TMI Blog2020 (9) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 62 can be made by taking into account all the relevant material which are already available and/or the material available which is gathered from the other sources. It is also clear from the settled judicial principles on best judgment assessment that the estimations involved in the best judgment assessment should not be based on mere surmises and/or conjectures. Though estimations are involved in the best judgment assessment, the same cannot be without any basis or with some basis. In the instant case, uniformly the suppressed turnovers for a particular month are estimated either mostly on the basis of returns of the outward supplies of the dealer in Form GSTR-1 of that month or on the basis of the return in Form GSTR-3B for the preceding month. The quantum of the outward supplies declared by the dealer in such return is held to be incorrect and incomplete and the same is inflated to 150% of the declared outward supplies to arrive at the probable suppressed outward supplies for that month @ 50% - This cannot be treated as the correct basis for the estimation. No attempt is made by the CTO to gather any material to at least indicate, not to talk of establish, that the quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in favour of the appellant to struck down the penalty as the levy is not justifiable. Hence, the total penalty of ₹ 3,43,96,432/- annulled and appeal allowed on this aspect in favour of the appellant. Whether the interest levied by A.A, is in tune with the provisions of the GST Act or not? - HELD THAT:- The levy of interest is upheld, but the A.A is directed to compute leviable interest as on date against the actual tax to be paid by the appellant as discussed at above paras. In the end, appeal on this aspect is confirmed. The appellant also not advanced any objections on this aspect. The assessment is partly modified, partly annulled and partly confirmed on the levy made by the assessing authority. - Order No. 5132/2020 in Appeal No. APL1900230 - - - Dated:- 16-3-2020 - P. Vaishnavi, Jt. Comm. (ST) And Appellate Authority (ST) ORDER P. VAISHNAVI, JT. COMM. (ST) APPELLATE AUTHORITY (ST) 1. This appeal is filed by M/s. Omsai Professional Detective and Security Services Private Limited, D. No. 57-3-4, Sri Rama Nilayam, Yadavula Bazar, Patamata, Vijayawada (hereinafter referred to as 'Appellant') against the tax assessment orders passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y suppressed such 150% of the returned turnovers in Form GSTR-1, in such default. The details of such total tax, interest and penalty levied are given below in the table. 7. Thus, the A.A has levied the tax, penalty and interest as detailed hereunder: Tax : ₹ 3,43,96,432/- Penalty : ₹ 3,43,96,432/- Interest : ₹ 8,30,115/- Total : ₹ 6,96,22,979/- 8. Aggrieved by the above orders passed by the assessing authority, the appellant has preferred the present appeal and disputed the levy of tax, penalty and interest totaling to an amount of ₹ 6,96,22,979/-. Grounds of Appeal;- 9. The grounds of appeal filed by appellant in the appeal are extracted hereunder; (1) Appellant submits that the impugned order is ex facie illegal and untenable in law since the same is contrary to facts and judicial decisions. (2) As stated in the background facts, and as an elaboration to the same, the appellant would like to explain the practical difficulty faced at the time of committing default of non-filing of return, which had occurred purely as a. result of helplessness and was undoubtedly without any malicious intention of evading taxes. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates. (7) As seen from the above, the proper officer may assess the tax liability only inter alia if the (a) registered person failed to furnish the returns under section 39 of CGST Act, 2017. (b) Notice under section 46 of CGBT Act, 2017 is served; The above-mentioned pre-requisites are not fulfilled in the present set of factual matrix as explained hereinbelow. In Re : No failure in furnishing of the returns u/s. 39, ibid (8) Appellant submits that GST was introduced w.e.f. 1-7-2017. According to the original scheme of GST, a person was required to file details and returns monthly as explained below: (a) FORM GSTR-1 - As per Section 37 of the CGST Act, 2017 read with Rule 59 of CGST Rules, 2017, a person is required to file FORM GSTR-1 mentioning details of the outward supply effected during a tax period. Accordingly, the entire outward supply (that is sales, including inter-state suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be construed that FORM GSTR-3B is a return which will be notified by the Commissioner of GST and it has no nexus with FORM GSTR-3 the way it had before this amendment and accordingly, it can be construed that FORM GSTR-3B is not a return prescribed under Section 39 of CGST Act, 2017 as the very foundation of the parity clause between two returns has been amended so as to partake either of the returns colour in isolation. (12) Also the fact that Rule 61(1) states, Every registered person other than a person referred to in section 14.........shall furnish a returns specified under sub-section (1) of section 39 in FORM GSTR-3 electronically.......... . Thereby drawing no relevance to GSTR-3B with GSTR-3 and leaving no room for doubt regarding the distinct identity of both the returns. In other words, the GSTR-3 and GSTR-3B are two different returns while the GSTR-3 is return prescribed u/s. 39, ibid read with rule 61(1) of CGST Rules, 2017 and the GSTR-3B is not so. (13) In this regard, Appellant wishes to rely on the Hon'ble Gujarat High Court in the case of AAP and Co., Chartered Accounts v. UOI 2019-TTOL-1422-HC-AHM-GST held that GSTR-3B is not a return u/s. 39. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid notice u/s. 46, ibid in form GSTR-3A. Similar to the Section 62 of CGST Act, 2017, the Section 46, ibid also refers to the returns to be filed u/s. 39, ibid i.e. GSTR-3 and not the GSTR-3B returns thereby there is no jurisdiction to serve the notice u/s. 46, ibid for failure in filing of the GSTR-3B returns. The submissions made supra as to what constitutes the return u/s. 39 would equally apply here and Appellant would like to reiterate the same. In Re : Notice in GSTR-3A (u/s. 46, ibid) was not issued prior to the assessment u/s. 62, ibid: (16) Without prejudice to the above, Appellant submits the Ld. Adjudicating authority has made the assessment u/s. 62, ibid without first serving the notice u/s. 46, ibid. Hence, the impugned assessment fails on this count also. In Re : Penalty u/s. 122 is not imposable: (17) Appellant submits the penalty is not imposable as there was no offense committed that attracts penal action u/s. 122, CGST Act, 2017. The fact that Appellant has been filing the GSTR-1 returns regularly and also remitting the tax dues wherever possible despite of the huge cash crunch in the business. (18) Appellant craves leave to alter, add to and/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le estimating the total turnover for all the months. But, arbitrarily added 50% more turnover without any basis or evidence. Secondly, the appellant also pointed out that as per the contents of Section 62 a notice under Section 46 ought to have been issued before passing the best judgment assessment orders as per Section 46, but the A.A has not issued any such notices for the tax periods from January, 2019 to February, 2019, and hence such orders are unlawful and liable to be set aside. 14. The appellant further contends that it has already submitted the returns in Form GSTR-3B for the months of January, 2019 to February, 2019, which shall be seen as a genuine effort by it to discharge its tax due. The appellant in its submissions has attempted to interpret Section 39 in an interesting and relevant point of dispute. The appellant contends that as per Section 39 of the Act, the returns in Forms GSTR-1, GSTR-2 and GSTR-3 have been prescribed, but due to the difficulty in the implementation of the relevant returns under the Act, which were designed to be implemented as per the scheme explained supra were not implemented by the Government of India and a new return in FORM GSTR-3B is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62, ibid fails and requires to be set aside. 19. The appellant further contends that the assessment under Section 62, ibid shall be made after serving a valid notice under Section 46, ibid in form GSTR-3A. Similar to the Section 62 of CGST Act, 2017, the Section 46, ibid also refers to the returns to be filed under Section 39, ibid i.e. GSTR-3 and not the GSTR-3B returns and hence there is no jurisdiction to serve the notice under Section 46, ibid for failure to file the returns in Form GSTR-3B. 20. Without prejudice to the above objections, the appellant also questioned that the AA has not served notice under Section 46 for certain months, and hence orders basing on such action cannot be held as legitimate. 21. Regarding, the estimation of turnover by A.A, the appellant objected that since the outward taxable supplies turnover is available through the returns in Form GSTR-1 filed by it, the A.A ought to have raised demand based on the actually scored disclosed turnovers instead of estimating the same that too without any basis. The appellant averred that the A.A has not gathered any additional material or information to contradict with the disclosed turnovers, as such the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates . A fundamental comprehension of above Section obviously makes it perceivable that the best judgment assessment to be passed by any authority shall be based on taking into account of all the relevant material, which is available or which may be gathered by such assessing authority. But, the impugned finding does not speak of any material collected by the A.A, nor mentions any enquiries which establish the assumed turnover by the AA. In such circumstances, it is to be held that the AA has not followed basic instructions read between in the contents of Section 62(1), hence not qualifies to be upheld as bona fide.. In this connection, the following case laws are to be taken into consideration bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax/Income Tax Acts, but the principles and concepts regarding the best judgment assessment formulated by the earlier judicial pronouncements would be squarely applicable to the GST disputes also. The essential principle emerges from the above judgments is that presumption of sale or purchase turnover is not any substitute for the proof of sale/purchase. Any presumption shall always linked to some sort of material like bills, vouchers or payment consideration evidence, etc. If the estimation is not based on any evidences, such factual presumptions are always rebuttable. That's why in the instant case also, the A.A has not brought on record any evidence of such kind. That means, without any incriminating material to establish the assumed suppressions of taxable supply of services, best judgment orders cannot be upheld as de jure. It is further reasonable here to note that the main principle emanates from the decisions on the best judgment assessment is that any levy basing on mere presumptions, but not substantiated by any sort of incriminating material to establish the suppression indubitably, shall be seen as bad in law and in violation to the principles of natura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en after adding 50% are observed to be erroneous. The common best judgment assessment, penalty and interest orders are passed in a single order called Form GST ASMT-13 under Section 62 of the APGST Act, 1917 read with Rule 61(1) and Rule 100(1) of the APGST Rules, 2017. The turnovers of the dealer are estimated under Section 62 of the Act only on the ground that the dealer has not filed the return in Form. GSTR-3B. The said estimates of the turnovers are based either on the return in Form GSTR-3B for the previous tax periods or the details of the outward supplies made by the dealer reported in Form GSTR-1 for the same month/tax periods (mostly of the previous months). For such non-filing of the Form GSTR-3B for the particular tax periods, the turnovers declared by the dealer for the previous periods of turnovers declared towards its outwards supplies of goods and/or services in Form GSTR-001 for that tax period is adopted, besides adding 50% of such returned outward supplies/turnovers towards probable suppressions uniformly in all the tax periods and the best judgment assessments are made accordingly in the same document of common orders in Form GST ASMT-13, levying the tax, pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble High Court of Judicature of Gujarat at Ahmadabad in R/Special Civil Application No. : 18962 of 2018, dated 24-6-2019 - 2019-VIL-314-GUJ : 2019 (26) G.S.T.L. 481 (Guj.). Thus, the issue is no more a res Integra. Their lordships at para 28 and 30 of the said judgment and orders held as under:- Para 28.-- Therefore, the moot question is, whether the return, in Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act/GGST Act. The aforesaid press release is valid and in consonance with Section 16(4) of the CGST Act/GGST Act only if Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act/GGST Act. Para 30:- It would be apposite to state that initially it was decided to have three returns in a month, i.e. return for outward supplies i.e. GSTR-1 in terms of Section 37, return for inward supplies in terms of Section 38, i.e. GSTR-2 and a combined return in Form GSTR-3. However, considering technical glitches in the GSTN portal as well as difficulty faced by the taxpayers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayer for some time, it was decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment, the same cannot be without any basis or with some basis. In the instant case, uniformly the suppressed turnovers for a particular month are estimated either mostly on the basis of returns of the outward supplies of the dealer in Form GSTR-1 of that month or on the basis of the return in Form GSTR-3B for the preceding month. The quantum of the outward supplies declared by the dealer in such return is held to be incorrect and incomplete and the same is inflated to 150% of the declared outward supplies to arrive at the probable suppressed outward supplies for that month @ 50% (150% -100%). This cannot be treated as the correct basis for the estimation. No attempt is made by the CTO to gather any material to at least indicate, not to talk of establish, that the quantum of the outward supplies declared by the dealer/supplier in Form GSTR-1 for that month is incorrect and incomplete. It is not even rejected by the AA. But, still the best judgment of the quantum of the outward supplies is made declaring uniformly for all the months that the dealer has suppressed 50% of its declared outward supplies in the relevant months. Thus, the estimations involved in the best judgment asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and penal interest without issuing an assessment order under Section 61 of the Andhra Pradesh Goods and Services Tax Act, 2017 ( the APGST Act for brevity), and without issuing a show cause notice, as illegal, arbitrary and without jurisdiction. By the order, impugned in the Writ Petition, dated 20-8-2018 the Assistant Commissioner directed payment of penalty at 15% along with interest under Section 50 read with Section 79(5) of the APGST Act and Rule 143 of the APGST Rules, failing which recovery proceedings would be initiated under Section 79 of the said Act. While fairly admitting that the petitioner is liable to pay tax and penal interest, Sri P. Balaji Varma, Learned Counsel for the petitioner, would, however, question the validity of the assessment order in so far as the petitioner was called upon to pay penalty at 15%, contending that any proceedings for recovery of penalty must be preceded by a show cause notice which, admittedly, was not issued in the present case. Section 74(5) of the APGST Act stipulates that a person, chargeable with tax, may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under Section 50 and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition on any other ground, it is wholly unnecessary for us to examine the said order on its merits. Suffice it, therefore, to set aside the impugned order to the limited extent the petitioner was called upon to pay penalty at 15%. The Writ Petition stands disposed of accordingly. Needless to state that this order shall not disable the respondent from issuing a penalty notice and recover the penalty payable in terms of Section 74(1) of the APGST Act. There shall be no order as to costs. Miscellaneous petitions, if any, pending shall stand closed. The Hon'ble High Court of Andhra Pradesh has discretely thrown light on the penalty orders discussed above, where in penalty levied in the same orders of assessment, and struck down such orders mandating that a separate notice for passing penalty orders shall always be issued before levy. In the instant case, the A.A has not followed such procedure and arbitrarily clubbed the tax penalty orders without putting a notice to appellant, thus making it liable for setting aside. Before embarking on adjudication of this issue, it is very much essential to have a comprehensive understanding of Section 122(1 2) of GST Act, 2017, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xv) suppresses his turnover leading to evasion of tax under this Act; (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder; (xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act; (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act; (xix) issues any invoice or document by using the registration number of another registered person; (xx) tampers with, or destroys any material evidence or document; (xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act, he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be set aside. Hence, the penalty which is proportionate to the tax additions made towards the probable suppression is also set aside. Besides, there is not even an iota of evidence established by the AA pointing out the willfulness in the omission to file the return in Form GSTR-3B and/or in the determined suppression of outward tax. None of the facts that could give rise to the inferences of the 'willfulness' are specified in the very brief pre-common assessment Show-Cause Notice and also in the common assessment orders in Form GST ASMT-13. Hence, the levy of penalty @ 100% of determined turnovers are also to be deleted. It is ordered accordingly. Conclusion: For the above anomalies discussed, a case is made in favour of the appellant to struck down the penalty as the levy is not justifiable. Hence, the total penalty of ₹ 3,43,96,432/- annulled and appeal allowed on this aspect in favour of the appellant. (3) Regarding, levy of interest of ₹ 8,30,115/-: Before embarking on adjudication of this issue, it is very much essential to have a comprehensive understanding of Section 50 of GST Act, 2017, which are abstracted below: Section 50. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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