Interest On Belated Filing Of GSTR-3B Return Not Recoverable Without Adjudication: Jharkhand High Court
The Jharkhand High Court has ruled that recovery of interest under CGST Act, 2017 for delay in filing the GSTR-3B return cannot be initiated without following any adjudication proceedings under the Act in the event the interest liability is disputed by the assessee. The Bench, consisting of Justices Aparesh Kumar Singh and Deepak Roshan, quashed the notice of recovery issued...
The Jharkhand High Court has ruled that recovery of interest under CGST Act, 2017 for delay in filing the GSTR-3B return cannot be initiated without following any adjudication proceedings under the Act in the event the interest liability is disputed by the assessee.
The Bench, consisting of Justices Aparesh Kumar Singh and Deepak Roshan, quashed the notice of recovery issued by the authorities under Section 79 of the CGST Act on the ground that the adjudication proceedings under Section 73 or 74 of the CGST Act were not followed by the revenue authorities.
The Petitioner/Assessee R.K. Transport Private Limited filed a writ petition before the Jharkhand High Court against the levy of interest imposed on the Assessee by the Assistant Commissioner (CGST and Central Excise) under Section 50(1) of CGST Act for delay in furnishing GSTR-3B return for a given period.
The Assessee R.K Transport contended before the High Court that since the liability of interest had been disputed by the Assessee, the same could not have been levied without following any adjudication proceeding under Section 73 or 74 of the CGST Act. The counsel for the revenue department submitted that the interest payable on such delayed payment of tax could have been recovered under the CGST Act. The counsel averred that if the GSTR-3B return had been filed belatedly by the Assessee and the tax dues had not been paid by it within the prescribed time, interest and late fee was by default a confirmed demand within the meaning of Section 50 and Section 47 of the CGST Act respectively, which did not require any adjudication process under Section 73 or 74 of the CGST Act.
Section 50(1) of the CGST Act, 2017 provides that every person who is liable to pay tax under CGST Act or the rules made thereunder but who fails to pay the tax or any part thereof to the Government within the prescribed period, shall pay interest on his own at such rate, not exceeding eighteen per cent., as may be notified. Section 47 provides that any registered person who fails to furnish the specified returns by the prescribed due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.
The High Court observed that the Coordinate Bench of the Jharkhand High Court in the case of Mahadeo Construction Company versus Union of India (2020) had ruled that though the liability of interest under Section 50(1) of the CGST Act is automatic, but the same was required to be adjudicated by initiation of adjudication proceedings under Section 73 or 74 of the CGST Act in the event an assessee had disputed the computation or the very leviability of such interest. The Jharkhand High Court in that case had held that till the adjudication was completed by the Proper Officer under the CGST Act, the amount of interest could not have been termed as an amount payable under the CGST Act or the Rules made thereunder and no recovery proceedings under Section 79 of the CGST Act could have been initiated for recovery of the interest amount.
The High Court observed that the Petitioner/Assessee R.K Transport had disputed the liability towards interest levied by the revenue authorities, and despite the same the revenue department had raised a demand for payment of interest due to delay in furnishing the GSTR-3B return without initiating any adjudication proceedings under Section 73 or 74 of the CGST Act. The High Court thus observed that the case of the Assessee was covered by the ration rendered by the Coordinate Bench in the case of Mahadeo Construction Company (2020).
The High Court therefore allowed the writ petition of the Assessee and granted liberty to the revenue authorities to initiate adjudication proceedings under Section 73 or 74 of the CGST Act to determine the interest liability of the Assessee, after giving it an opportunity of hearing.
Case Title: R.K. Transport Private Limited Versus The Union Of India Through The Principal Commissioner, Central Goods And Services Tax And Central Excise, Ranchi And Another.
Citation: 2022 LiveLaw (Jha) 27
Counsel For The Petitioner/Assessee: Mr. Sumeet Gadodia, Advocate
Counsel For The Respondent: Mr. P.A.S. Pati, Advocate