I. HIGH COURT
28. [2021 (44) GSTL 337 (A.P.)] S.P.Y. Agro Industries Ltd. vs. UOI Date of order: 20th October, 2020
Sections 73, 74 and 122 of CGST Act, 2017 – Initiating recovery proceedings before the timeline to prefer appeal against the assessment order issued for non-filing of GST returns and before the period given for replying to notice issued for discrepancy in GSTR1 and GSTR3B is in contravention of principles of natural justice
FACTS
The petitioner is engaged in the manufacture and sale of alcoholic and non-alcoholic beverages, ethanol, etc. For the period February, 2018 to June, 2020, GST liability could not be cleared by it in time but subsequently it was cleared. While the various notices and assessments were going on during the period of default, a recovery notice was issued u/s 79 of the CSGT Act, 2017 demanding tax and interest along with penalty amounting to Rs. 12,14,61,113. Revenue disputed that the petitioner had failed to pay GST liabilities and also file GSTR3B for various months within the prescribed due dates. Further, it had filed GSTR1 for certain months but failed to file GSTR3B for the corresponding months.
In view of the above, it was urged that no revenue was actually transferred to the Government and also the party to whom the petitioner had issued invoices would avail GST credit, which the petitioner paid with delay.
HELD
The High Court was of the view that as per the procedure contemplated under sections 73 and 74 of the CGST Act, a notice has necessarily to be issued and adjudicated following due process of law. For the period from February to December, 2018, the petitioner had filed a valid return for part demand within 30 days of service of assessment order and thus by virtue of section 62(2) of the Act, the assessment order to the extent of which the valid return was filed is deemed to be withdrawn and only the liability of payment of interest shall continue and not the penalty pertaining to such valid return.
For the period January to December, 2019, the notice intimating the discrepancy in the return was issued in Form GSTR ASMT-10 on 28th July, 2020 wherein the petitioner was directed to explain the reasons for the discrepancies contained therein on or before 27th August, 2020. Even before waiting till that date, the garnishee notice for the said period came to be issued. Further, it was not even an order that was passed by the authority, but only a notice seeking explanation about the discrepancies contained therein, on or before 27th August, 2020. For the tax period January to June, 2020, an assessment order was passed in Form ASMT-13 and the impugned notice was issued without waiting for a period of three months to prefer appeal against the order.
In view of the above circumstances, the High Court set aside the impugned order and the matter was remanded back to the authorities to deal with it afresh in accordance with law, after giving an opportunity of hearing to the petitioner.
