TMI Blog2021 (6) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to ₹ 73,96,872/-. The appellant has mainly contested in their appeal memo that the adjudicating authority has passed the best judgment Assessment Order C. No. CGST-20/R-XXVI/Non-filing NBD/178/19/8287, dated 30-1-2020 in Form GST ASMT-13 under Section 52 of the CGST Act, 2017 for non-filing of GSTR-1 statement and GSTR-3B return for the months of January, 2019 to December, 2019 whereas, in the show cause notice Reference Number WM060109193A0713, dated 19-11-2019 issued in Form GSTR-3A under Section 46 of the CGST Act, 2017 for Non-filing of GST returns (GSTR-3B) under which the period of dispute has been shown from October, 2018 to September, 2019 Financial Year 2018-19 and 2019-2020. Thus, the adjudicating authority did not issue any show cause notice in Form GSTR-3A under Section 46 of the CGST Act, 2017 for the period of October, 2019, November, 2019 and December, 2019 and passed the best Assessment Order dated 30-1-2020 taking the period from January, 2019 to December, 2019 without the following of principle of natural justice. Scope of SCN - HELD THAT:- The adjudicating authority while passing Assessment Order in Form ASMT-13, dated 30-1-2020 under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act, 2017 stating the reason being Non-filing of GST returns (GSTR-3B) for the period October, 2018 to March, 2019 and April, 2019 to September, 2019. Further, the adjudicating authority has passed the best judgment Assessment Order C.No. CGST-20/R-XXVI/Non-filing NBD/178/19/8287, dated 30-1-2020 in Form GST ASMT-13 under Section 62 of the CGST Act, 2017 for non-filing of GSTR-1 statement and GSTR-3B return for the months of January, 2019 to December, 2019 are also appellant not discharged/set-off their outward liability amounting to ₹ 73,96,872/- (GST amounting to ₹ 62,27,256/- + Interest ₹ 5,46,890/- and Penalty ₹ 6,22,726/-). 3. Being aggrieved with the best judgment Assessment Order in Form GST ASMT-13 vide C.No. CGST-20/R-XXVI/Non-filing NBD/178/19/8287, dated 30-1-2020, the appellant has filed the appeal on 19-6-2020 along with proof of mandatory pre-deposit in terms of sub-section (6)(b) of Section 107 of the CGST Act, 2017 vide DRC-03, dated 16-12-2020 on the following grounds :- that the impugned best judgment order has been issued in an arbitrary and haste manner in violation of the provisions of Section 62 and principles of natural j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n present case best judgment assessment under Section 62 of the CGST Act, 2017. (A.4) It is imperative to go into the nitty-gritty of the provisions of Section 62 to determine whether best judgment assessment has been done within the four corners of the law or not. Section 62 reads as under : 62. (1) Notwithstanding anything to the contrary contained in section 73 or section 74 here a registered person fails to furnish 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 judgment 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.5) One of the key conditions laid down in Section 62(1) when the Department can assess GST liability under Section 62 is where registered person fails to furnish return under Section 39 or Section 45 even after Notice is issued under Section 46. That is, the prerequisite for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of Section 62 and manner in which best judgment assessment can be done by the Department. The relevant portion of Section 62 reads as under : 62. (1) Notwithstanding anything to the contrary contained in section 73 or section 74 where a registered person fails to furnish 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 judgment 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 (2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue (B.2) After a perusal of the above Section 62(1) of CGST Act, 2017. It is inferred tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification with his assessment order which is arbitrary, without any basis and fallacious. The term best judgment itself suggest that it is an assessment which emerges out of thorough and detailed examination of all relevant aspects in a minute manner so as to call the judgment inferior to none, unquestionable and best to his knowledge, wisdom and information which is made available or which can be gathered within the terms of the provisions of the law. (B.6) The crucial aspect of Section 62(1) which is to be kept in mind while using best judgment is taking into account all relevant information which is either available or which can be gathered by the Department. The intended purpose of giving a power to the Department by Section 62(2) to gather any further relevant information is to ensure that the best judgment assessment is undertaken after considering all relevant data as may be available or gathered so that all factual aspects of the case are dealt properly to apply best judgment. (B.7) It is imperative to emphasize the term relevant material which means every relevant aspect of the case needs to be looked into while arriving at the best judgment assessment. The im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdening lift, electricians, plumbing etc. which are used to provide taxable activity of maintenance services. The appellant are also in possession of tax paid documents based on which they are entitled to avail input tax credit. The input tax credit has already been recorded in the books of account and also set-off on monthly basis in books of account against GST liability for that month and any GST liability payable in cash is shown under Liabilities in the Balance Sheet. (B.10) The appellants submit that as per the Section 16 of the CGST Act, 2017 a registered person is entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services pertaining to the FY 2018-19 up to 30-9-2019 and for FY 2019-20 up to 30-9-2020. In the present case the appellant had duly availed and recognized input tax credit pertaining to the FY 2018-19 in their books of account prior to September, 2019 and for period F.Y.2019-20 prior to September, 2020 based on valid tax documents. Further, other conditions of availment of credit have also been satisfied by the appellant. (B.11) The appellant submits that the input tax credit availment is seen as per availme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lizing input tax credit of GST on invoices of vendors and GST payable under reverse charge mechanism as against the GST demand of CGST ₹ 31,13,628/- and SGST ₹ 31,13,628/- assessed by the Department. The appellants are also enclosing Chartered Accountant certificate certifying that the input tax credit has been duly recorded in books of account for the period January, 2019 to December, 2019. Hence, the appellant submits that the impugned order should be set aside to fail to gather the actual data for the relevant period as empowered under Section 62, non-consideration of input tax credit in spite of details available in GSTR-3B filed for the base period July, 2018 to December, 2018. (B.15) The appellant submits that Circular No. 129/48/2019-GST, dated 24 December, 2019 which provides standardized instructions to the field officers to follow SOP in case of non-filing of returns also clarifies in its Para No. 4(v) of the Circular about the base data which can be considered by the Department while undertaking best judgment assessment. The relevant para 4(v) is reproduced below : 4. Following guidelines are hereby presented to ensure uniformity in the implementation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation to the department of summary of transactions taken place during a particular month. It is emphasized that the date of filing of return is not date of payment of GST. It is only a summary of the month whereas actual date of payment is the date when we debited the amount in the books of account for which summary is reported in the monthly GSTR-3B returns. Therefore, calculation of interest provided in the impugned Order needs to be revisited by excluding portion of GST which would be treated as paid through ITC and interest would be calculated only on the net amount payable by Electronic Cash ledger. (C.3) A perusal of the agenda of the 31st GST Council Meeting held on 22-12-2018 also shows that the GST Council has acknowledged the fact that GST is a tax on value addition and thus had agreed to insert the proviso under Section 50(1) of the CGST Act, 2017. Relevant extract of the agenda is as under : It is also pertinent to mention that the liability of any registered person is related to the value addition made by him since GST is leviable only on value addition. Accordingly input tax credit is allowed to the registered person in respect of the tax paid by him on h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of interest by way of the suitable rule as mandated by Section 50(2). Therefore the demanding of interest is not in accordance with Sec. 50(2) in absence of any rule for determination of interest. (C.7) Without prejudice to the above submissions, the appellants submit that Section 62 empowers the proper officer to assess only tax liability and does not empower the proper officer to assess interest on GST liability. The interest cannot be demanded without following principles of natural justice under Section 73 of the CGST Act, 2017. (C.8) The appellant also submits that what is contemplated u/s. 75(12) read with Sec. 79 of the CGST Act, 2017 permitting initiation of recovery proceedings without issuance of the SCN is only limited to the interest amount which has been self-assessed by the taxpayer. Hence the amount of interest sought to be recovered either on account of quantification or determination which is in excess of the self-assessed interest can only be done by resorting to the provisions of Secs. 73 and 74 following the principles of natural justice. (C.9) In view of the above, the appellant submits that interest cannot be recovered without issuance of sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 74 of CGST Act, 2017 i.e. bypassing adjudication proceedings is to recover the tax from the assessee in case of non-filing of returns. Hence, it is imperative that correct data and information is gathered to recover the tax from the assessee. (D.4) The Department should have asked the accurate information about the supplies undertaken by the appellant for the relevant period i.e. January, 2019 to December, 2019 as they have all the data available with them pertaining to the disputed period. The appellant submits that the average period taken i.e. six months is too short period to determine the amount of tax liability, at least a period of twelve months must be taken into account because the appellants are engaged in a kind of industry which faces a lot of financial crisis and the revenue generated is a so not regular in nature and the amount so determined on average basis is also not correct as per the type of industry. (E) The impugned order is passed in violation of principles of natural justice as no effective opportunity for personal hearing was granted to the appellant. (E.1) The appellant submits that the Department has decided the matter on ex parte basis w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se laws in this regard. (F) The penalty imposed under Section 73(9) of CGST Act, 2017 cannot be sustained in absence of any provision of penalty under Section 62. (F.1) The impugned order has imposed a penalty of 10% under Section 73(9) of CGST Act, 2017 on the GST demand ordered to be recovered under Section 62 of the CGST Act, 2017. It is again a complete misinterpretation of the provisions of the law at end of the revenue authorities. Firstly, penalty can only be imposed by authority of law and if there is an express provision in the law for the particular instance for which GST demand has been raised. The officer has resorted to best judgment assessment under Section 62 of the CGST Act, 2017 which reads as under : 62.(1) Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered person fails to furnish 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 judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. And in current case there is express provision in Section 73 to first issue show cause notice and only then after obtaining representation from the Noticee, penalty can be imposed. Hence, on both fronts, (a) Section 73(9) does not apply to Section 62; and (b) without issuing Notice under Section 73(1), penalty under Section 73(9) cannot be imposed. The impugned order has been issued by overlooking various factual and legal aspects and hence should be set aside. (F.5) The appellant also wishes to bring attention to Section 127 of CGST Act, 2017 which empowers the proper officer to levy penalty upon the person under this act after giving a reasonable opportunity of being heard and said Section 127 reads as under : 127. Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceedings under section 62 or section 63 or section 64 or section 73 or section 74 or section 129 or section 130, he may issue an order levying such penalty after giving a reasonable opportunity of being heard to such person. After analysing the above section following points emerge out viz : (a) The above-mentioned section cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -SUPREME COURT. 4. Personal hearing in the case was held on 17-12-2020 through video conference, wherein, Shri N.M. Nikhil Mohan Jhanwar, Chartered Accountant, appeared for personal hearing through video conference and explained the each point of grounds of appeal and reiterated the submission already made in their appeal memo. Further, he has nothing more to add additional during the personal hearing. 5. I have carefully gone through the facts of the case and submission made in the appeal memo as well as oral submission made at the time of personal hearing. I find that the adjudicating authority has issued a show cause notice Reference Number WM060109193A0713, dated 19-11-2019 in Form GSTR-3A under Section 46 of the CGST Act, 2017 stating the reason being Non-filing of GST returns (GSTR-3B) for the period October, 2018 to March, 2019 and April, 2019 to September, 2019 (Financial Year 2018-19 and 2019-2020). Further, the adjudicating authority has passed the best judgment Assessment Order C. No. CGST-20/R-XXVI/Non-filing NBD/178/19/8287, dated 30-1-2020 in Form GST ASMT-13 under Section 62 of the CGST Act, 2017 for non-filing of GSTR-1 statement and GSTR-3B return for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue. SECTION 63. Assessment of unregistered persons. - Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2) of section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods 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 : Provided that no such assessment order shall be passed without giving the person an opportunity of being heard. 8. Further in this context the RULE 100 of the CGST Rules, 2017 is relevant in the matter which is as under :- (1) The order of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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