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Can an SCN be issued under S 73/ 74 of CGST Act, 2017 only and only for payment of interest on late filing of GSTR-3B ? - Goods and Services Tax - GSTExtract Section 73 of the C GST Act , 2017 covers the following circumstances - Tax not paid Tax short paid Erroneously Refunded Input Tax Credit wrongly availed Input Tax Credit wrongly utilized It also covers the interest and penalty on that tax paid thereon. But can an SCN be issued merely and only for the payment of interest on delayed filing of GSTR-3B ? In short, there is no tax, there is no penalty, only interest as per the SCN issued under S 73 r/w S50 of the CGST/ S GST Act , 2017 . I would like to mention the decision in the case of Rajkamal Builder Infrastructure (P.) Ltd. v. Union of India - 2021 (3) TMI 1139 - GUJARAT HIGH COURT in which it was held in the following paras that - 9. Thus, the plain reading of the aforesaid rules indicates that Form GST DRC 01 can be served by the proper officer along with the 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 and that too, electronically as a summary of notice. 10. We do not find reference of any notice under section 50 so far as Rule 142(1)(a) of the CGST Rules is concerned. In such circumstances, DRC 01 could not have been issued for the purpose of recovery of the amount towards interest on delayed payment of tax. 11. The aforesaid leads us to consider the question that if the amount towards interest on delayed payment of tax is to be recovered, then what is the Form in which the notice is to be issued? ... ... ... 16. Rule 142 makes it clear that the order referred in sub-rule (5) shall be treated as the notice for recovery. 17. From the aforesaid, we have reached to the conclusion that the notice should have been issued in Form GST DRC 07. The Notice should specify the amount of tax, interest and penalty payable by the person chargeable with tax. 18. In view of the aforesaid, the Form GST DRC 01 could be said to have been issued without any authority of law. Even in the case of Godavari Commodities Ltd. v. Union of India 2019 (12) TMI 275 - JHARKHAND HIGH COURT , the counsel for the respondent argued since the matter related to only interest short paid on belated filing of returns, SCN need not have been issued u/ S 73 . But this contention was rejected primarily on the ground that this would amount to violation of principles of natural justice, and an opportunity of being heard ought to have been provided and thus the mechanism of SCN was a necessary process for the same. In the case of Union of India v. LC Infra Projects (P.) Ltd. - 2020 (4) TMI 664 - KARNATAKA HIGH COURT similar line of reasoning that PNJ must not be violated was repeated at Para 12 - 12. Assuming that sub section (1) of Section 73 is not applicable, in our view, before penalizing the assessee by making him pay interest, the principles of natural justice ought to be complied with before making a demand for interest under sub section (1) of Section 50 of the GST Act . Consequence of demanding interest and non-payment thereof is very drastic. (Emphasis Added) Thus it can be seen from Para 12 of the judgment which has been reproduced as above that - 1. The para simulated a scenario in which S 73 was not applicable to the mere demand of interest on delayed payment of returns; 2. That assuming such situation existed, it would be draconian since there would have been no following of principles of natural justice. My questions are the following - 1. That in the Rajkamal Builder Infrastructure judgment, would the notice stage be entirely presumed by the order stage since DRC-07 itself would be treated as notice ? 2. That vide the Godavari Commodities and LC Infra judgment does there arise a situation where an SCN under S 73 is inapplicable for merely demanding interest on delayed payment of tax; and even if it is applicable, it is primarily to follow principles of natural justice ? 3. In the event that issuance of DRC-01 or SCN for that matter is NOT an appropriate step for the initiation of proceedings for interest short paid due to delayed filing of GSTR-3B ; what would be the appropriate step for the department ?
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