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TMI Blog2024 (3) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... ter that the petitioner s audit report was published on 10.11.2021 and where in the audit report itself it has been highlighted that the petitioner has since cleared off all the tax liability and has also paid the relevant interest also up to date. Admittedly, the show cause notice was thereafter has been issued much thereafter on 20.04.2022. Admittedly in the instant case, the show cause notice was issued on 20.04.2022, however, during the course of the audit itself certain discrepancies were pointed out by the audit team. Even much before of the final audit report being published, the petitioner is said to have paid the entire tax liability along with the updated interest on 28.10.2022. In the said circumstances, the case of the petitioner is one which that would fall strictly under Sub-Sections (5) and (6) of Section 73 where it has been emphatically laid down by the law makers that any person chargeable with tax, if he pays the amount of tax along with the interest payable there on, proper officer upon receipt of such information shall not initiate any further proceedings under Sub-Section (1) and all the proceedings shall have to deemed to be concluded. Applicability of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue a writ, direction or order, more particularly, one in the nature of a Writ of Mandamus by declaring the impugned order in Original No. 1/2023-24-GST (Supdt.), dated 15.11.2023, and also the consequent demand raised in Form DRC-07 bearing reference No. ZD361223018542R, dated 11.12.2023, as void, illegal, arbitrary, without jurisdiction and without authority of law and to set aside the same. 2. Heard Mr. M. Naga Deepak, learned counsel for the petitioner and Mr. Dominic Fernandes, learned Standing Counsel for Central Board of Indirect Tax (C.B.I.C.), for the respondents. 3. Vide the impugned order, the 1st respondent has confirmed a demand of ₹.92,160/- (CGST ₹.46,080/- + SGST ₹.46,080/-) towards irregularly availed Input Tax Credit (I.T.C.) on ineligible supplies. Further, the authorities concerned have also confirmed demand of notice towards irregularly availed I.T.C. on common services used for providing taxable services and exempted supplies of ₹.2,34,700/-. In addition, there was also a demand for interest amount of ₹.6,642/- and ₹.39,100/- in terms of Section 50 of the Central Goods and Services Tax Act, 2017 (for short, the C.G.S.T. Act ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .S.T Act, particularly relying upon Sub-Section (5) of Section 73 of the C.G.S.T Act, the learned counsel for the petitioner contended that the case of petitioner squarely falls within the purview of Section 73(5) and for this reason itself, the entire show-cause proceedings and the final order under challenge in this writ petition deserves to be set aside / quashed. He further contended that when the petitioner, at the first instance, was given the findings of the audit before the final audit report was submitted on 14.10.2021 and after scrutinizing the same, immediately the petitioner cleared the entire tax payable by him in respect of the I.T.C. that was availed by the petitioner wrongly. The petitioner also paid the entire interest amount on 28.10.2021 itself. According to learned counsel for the petitioner, the show-cause notice in the instant case was issued only on 20.04.2022. Therefore, the proceedings drawn by the respondents would get hit by proviso to Section 73(5) and the writ petition to the aforesaid extent deserves to be allowed. He further submitted that the authorities concerned have wrongly initiated proceedings under Section 74 which otherwise would not be sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been made available to the petitioner by the audit team. The said provisional report was served upon the petitioner on 14.10.2021. The petitioner accepting the said finding immediately discharged the tax liability along with the accrued interest on 28.10.2021, i.e., within a span of around two weeks time, which was much thereafter that the petitioner s audit report was published on 10.11.2021 and where in the audit report itself it has been highlighted that the petitioner has since cleared off all the tax liability and has also paid the relevant interest also up to date. Admittedly, the show cause notice was thereafter has been issued much thereafter on 20.04.2022. 11. At this juncture, it would be relevant to take note of the contents of Section 73 of the C.G.S.T Act. The relevant portion for adjudication of the present writ petition is being reproduced hereunder: 73. Determination of tax not paid or short paid or erroneously refunded or input tax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear indication that Sub-Section (5) refers to even those payments which have been cleared by the taxpayers which were otherwise termed as wrongfully availed I.T.C. 13. What further needs to be appreciated is that on plain reading of the provisions of Section 73(1) of the C.G.S.T Act, particularly Sub-Sections 5 to 8 which are already reproduced in the preceding paragraphs, the law makers were very clear in their mind so far as expecting the taxpayer to clear the unpaid tax or reversal of the wrongfully availed I.T.C. at the earliest in order to provide stringent coercive recovery measures including imposition of penalty. A plain reading of Sub-Section (1) of Section 73 gives an inference of the liability of a taxpayer being in respect of (i) any tax that has not been paid or (ii) any tax which is short paid (iii) any erroneously refunded tax (iv) where ITC has been wrongly availed (v) the I.T.C. having utilized for any reason other than fraud or willful misstatement or suppression of facts in order to evade payment of tax. The said by itself would show how exhaustive was Sub-Section (1) of Section 73 and the intentions of the law makers incorporating all those unpaid or wrongly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, keeping in view the provisions of Sub-Sections (5) and (6), it will go to establish that once having discharged their tax liability also by paying interest on the said tax payable, then no further proceedings could be drawn for the same tax any further. This view of the Bench stands further fortified from reading of Sub-Section (8) as well which again gives an indication that if necessary compliance in respect of tax as is stipulated under Sub-Sections (1) and (3) is paid along with interest even after issuance of show cause notice, even then the penalty cannot be levied and the notice proceedings shall be deemed to have been concluded. 18. Keeping in view the aforesaid statutory provision as it stands so far as Section 73 and the various Sub-Sections of the said Section, the element of fraud or misstatement or suppression of fact with an intention of evading tax which is halved upon by the learned Senior Standing Counsel would arose as has been stated earlier only in the event if the taxpayer fails to meet the provisions of Sub-Section (5) of Section 73. The attempt of the learned Senior Standing Counsel trying to bring the conduct of the petitioner within the purview of frau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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