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TMI Blog2024 (1) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... Code 8711 led by the iconic brand Royal Enfield, with its manufacturing unit in Tamil Nadu. They have their Global Head Quarters in Chennai and three manufacturing facilities at Oragadam, Vallam and Tiruvottiyur. The petitioner is operating through their dealers and distributors and by means of more than 1000 large stores and 900 studio stores in major cities and also having more than 800 authorized dealers in India alone. 3.2 The petitioner has paid a sum of Rs. 15,033 Crores as GST for the period from the year 2017-18 till the year 2023. Out of the said amount, a sum of Rs. 10,871 Crores was paid using the Input Tax Credit and a sum of Rs. 4,162 Crores was paid in cash. 3.3 On the date of introduction of GST i.e., 01.07.2017, the petitioner had an accumulated balance of a sum of Rs. 33,87,10,445/- as CENVAT credit ready to be transitioned into the GST regime. However, owing to want of system readiness and technical glitches in the GST Common Portal during the initial stages of implementation of GST, the Department had extended the due dates for filing the Form GST TRAN-1 from time to time and accordingly, the petitioner had filed their Form GST TRAN 1 on 16.10.2017 under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner challenged the said Recovery notice in W.P.No.16866 of 2023, in which, vide order dated 07.06.2023, this Court had granted stay of recovery proceedings subject to the payment of 30% of the interest amount demanded in the Letter dated 16.05.2023. Aggrieved by the said interim order dated 07.06.2023, the petitioner had preferred an appeal in W.A.No.1263 of 2023 before the Hon'ble Division Bench of this Court. In the said writ appeal, an order came to be passed on 20.06.2023, wherein the Hon'ble Division Bench of this Court had directed the 1st respondent to consider the petitioner's representation dated 29.05.2023 and pass an order within a period of 3 weeks. 3.7 Pursuant to the said order dated 20.06.2023, the Department considered the petitioner's representation and passed an order dated 12.07.2023 confirming the demand of interest against the petitioner. Aggrieved over the said order dated 12.07.2023, the petitioner had filed W.P.No.22013 of 2023. 3.8 The common issue involved in both these writ petitions is as to whether the petitioner is liable to pay interest of the GST amount, which was routinely deposited into the ECL within the due date. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count under Central Excise Regime is akin to the ECL in GST Regime. 4.4 He would also submit that in the 27th GST Council meeting dated 04.05.2018, the delay in filing the GSTR 3B by tax payers due to technical glitches in the filing of Form TRAN 1 was recognised and as a result, the GST Implementation Committee had approved the waiver of Late Fee on such delayed filing. 4.5 Further, he would contend that in the present case, there is no element of withholding of tax as the petitioner had rightly deposited the amount into ECL on time. Therefore, since there is no basis to levy the demand for interest by the Department and Section 50(1) of GST Act is not attracted in this case. 4.6 It is also brought to the knowledge of this Court by the learned Senior counsel that a query was raised under the Right to Information Act, 2005 (hereinafter called as "RTI Act") on how the GST collection figure is arrived at by the Government and the RTI response, which was issued by the Ministry of Finance Department of Revenue, set outs that GST collection figures are prepared on the basis of the amount deposited in the electronic cash ledger. 4.7 Further, it was submitted that a writ petition in W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 140 of the GST Act read with Rule 117 of the GST Rules, unless the Form TRAN-1 was uploaded by the petitioner in the GST Portal. Once the said Form TRAN-1 is uploaded, the same will be carried forward and the transitional credit will be credited to the ECL of the petitioner. Hence, he would submit that the non-availability of "Transitional Input Tax Credit" has no bearing for filing the mandatory monthly returns in GSTR-3B on the 20th day of the succeeding month. 5.4 Further, he would contend that though the time for filing the TRAN-1 was extended by the Government from time to time, there was no extension to file the monthly returns in Form GSTR-3B. Therefore, since the transitional credit can be availed as and when it is credited to the ECL and as and when Form TRAN-1 was filed by the respondent, the reasons assigned by the petitioner for non-filing of monthly returns is not correct. 5.5 He would also submit that there is no reason for the petitioner to retain the GST collected from their customers to the tune of Rs. 527.54 Crores and detain the same in the ECL for non-availability of TRAN-1 credit of Rs. 33,87,10,445/-. Since the petitioner is only an "authorised agent" to col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India reported in MANU/JH/1260; (vii) Haji Lal Mohd Biri Works vs. State of Uttar Pradesh reported in (1974) 3 SCC 137; (viii) The Sales Tax Officer vs. Dwarika Prasad Sheo Karan Dass reported in (1977) 1 SCC 22; (ix) Khazan Chand vs. State of Jammu and Kashmir reported in (1984) 2 SCC 456; (x) Prahlad Rai vs. Sales Tax Officer reported in (1991) Supp (2) SCC 612; (xi) Commissioner of Sales Tax vs. Qureshi Crucible reported in (1993) Supp (3) SCC 495; 6. I have given due consideration to the submissions made by Mr.Vijay Narayan, learned Senior counsel appearing for the petitioner and Mr.A.P.Srinivas, learned Senior Standing Counsel appearing for the respondents and also perused the materials available on record. 7. In the present case, on the date of introduction of GST i.e., 01.07.2017, the petitioner had an accumulated balance of a sum of Rs. 33,87,10,445/- as CENVAT credit ready to be transitioned into the GST regime. However, due to the technical glitches and other difficulties faced by the assessees, the petitioner was not able to file the GST TRAN- 1 in time, however, the Department had extended the due dates for filing the Form GST TRAN-1 from time to time and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed to authenticate and file the same by 30.04.2018 and that those taxpayers who were not able to file FORM GSTR-3B due to non-filing of FORM GST IRAN-1, shall be allowed to file the same by 31.05 2018. He informed that the GSTN has sent a proposal to waive late fee on delayed filing of FORM GSTR-3B in such cases. He further stated that to enable such waiver through notification, a class of taxpayers has to be defined for the 17,573 such identified cases, CEO, GSIN replied that the formulation of such definition and the list of 17,573 taxpayers would be prepared by GSTN 4.10.2. Special Secretary, GST Council observed that such waiver/reversal of the late fee may be conditional upon the taxpayers authenticating and filing FORM GST TRAN-1 and associated FORM GSTR-3B by 30.04.2018 and 31.05.2018 respectively. 4.10.3. After discussion, GIC approved the following: i. Waiver of late fee on such delayed filing of FORM GSTR-3B of taxpayers who could not submit FORM GST TRAN-1 due to technical errors. ii. Such waiver shall be conditional upon the taxpayers authenticating and filing FORM GST TRAN-1 and associated FORM GSTR-3B by 30.04.2018 and 31.05.2018 respectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 93.80 19.01.2018 22.01.2018 TOTAL 1221.73 694.19 527.54 527.54 17. Therefore, except the pending transitional CENVAT credit to the extent of a sum of Rs. 33 crores for the month of July, 2017, all the other amounts have been credited to Electronic Credit Ledger and Electronic Cash Ledger and there was no due as on the date of filing of Form GSTR-3B returns. The following table also shows the actual due date for filing of Form GSTR-3B returns for the respective months and the date on which the Form GSTR-3B returns were filed by the petitioner: Month (2017) Due date for filing Form GSTR 3B Date of filing Form GSTR 3B July 28.08.2017 24.01.2018 August 20.09.2017 31.01.2018 September 20.10.2017 02.02.2018 October 20.11.2017 07.02.2018 November 20.12.2017 07.02.2018 December 22.01.2018 14.02.2018 18. Though there was a delay in filing the returns, the entire tax amount has been deposited in time to the Government without any delay in the manner stated above at paragraph No.16. 19. According to the respondent, the amount available in ECL will be transferred to the Government by virtue of debiting the payment therefrom towards tax, inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not correct to state that the instance of payment of tax would occur only after filing the GSTR3B returns but otherwise when the actual payment of tax made to the Government in terms of the explanation (a) to Section 49(11) of the Act. 24. Under these backgrounds, now let me examine the legal position by referring the various provisions of the Act, Rules made thereunder and case laws of various High Courts and Hon'ble Apex Court. In such view, it would be apposite to extract the provisions of Section 39(1) of the Act, which states as follows: "39. Furnishing of returns.- (1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax), states about the tax paid through ITC under the different heads, the column No.7 deals with the details of tax paid by way of TDS/TCS and the column No.8 states about the tax/cess paid in cash. 31. Therefore, it is clear that prior to the filing of the Form GSTR- 3B, the tax should have been paid by using GST PMT-06 and that is the reason why the details of the payment of tax is required to be furnished in the said form irrespective of time of filing the GSTR-3B, whether it is before or after the due date for filing the returns. 32. Now let me examine as to what is the last date for payment of tax, by a registered person, to the Government? For this purpose, it is just and necessary to extract the provisions of Section 39(7) of the Act, which reads as follows: "39. (7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return." 33. A reading of the above provisions will reveal that every registered person, who is required to furnish the returns under Sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter only, it will be deemed to be credited to the Electronic Cash Ledger. When the GST is paid by using Form GST PMT-06, it will be credited in the following manner: 1) First the GST amount will be credited to the account of the Government; 2) Secondly, the date, on which it is credited to the Government, is deemed to be the date of deposit in the Electronic Cash Ledger. 36. Thus, it is clear that in terms of Section 39(1) of the Act, while filing the the monthly returns in Form GSTR-3 or GSTR-3B, the registered person/assessee has to state the amount of tax paid, which means before the filing of returns, the tax should have been paid. 37. Further, Section 39(7) of the Act states that the tax should have been paid to the Government before the last date for filing the GSTR-3B returns, which means the instance of payment of tax would occur not later than the last date of filing of GSTR-3B returns. Thus it is immaterial whether GSTR-3B is filed within due date or not for remittance of tax to the account of Government. In view of the above, it is not correct to state that the instance of payment of tax to Government would occur only upon the filing of GSTR-3B return and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of GSTR-3B would ensure the complete discharge of GST liability by the registered person through the accounting entries in the respective ledgers. Hence, it does not mean that only when the GSTR-3B is filed, the Government can utilise the GST collection made by the registered person i.e., it is not that until the filing of monthly returns, the registered person can retain the said amount in the Electronic Cash Ledger or Electronic Credit Ledger forever. From the moment it is deposited by generating GST PMT-06, it is the money of the exchequers, since the money was collected only under the name of the exchequer in the form of GST. 41. A combined reading of aforementioned provisions of Section 39(1), 39(7) and Explanation (a) to Section 49(11) of the Act along with Forms viz., Form GST PMT-06, Form GSTR-3 and Form GSTR-3B makes it clear that the payment of tax will always be made not later than the last date for filing the GSTR-3 or GSTR-3B monthly returns, i.e., on or before 20th of every month. 42. Thus, the submissions of the learned Senior Standing counsel for the respondents that the GST can be paid only after filing the GSTR- 3B, is against the provisions of Sections 39(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of this Act or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed. (4)................ (5)............... (6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of section 54." 46. Section 49(1) of the Act deals with the amount to be credited to the Electronic Cash Ledger i.e., every deposit made towards the tax, interest, penalty, fee or any other amount shall be credited to the Electronic Cash Ledger of such person to be maintained in such manner as may be prescribed. Further, as discussed above, the explanation (a) to Section 49(11) of the Act clearly states that any tax amount, which is to be paid by generating GST PMT-06, will be directly credited to the account of the Government and thereafter, for the purpose of accounting, it would deemed to be credited to the Electronic Cash Ledger, which is only for the limited purpose of the quantification of the liability towards GST and to verify as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay on his own interest at such rate not exceeding 18% per annum. 50. The aforesaid Section deals with the interest, which has to be paid, if the tax is not paid within the prescribed period. If such being the case, what would be the prescribed period? To answer this, we have to analyse the provisions of Section 39(7) of the Act. 51. The provisions of Section 39(7) of the Act states that the tax shall be paid to the Government not later than the last date, on which he required to furnish the monthly returns in terms of Section 39(7) of the Act, otherwise, the tax has to be paid along with interest in terms of the provisions of Section 50(1) of the Act. Thus, the prescribed date mentioned in Section 50(1) of the Act refers to the last date for payment of GST in terms of the provisions of Section 39(7) of the Act. 52. In the present case, the notice was sent in terms of the proviso to Section 50(1) of the Act, whereby called upon the petitioner to pay interest. At this juncture, it would be apposite to extract the proviso to Section 50(1) of the Act hereunder: "50. Interest on delayed payment of tax.- (1)................... Provided that the interest on tax payable in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha (AIR 1961 SC 1596) and Calcutta Tramways Co. Ltd. v. Corporation of Calcutta (AIR 1965 SC 1728); when one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject matter of the proviso. The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment and its effect is confined to that case. It is a qualification of the preceding enactment which is expressed in terms too general to be quite accurate. As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily, a proviso is not interpreted as stating a general rule. "If the language of the enacting part of the statute does not contain the provisions which are said to occur in it you cannot derive these provisions by implication from a proviso." Said Lord Watson in West Derby Union v. Metropolitan Life Assurance Co. (1897 AC 647)(HL). Normally, a proviso does not travel beyond the provision to which it is a proviso. It carves out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreted the said proviso in such a way that the proviso will override the provision and whereby altered the date for payment of tax to the Government, which is not permissible and thus, the same is contrary to the provisions of Section 50(1) of the Act. 59. Further, Section 54(12) of the Act deals with the payment of interest at the rate of 6% for the delay in refund of GST. If there is any delay in refund of GST in terms of Section 54(12) of the Act, the Government has to refund the same along with interest. However, the learned Senior Standing counsel for the respondent had contended that no tax amount will be passed on to the Government until the filing of Form GSTR-3B. In such case, merely for taking the refund from ECL, without even passing on the said amount to the Government, why should the Government has to pay the interest for delay in refund at the rate of 6%? Therefore, the submission of the learned Senior Standing counsel, that no tax amount will be passed on to the Government until filing of GSTR-3B, would be contrary to Section 54(12) read with 39(7) of the Act. 60. The respondent's further contention was that as long as the amount is available to the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmu and Kashmir, Ladakh, Chandigarh or Delhi. twenty-fourth day of the month succeeding such quarter. (2) Every registered person required to furnish return, under sub-rule (1) shall, subject to the provisions of section 49, discharge his liability towards tax, interest, penalty, fees or any other amount payable under the Act or the provisions of this Chapter by debiting the electronic cash ledger or electronic credit ledger and include the details in the return in FORM GSTR-3B." 62. The aforesaid Rule 61(1) deals with regard to the furnishing the Form GSTR-3B and 61(2) states about the discharge of liability towards the tax, interest, penalty, fees and any other amount under the Act by debiting the electronic cash or credit ledger and include the details in the GSTR-3B returns. 63. As discussed above, once GSTR-3B is filed, the total amount of tax would be quantified, by which it would be ascertained about the discharge of tax liabilities. In terms of Rule 61(1), the registered person has to file the monthly return on or before 20th of succeeding month. 64. As far as Rule 61(2) is concerned, it deals with the discharge of liability in terms of Section 49(1) of the Act. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount from the PLA. Sub-rules (3), (4), (5) and (6) of Rule 173G indicates a strict and vigorous scrutiny to be exercised by the central excise authorities with regard to manufacture and removal of excisable goods by an assessee. The self removal scheme and payment of duty under the Act and the Rules clearly shows that upon deposit in the PLA the amount of such deposit stands credited to the Revenue with the assessee having no domain over the amount(s) deposited. 10. ..................... 11. ..................... 12. The above discussions, coupled with the peculiar features of the case, noticed above i.e. consistent practice followed by the assessee and accepted by the Revenue; the decisions of the two High Courts in favour of the assessee which have attained finality in law; and no contrary view of any other High Court being brought to our notice, should lead us to the conclusion that the High Courts were justified in taking the view that the advance deposit of central excise duty constitutes actual payment of duty within the meaning of Section 43B of the Central Excise Act and, therefore, the assessee is entitled to the benefit of deduction of the said amount." 68. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the liability to pay interest under Section 50 (1) arose automatically. The petitioner cannot, therefore, escape from this liability." 70. For all the reasons as discussed above, this Court is of the view that the law laid down by the Hon'ble Division Bench of the Jharkand High Court in RSB Transmission case and the judgement rendered by Telangana High Court in Megha Engineering case in my humble opinion are not in line with the provisions of the Act and Rules made thereunder and hence, this Court is unable to follow the same. 71. Further, in the judgement of Vishnu Aroma Pouching Private Limited vs. Union of India reported in 2020 (38) G.S.T.L. 289 (Guj.), the Gujarat High Court had taken a view, which is similar to the view of this Court and held as follows: "12. From the facts as emerging from the record, it is manifest that despite the fact that the petitioner had approached them at the earliest point of time, the respondent authorities maintained silence for a considerable period of time and did not provide remedial measures till directed by this court. The errors in uploading the return were not on account of any fault on the part of the petitioner but on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, and the petitioner has not utilised this sum aggregating to Rs. 128.63 crores (rounded off) for discharging any other tax liability. 14. Thus, the petitioner had duly discharged the tax liability of August, 2017 within the period prescribed therefor; however, it was only on account of technical glitches in the System that the amount of tax paid by the petitioner for August 2017 had not been credited to the Government account. Hence, the interests of justice would best be served if the declaration submitted by the petitioner in October, 2019 along with the return of September, 2019 is treated as discharge of the petitioner's tax liability of August, 2017 within the period stipulated under the GST laws. Consequently, the petitioner would not be liable to pay any interest on such tax amount for the period from 21.9.2017 to October, 2019." 72. In view of the above finding and following the law laid down by the Gujarat High Court in the aforesaid Vishnu Aroma case, since in the present case, the tax amount has already been credited to the Government within the prescribed time limit, i.e., before due date, the question of payment of interest would not arise. Under these circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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