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2020 (2) TMI 668

..... automatic or the same is to be determined, after considering the explanation offered by the assessee? - HELD THAT:- Though the liability fastened on the assessee to pay interest is an automatic liability, quantification of such liability certainly needs an arithmetic exercise after considering the objections if any, raised by the assessee. It is to be noted that the term "automatic" does not mean or to be construed as excluding "the arithmetic exercise". In other words, though liability to pay interest arises under section 50 of the said Act, it does not mean that fixing the quantum of such liability can be unilateral, especially, when the assessee disputes the quantum as well as the period of liability. Therefore, though the liability of interest under section 50 is automatic, quantification of such liability shall have to be made by doing the arithmetic exercise, after considering the objections of the assessee. Maintainability of writ appeal - Whether the dismissal of the writ appeals by Dr.Vineet Kothari,J. is correct or whether those writ appeals ought to have been entertained for further hearing? - HELD THAT:- A careful perusal of the direction issued by t .....

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..... from July 2017, three types of returns are liable to be filed, GSTR-1 showing the details of outward supplies of goods or services by the assessee (details of purchases), GSTR-2 showing the details of inward supplies of goods or services (details of sales) and GSTR-3 stating the total purchases and total sales and the tax payable and the input tax credit permissible and also GSTR-3B, a monthly return through which the assessee has to remit the tax calculated after deducting the input tax credit available. While discharging the monthly dues, the available ITC can be deducted and the balance is to be paid by way of cash. Because of delay in making payment by the purchasers due to recession in the market, the petitioner could not file the monthly returns for the period from July 2017 to March 2018 in time and consequently, could not remit the dues along with the returns. However, on receipt of the amounts from the purchasers, the petitioner filed monthly returns and paid the taxes, after crediting the ITC. For the period from July 2017 and September 2017, there was no delay in filing the return and also paying the tax dues. However, the Superintendent of Central Excise, Chengalpattu R .....

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..... iling the return and paying the GST within the time. Therefore, the Revenue, by relying upon Section 50 of the said Act, resorted to recover interest on the delayed payment. Such recovery proceedings culminated into the impugned bank attachments. According to the writ petitioners, the impugned bank attachment proceedings were issued in violation of the principles of natural justice and without passing any order determining the liability to pay interest. 7. It is seen that the Revenue contested the writ petitions by claiming that payment of interest under Section 50 of the said Act is automatic. In other words, it appears that the Revenue's contention before the Writ Court was that once a delayed payment of tax was made, liability to pay interest on the same becomes automatic, for which no separate proceedings need to be initiated for determining such interest liability. In support of the above contention, the learned counsel for the Revenue seems to have relied on a Division Bench order of the Telengana High Court dated 18.04.2019 made in W.P.No.44517 of 2018 in Megha Engineering and Infrastructures Limited vs Commissioner of Central Tax and Others. 8. The Writ Court disposed W .....

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..... n, IFSC Code: IOBA0000761 to show that the balance available in the writ petitioner's account as of 12.06.2019 is ₹ 33,77,394/- (Rupees Thirty Three Lakhs Seventy Seven Thousand Three Hundred and Ninety Four only). b) As the bank has not been arrayed as respondent, Registry shall communicate this order to the aforesaid bank at the aforesaid address and from and out of the aforesaid balance of little over ₹ 33,00,000/-, the said bank shall pay out an admitted sum of ₹ 9,15,121/- (Rupees Nine Lakhs Fifteen Thousand One Hundred and Twenty One only) to the Assistant Commissioner of GST and Central Excise, Maraimalainagar Division (first respondent herein) forthwith. c) In all other aspects, communication dated 21.05.2019 bearing reference C.No.IV/16/30/2019-Tech-III from the first respondent to the aforesaid bank will stand set aside. This would mean that the writ petitioner can operate aforesaid bank account with the exception of aforementioned admitted sum of ₹ 9,15,121/-, which shall be paid by the Bank to the first respondent. d) On payment of aforesaid amount on or before 20.06.2019, the impugned communication dated 21.05.2019 bearing reference C.No.IV/ .....

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..... in the reply submitted by each petitioner and to pass an order in a manner known to law and communicate the same to each writ petitioner. It is also made clear in the said order that if the decision taken by the second respondent therein is in favour of the writ petitioner, it is the end of the matter and on the other hand, if it goes against the writ petitioner, they should avail alternative remedy of preferring a statutory appeal to the appellate authority under Section 107 of the CGST Act. 11. Challenging the above orders of the Writ Court, the Revenue preferred the above two writ appeals. In the grounds of appeal, it is contended by the Revenue that the Writ Court failed to see that there is an admitted default in filing the self assessed monthly statements/returns within the statutory period and payment of admitted self assessed tax, which consequently attracts payment of interest under Section 50 of the GST Act. In other words, it is the contention of the Revenue that interest envisaged under Section 50 of the said Act is automatic and to be paid by the defaulter on his own. 12. Both the writ appeals were taken up together for hearing on 23.07.2019 by the Hon'ble Division .....

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..... dge passed the following direction in the order impugned before us:- "5.Following the order made in W.P.No.15624 of 2019, this writ petition is disposed of with the following directions: a) Writ petitioner has produced a computer generated statement for his bank account i.e, Account No.076102000001034, Customer ID 656931 with Indian Overseas Bank, Maraimalainagar (0761), 34, Nandanar Street, Maraimalainagar, Chengalpattu, Tamil Nadu ? 603 209, Email Id: iob0761@iob.in, IFSC Code: IOBA0000761 to show that the balance available in the writ petitioner's account as of 12.06.2019 is ₹ 33,77,394/- (Rupees Thirty Three Lakhs Seventy Seven Thousand Three Hundred and Ninety Four only). b) As the bank has not been arrayed as respondent, Registry shall communicate this order to the aforesaid bank at the aforesaid address and from and out of the aforesaid balance of little over ₹ 33,00,000/-, the said bank shall pay out an admitted sum of ₹ 9,15,121/- (Rupees Nine Lakhs Fifteen Thousand One Hundred and Twenty One only) to the Assistant Commissioner of GST and Central Excise, Maraimalainagar Division (first respondent herein) forthwith. c) In all other aspects, commun .....

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..... ion 50 of the Act to the extent of ₹ 9,15,121/- (in W.A.No.2127/2019) and ₹ 22,39,413/- (in W.A.No.2151/2019) which the Assessee undertook to pay. 6. I do not find any merit in the present Writ Appeals filed by Revenue and the same are liable to be dismissed. Accordingly, they are dismissed. The connected Miscellaneous Petitions are also dismissed." Per: C.V.KARTHIKEYAN, J: " Revenue is in appeal against the order of the learned Single Judge dated 13.6.2019. 2. Section 50 of the CGST Act has been drawn to our attention by the learned counsel for the Appellant which reads is as follows:- "Interest on delayed payment of tax- (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified by the Government on the recommendations of the Council. (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed from the da .....

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..... escape from this liability." 5. I therefore, hold that the appellant has raised an arguable point which requires deeper consideration of the scope of Section 50 of the Central Goods and Services Tax Act, 2017 and consequently, I am of the view that the summary dismissal of the Writ Appeal at the admission stage itself by my learned Brother and the view taken by the learned Single Judge require to be revisited. 6. The matter is, therefore, referred to the Hon'ble the Chief Justice under Clause 36 of the Letters Patent, on the issue as to whether under Section 50 of the CGST Act, the interest on delayed filing of the Returns arises automatically or on assessment and after considering the explanation offered by the Assessee and whether at all that explanation has to be considered by the Assessing Officer and then pass further orders. " 14. Consequent upon the above two differing orders, the matter is placed before me pursuant to an order passed by the Hon'ble Chief Justice. 15. Heard Mr.V.Sundareswaran, the learned Senior Standing Counsel for the appellants and Mr.MA.Mudimannan and Ms.P.Jayalakshmi, the learned counsels appearing for the respondents. Both sides plac .....

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..... as not expressed any opinion or view on the larger question as to whether the interest on delayed filing of returns arises automatically or not. The Hon'ble Judge has only observed that the Assessing Officer is bound to determine the correct liability of interest after considering the objections raised by the assessee. 21. No doubt, C.V.Karthikeyan,J. has observed at paragraph No.4 of his order that once admission is made that returns have not been filed in time, the interest for the delay in filing the returns automatically arises and there cannot be any explanation for the same. In support of his view, the Hon'ble Judge relied on the Division Bench decision of the Telengana High Court made in Megha Engineering & Infrastructures Ltd. case. Insofar as the reliance placed by the Hon'ble Judge in Megha Engineering's case is concerned, it is now brought to my notice that a review petition is filed against the said order in the Telengana High Court, wherein stay has been granted. 22. Therefore, though I find that a categorical view is not expressed by Dr.Vineet Kothari,J. as to whether interest under Section 50 of the said Act is an automatic liability or the same i .....

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..... uction, as the case may be, at such rate not exceeding twenty-four per cent, as may be notified by the Government on the recommendations of the Council." 27. A careful perusal of the above said provision would show that every person who is liable to pay tax, but fails to pay the same or any part thereof within the period prescribed shall, on his own, pay interest at such rate not exceeding 18% for the period for which the tax or any part thereof remains unpaid. Thus, sub clause (1) of Section 50 clearly mandates the assessee to pay the interest on his own for the period for which the tax or any part thereof remains unpaid. The liability to pay interest is evidently fastened on the assessee and the same has to be discharged on his own. Thus, there cannot be any two view on the liability to pay interest under Section 50(1) of the said Act. In other words, such liability is undoubtedly an automatic liability fastened on the assessee to pay on his own for the period for which tax or any part thereof remains unpaid. 28. Sub Section (2) of Section 50 contemplates that the interest under Sub Section (1) shall be calculated in such manner as prescribed from the day succeeding the day .....

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..... disputing the quantum of interest claimed by the Revenue by contending that the interest liability was worked out on the entire tax liability instead of restricting the liability to the extent of tax unpaid. It is further seen that the writ petitioners have placed some worksheets, wherein they have claimed some ITC credit for every month as well. Their grievance before the Writ Court was that the impugned bank attachment ought not to have been resorted to without determining the actual quantum of liability. 32. Therefore, it is evident that the dispute between the parties to the litigation is not with regard to the very liability to pay interest itself but only on the quantum of such liability. In order to decide and determine such quantum, the objections raised by each petitioners shall have to be, certainly, considered. Undoubtedly unilateral quantification of interest liability cannot be justified especially when the assessee has something to say on such quantum. The Writ Court thus, in the above line, has disposed the writ petitions, that too, on a condition that the petitioner in each case should pay the admitted liability of interest. 33. A careful perusal of the direction is .....

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