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2020 (2) TMI 668

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..... e, 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 the Writ Court does not indicate anywhere as to how the Revenue is prejudiced by the said order, especially when the Revenue is given liberty to pass an order in a manner known to law and communicate the same to the petitioners, after considering their objections. Thus, the Writ Appeals preferred against the said orders of the Writ Court, as observed by Dr.Vineet Kothari,J., are wholly unnecessary - Therefore, I am in agreement with the view expressed by Dr.Vineet Kothari,J., as I find that entertaining the writ appeals is not warranted, since the Writ Court has not determined the interest liability of each petitioners against the interest of the Revenue in any manner and on the other hand, it only remitted the matter back to the con .....

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..... ot 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 Range, through a communication dated 02.05.2019, demanded a sum of ₹ 41,74,620/- as interest for the belated payment of tax for the period from July 2017 to March 2018. The petitioner, by letter dated 10.05.2019 informed that the interest payable works out to ₹ 915121/- only. The petitioner enclosed an Annexure, having the due date for filing return/payment of tax and the actual date of payment and number of days and interest payable. However an attachment of bank account of the petitioner for the alleged non payment of interest as stated in the communication of the said Officer dated 02.05.2019 was issued. 5. The case of the writ petitioner in W.P.No.15624 of 2019 is as follows: The petitioner is taking input tax .....

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..... 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.P.No.15624 of 2019 on 13.06.2019, wherein the operative portion at paragraph 16 reads as follows: "16. In the light of narrative thus far, the following order is passed: a) Writ petitioner undertakes to pay the admitted liability of ₹ 22,39,413/- (Rupees Twenty two lakhs Thirty Nine Thousand Four hundred and Thirteen only) (as admitted in petitioner's aforementioned letter dated 29.03.2019 to the Department within one week from today i.e., on or before 20.06.2019). b) On payment of aforesaid amount on or before 20.06.2019, the impugned communication dated 23.05.2019 bearing reference C.No.IV/16/30/2019-Tech-III from the second respondent to the third respondent bank will stand set aside. c) If the aforesaid p .....

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..... ted 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/16/30/2019-Tech-III from the second respondent to the Indian Overseas Bank will stand set aside. e) On payment of aforesaid amount of ₹ 9,15,121/- on or before 20.06.2019 by the writ petitioner's banker, as mentioned supra, impugned communication from the second respondent to Indian Overseas Bank inter-alia under Section 79 of CGST Act will stand set aside and the second respondent shall consider all the points raised in writ petitioner's reply dated 10.05.2019, more particularly the annexed working sheet, pass an order in a manner known to law and communicate the same to the writ petitioner under due acknowledgement within one week therefrom. f) If the decision taken by the second respondent is in favour of th .....

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..... 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 Bench. However, after hearing both sides, the Hon'ble Judges individually passed two different orders. While Dr.Vineet Kothari,J. dismissed the writ appeals, C.V.Karthikeyan,J. held that the appellants have raised an arguable point which requires deeper consideration of the scope of Section 50 of the Central Goods and Service Tax Act 2017 and that the summary dismissal of the Writ Appeal at the admission stage itself and the view taken by the learned Single Judge require to be revisited. Thus, C.V.Karthikeyan,J. referred the matter to the Hon'ble Chief Justice under Clause 36 of the Letters Patent on the issue as to whether under Section 50 of the CGST Act, interest on delayed filing of returns arises automatically .....

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..... ed 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/16/30/2019-Tech-III from the second respondent to the Indian Overseas Bank will stand set aside. e) On payment of aforesaid amount of ₹ 9,15,121/- on or before 20.06.2019 by the writ petitioner's banker, as mentioned supra, impugned communication f .....

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..... 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 day succeeding the day on which such tax was due to be paid. (3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, 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." 3. The learned counsel for the Appellant submits that every person, who is liable to pay tax, but, fails to pay the tax or any part thereof, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, .....

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..... sessee 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 placed their submissions reiterating their contentions raised before the Writ Court as well as before the Division Bench. 16. Before proceeding further, let me remind myself that the present matter is placed before me, as a third Judge by way of reference, in view of the differing view taken by the Hon'ble Judges in the Division Bench as extracted supra. 17. Let me first consider as to what is the issue, where the Hon'ble Judges had differed which requires third opinion/view. 18. A careful perusal of the separate orders passed by the Hon'ble Judges would first indicate that while Dr.Vineet Kothari,J. dismissed the writ appeal, C.V.Karthikeyan,J. found that the summary dismissal of the writ appeal at the admission sta .....

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..... ; 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 is to be determined after considering the explanation offered by the assessee, since this matter is placed before me by way of reference pursuant to the order made by the Hon'ble Chief Justice, to answer the said question, I am bound to answer the said question as well. 23. From the above narrated facts and circumstances, it is evident that two issues arise for the third view as follows: a) Whether the delayed filing of returns attract the interest liability on the assessee automatically? b) Whether the Writ Appeals ought to have been entertained? 24. In my considered view, a reference to the third Judge has to be made only when two different views are expressed by the Hon'ble Judges in the Division Bench. In this cas .....

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..... ged 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 on which such tax was due to be paid. Sub Section (3) of Section 50 further contemplates that a taxable person who makes an undue or excess claim of input tax credit under Section 42(10) or undue or excess reduction in output tax liability under Section 43(10) shall have to pay interest on undue or excess claim or such undue or excess reduction, at the rate not exceeding 24 percent. 29. A careful perusal of sub Sections (2) and (3) of Section 50 thus would show that though the liability to pay interest under Section 50 is an automatic liability, still the quantification of such liability, certainly, cannot be by way of an unilateral action, more particularly, when the assessee disputes with regard to the period for which the .....

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..... ne 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 issued by the Writ Court does not indicate anywhere as to how the Revenue is prejudiced by the said order, especially when the Revenue is given liberty to pass an order in a manner known to law and communicate the same to the petitioners, after considering their objections. Thus, I find that the Writ Appeals preferred against the said orders of the Writ Court, as observed by Dr.Vineet Kothari,J., are wholly unnecessary. Therefore, I am in agreement with the view expressed by Dr.Vineet Kothari,J., as I find that entertaining the writ appeals is not warranted, since the Writ Court has not determined the interest liability of each petitioners against the interest of the Revenue in any manner and on the other hand, it only remitte .....

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