01.07.2017 as a mere stopgap measure in lieu of return in Form GSTR-3 as prescribed under Section 39(1) of the Act read with Rule 61(1) of the Rules. Subsequently, vide Notification No. 17/2017-CT dated 27.07.2017, the Central Government amended sub-Rule (5) of Rule 61, whereby the words in lieu of GSTR-3 was omitted, meaning thereby that the return in GSTR-3B is not a return in lieu of return in Form GSTR-3. Similar amendment in Rule 61(5) was made in the JGST Rules, 2017 vide Notification dated 29.06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. Referring to Chapter on Internal Aids to Construction, it is submitted that proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso would fall within the main enactment. Ordinarily, it is foreign to the proper function of proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. When on a fair construction the principle provision is clear, a proviso cannot expand or limit it. It is further submitted by referring to the case of Abdul Jabbar Butt versus State of Jammu Kashmir [AIR 1957 SC 281, equivalent citation 1957 S.C.R. 51], referred to in the book, that it is fundamental rule of construction that proviso must be considered in relation to the principal matter to which it stands as a proviso. Since the natural presumption is that but for the proviso, the enacting part of the section would have included the subject matter of the proviso, the enacting part should be generally given such a construction which would make the exceptions carved out by the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under section 47, rather interest is being demanded in terms of Section 50 which clearly imposes liability on the registered person to pay interest on the amount of tax paid by debiting the Electronic Cash Ledger. The proviso to Section 50 is not under challenge. In reply to the contention relating to retrospective application of GSTR-3B with effect from 01.07.2017 by substituting Rule 61(5), it is contended that it does not make levy of interest retrospective. Section 50 was there in the statute book since inception. By virtue of Section 50(1), interest was payable on the gross tax liability. Now, proviso inserted to Section 50 has clarified the situation by limiting the interest liability on that portion of the tax which is paid by debiting the Electronic Cash Ledger. The interest liability has not been given retrospective effect, rather the scope of liability has been limited with retrospective effect. Therefore, argument of learned counsel for the petitioner based on return in Form GSTR-3B / GSTR-3 with reference to Rule 39(1) read with Rule 61(5) is misplaced and not tenable. Petitioner had filed its return for the month of July 2017 on 07.09.2017 in Form GSTR-3B. Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 and 2019-20 in the respective writ petitions. Petitioner has also sought quashing of the Summary of the Order issued in Form GST DRC-07 dated 26.02.2020 in the respective writ petitions. Petitioner has also raised a contention that interest under section 50(1) is not leviable on the taxes paid. It cannot be demanded for any delay in filing monthly return in Form GSTR-3B once the amount is deposited / credited in Electronic Cash Ledger in accordance with Section 49. Interest under section 50(1) being compensatory in nature, it can be demanded for the amount withheld by the registered person or if the amount remains unpaid or the registered persons fails to pay the tax. Since the charge of the interest has been disputed by the petitioner, the same can only be levied after an adjudication proceeding under section 73 or 74 of the Act after proper show-cause notice and opportunity to reply. In this regard, learned counsel for the petitioner has relied upon the case of Mahadeo Construction Co. (Supra) decided by a Coordinate Bench of this Court, of which one of us (Deepak Roshan, J) was a Member. 8. Following questions emerge for consideration in these writ petitions from the plead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts. (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for any reason, 8 other than the reason of fraud or any willful misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilized input tax credit, 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 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in subsection (10) for issuance of order. (3) Where a notice has been issued for any period under subsection (1), the proper officer may serve a statement, containing the details of tax not paid or sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-section (6) or subsection (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax. Rule 142 (1) (2) of JGST Rules, 2017 is also quoted hereunder: CHAPTER XVIII DEMANDS AND RECOVERY [142. Notice and order for demand of amounts payable under the Act.-( 1) The proper officer shall serve, along with the (a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01, (b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable. [(1A) The proper officer shall, before service of notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, shall communicate the details of any tax, interest and penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 2019-20 00.00 29,36,819.13 IGST Act 2019-20 00.00 27,50,978.88 Cess 2019-20 00.00 00.00 Total 00.00 86,24,617.15 The grounds and quantification are attached / given below: You have filed GSTR-3B after due date, but you have not paid Interest U/S 50 of SGST Act, 2017 on Tax/Cess Paid in Cash because it was not system calculated. You are hereby advised to pay the amount of tax as ascertained above alongwith the amount of applicable interest in full by 05.02.2020, failing which Show Cause Notice will be issued under section 73(1). You are hereby advised to pay the amount of tax as ascertained above alongwith the amount of applicable interest and penalty under section 74(5) ..... failing which Show Cause Notice will be issued under section 74 (1). N.A In case you wish to file any submissions against the above ascertainment, the same may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of GSTR-3B and not depositing due interest on his own . 3. Description of goods / services- Sr.No. HSN Description 1. 72011000 PIG IRON AND SPIEGELEISEN IN PIGS, BLOCKS OR OTHER PRIMARY FORMS-NON-ALLOY PIG IRON CONTAINING BY WEIGHT 0.5% OR LESS OF PHOSPHORUS. 2. 72041000 FERROUS WASTE AND SCRAP; REMELTING SCRAP INGOTS OF IRON OR STEEL WASTE AND SCRAP OF CAST IRON 4. Section of GST Act under which demand is created: Others 5. Details of demand Sr. No. Tax rate (%) Turnover Place of Supply Act Tax/Cess Interest Penalty Others Total 1. 0 0.00 Jharkhand IGST 0.00 3,070,101.58 0.00 0.00 3,070,101.58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2017. When the petitioner had disputed the demand of interest intimated to him, the adjudication order could not have been passed without proper show-cause notice. Thus, Respondents have failed to follow the principles of natural justice and the procedure prescribed under section 73(1) of JGST Act before issuing the Summary of the Order in Form GST DRC-07. The writ petition is therefore, maintainable under Article 226 of Constitution of India on the proposition well settled by the Apex Court. [ See: Magadh Sugar Energy Ltd. versus State of Bihar others, 2021 SCC OnLine SC 801], para-25 thereof is quoted hereunder: 25. While a High Court would normally not exercise its writ Jurisdiction under Article 226 of the Constitution If an effective and efficacious alternate remedy is available, the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies. This principle has been crystallized by this Court In Whirpool Corporation v. Registrar of Trademarks, Mumbai and Harbanslal Sahni v. Indian Oil Corporation Ltd. Recently, in Radha Krishan Industries v. State of Himachal Pradesh a two judge Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t para-21 of the judgment is extracted hereunder: 21. 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. Recently, the Hon ble Madras High Court, in its decision dated 19th December, 2019 rendered in Writ Appeals in the case of The Assistant Commissioner of CGST Central Excise and others Vs. Daejung Moparts Pvt. Ltd. and ors, has taken similar view. The said Writ Appeals were initially decided by a Two Judges Bench of the Hon ble Madras High Court and divergent views were taken by the Hon ble Judges on the issue of initiation of adjudication proceedings before imposing liability of interest under Section 50 of the Act. The matter was, thus, referred to learned Third 12 Judge, which was decided vide Judgment dated 19th December 2019 in the following terms:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot mean or to be construed as excluding the arithmetic exercise . In other words, though liability to pay interest arises under Section 50 of the said Act, it does not mean that fixing the quantum of such liability can be unilateral, especially, when the assesse disputes the quantum as well as the period of liability. Therefore, in my considered view, though the liability of interest under section 50 is automatic, quantification of such liability shall have to be made by doing the arithmetic exercise, after considering the objections of the assessee. Thus I answer the first issue accordingly. xxx xxx xxx 31. It is to be noted at this juncture that in both the writ petitions, the respective writ petitioners are not disputing their liability to pay the interest on the delayed payment of tax. On the other hand, they are disputing the quantum of interest claimed by the Revenue by contending that the interest liability was worked out on the entire tax liability instead of restricting the liability to the extent of tax unpaid. It is further seen that the writ petitioners have placed some worksheets, wherein they have claimed some ITC credit for every month as well. Their griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the procedure stipulated under the Act as indicated by them in Form GST DRC-01A containing the intimation of the tax ascertained against the petitioner. Summary of the Order has been issued upon the petitioner in Form GST DRC-07 on his GSTN portal without following the principles of natural justice. In this regard, it is also pertinent to refer to the opinion of this Court in the case of Godavari Commodities Ltd. (Supra) at para-7, which is quoted hereunder: 7. In order to appreciate the contention of learned counsel for the CGST, Section 73(1) of the CGST Act needs to be looked into, which reads as follows:- 73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts.- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee fails to pay the same by the due date, as per Section 50(1) of the Act. Since there is no delay in payment of the tax, interest is not chargeable for late filing of GSTR-3B for which, a late fee has been prescribed under Section 47 of the Act which the petitioner had duly paid. Petitioner has also submitted that only the balance amount of tax which was paid through Electronic Cash Ledger after the due date, is liable to be charged for interest which the petitioner had also paid. However, since the proceedings have been held to be vitiated on failure to follow the principles of natural justice and the procedure prescribed under section 73(1) of JGST Act, 2017, we consciously refrain from making any comments on the merits of this contention raised by the petitioner at this stage. The impugned Summary of the Order contained in Form GST DRC-07 dated 26.02.2020 in the respective writ petitions relating to different tax periods in question are accordingly quashed. Respondents are at liberty to issue proper show-cause notice in terms of Section 73(1) of JGST Act, 2017 with opportunity to the petitioner to file response thereto before passing any adjudication order. It is open to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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