Jharkhand HC stays order levying interest for delayed GSTR-3B returns and later attaching bank property

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Synopsis: The Hon’ble HC, Jharkhand in the matter of Mahadeo Construction Co., Palamau v. Union of India and others [W.P. (T) No. 3517 of 2019 decided on July 24, 2019] has stayed order levying interest to the tune of Rs. 19,59,721/- for delayed filing of GSTR-3B returns, noting that the returns for which the interest was levied, were already filed in September, 2018.

Further, noted that the interest had been levied without entering into adjudicatory process as required under Section 73 of the Central Goods and Services Tax Act, 2017 (“CGST Act”), against which the Petitioner has also a remedy of appeal under Section 107 of the CGST Act.

Facts:

M/s Mahadeo Construction Co. (“the Petitioner”) had filed the return for February, 2018 on September 21, 2018 and for March, 2018 on September 23, 2018 respectively. In spite of that, by order dated March 18, 2019, the Petitioner has been saddled with a total interest of ₹ 19,59,721/- for filing the delayed GSTR-3B.

During the pendency of this writ application, the bank account of the Petitioner has also been attached pursuant to an order dated May 22, 2019, for non-payment of the amount of interest.

Issue involved:

Whether imposition of interest and attaching bank account of Petitioner for delayed filing of Form GSTR-3B is valid?

Held:

The Hon’ble HC, Jharkhand in W.P. (T) No. 3517 of 2019 decided on July 24, 2019 has held as under:

  • The screen shots of the GSTN Portal which has been brought on record shows that the due date for payment of the return for the months of February 2017-2018 and March 2017-2018, was March 31, 2019.
  • The interest has been levied upon the Petitioner without entering into the adjudicatory process as required under Section 73 of the CGST Act against which the Petitioner has also a remedy of appeal under Section 107 of the CGST Act.
  • Notification No. 76/2018 dated December 31, 2018, states that the amount of late fee payable under Section 47 of the CGST Act, shall stand waived for the registered persons who failed to furnish the said return for the months of July, 2017 to September, 2018 by the due date, but furnished the same between the period from December 22, 2018 to March 31, 2019, notes that the Petitioner had furnished the return prior to this period.
  • Allowed Respondents four weeks’ time to file the detailed counter-affidavit in the matter. Till then stayed the order dated May 22, 2019.

Relevant provisions:

Section 73 of the CGST Act

  1. 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 paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised 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 sub-section (10) for issuance of order.

(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.

(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.

(5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

(6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.

(7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.

(8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.

(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.

(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.

(11) Notwithstanding anything contained in sub-section (6) or sub-section (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.