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2023 (9) TMI 1179 - HC - GSTValidity of garnishee proceeding - delay on the part of petitioner in payment of GST dues - no notice for demand of tax issued - violation of principles of natural justice - HELD THAT:- Admittedly there is a delay on the part of petitioner in payment of GST dues. It is also not in dispute that, the petitioner paid the GST dues belatedly, however along with interest as per it’s own calculation. It is noteworthy to mention that the petitioner had addressed letter dated 28.06.2023 to the respondent authorities requesting three months time for payment of interest owing to financial crisis and acute shortage of working capital. The petitioner addressed another letter dated 25.07.2023 disputing the interest liability arrived at by the respondents and further requested the authority to demand interest from due date of filing of GSTR 3B Return till the date of deposit of GST to Electronic Cash Ledger till the issue is decided by Hon’ble High Court. A perusal of Sections 73, 74 and 79 of CGST Act and Rules, 2017 indicate that before issuing garnishee proceedings under Section 79, the authorities shall issue notice to the assessee in terms of Section 73(1) and provide an opportunity to the assessee to submit his reply to the notice and only thereafter, the authorities shall proceed further by taking into consideration the reply / explanation provided by the assessee. In the case of VISION DISTRIBUTION PVT. LTD. VERSUS COMMISSIONER, STATE GOODS & SERVICES TAX & ORS. [2019 (12) TMI 1048 - DELHI HIGH COURT], Hon’ble Delhi High Court held that the taxpayer cannot be made to suffer for no fault of his own, on account of failure of the Government in devising smooth GST systems providing of debiting the Electronic Cash Ledger without filing of GSTR 3B Return. In the present case, admittedly, the respondent authorities have not issued any notice in terms of Section 79(1) of CGST Act, 2017 to the assessee to submit his reply/explanation to the demand notice for delay payments. Instead, the respondent Authorities have straight away issued garnishee proceedings under Section 79 of CGST Act, 2017, by which the petitioner’s bankers were directed to debit the alleged tax dues, which is referred to 73 of the CGST Act, 2017. There is considerable amount of force in the contention of the petitioner that without providing an opportunity of clarifying / explaining, the respondents authorities have calculated that the petitioner is liable to pay a sum of Rs. 1,28,97,355/- on account of late filing of GSTR 3B Return for the period July, 2017 to January, 2023 and had issued the impugned garnishee notices under Section 47(2) of the CGST Act, 2017 - respondent authorities are required to issue notice to the assessee seeking their response, clarifications for non-payment of tax, interest on late payment prior to passing garnishee proceedings under Section 79(1) of the CGST Act, 2017. Therefore, the action of respondent authorities in issuing the proceedings under section 73(1) of CGST Act, 2017 are in clear violation of principles of natural justice. Petition allowed.
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