2020(10)LCX0147

Andhra Pradesh High Court

S.P.Y. Agro Industries Limited

Versus

Union of India

W.P. No. 15336 of 2020 decided on 20/10/2020

THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR
AND
THE HON’BLE MS. JUSTICE J. UMA DEVI

W.P. No. 15336 of 2020

ORDER: (Per the Hon’ble Sri Justice C.Praveen Kumar)

1) The present Writ Petition came to be filed seeking the following relief:

“to issue a Writ of Mandamus, declaring the impugned Garnishee Notice C. No. V/05/04/Misc/2019-GST ARC, dated 26.08.2020, issued by the 1st Respondent as illegal, improper and incorrect”.

2) The averments made in the affidavit, filed in support of the Writ Petition show that, the Petitioner is duly registered under the Companies Act and doing business of manufacturing and sale of alcoholic and non-alcoholic beverages, ethanol etc. The Petitioner Company is registered with GST Department and is assigned to the Central jurisdiction, for the purpose of assessment.

3) It is said that, GST liability could not be cleared, by the Petitioner, in time, due to certain unforeseen circumstances in the Unit, but, however, subsequently, the same was cleared.

4) While things stood thus, a notice, dated 15.01.2019, came to be issued by the 2nd Respondent, under Section 46 of CGST Act, for not filing the returns in GSTR 3B, for the months of February 2018 to December 2018, and accordingly, it was directed to furnish returns, within 15 days, failing which the tax liability would be assessed under Section 62 of CGST Act.

5) It is said that, 2nd Respondent, vide its Order, dated 29.01.2019, and the Corrigendum, dated 12.02.2019, issued assessment Order under Section 62 in Form GSTR ASMT-13 ordering to pay the following amounts.

a) Rs. 1,04,53,566/- towards IGST, Rs.1,56,94,370/- towards CGST, Rs.1,56,94,370/- towards SG/UT GST and Rs.8,76,886/- towards cess;

b) Interest of Rs.10,13,922/- towards IGST, Rs.14,38,004/- towards CGST, Rs.6,42,732/- towards SG/UT GST and Rs.61,671/- towards cess under Section 50 of the CGST Act / AP GST Act.

c) Late fee of Rs.1,45,000/- (Rs.55,000/- each towards CGST & SG/UTGST and Rs.35,000/- towards Cess) under Section 47 of the CGST Act / AP GST Act.

d) Penalty of Rs.1,04,53,566/- towards IGST, Rs.1,56,94,370/- towards CGST, Rs.1,56,94,370/- towards SG/UT GST and Rs.8,76,886/- towards cess under Section 122(1) of the CGST Act / AP GST Act.

6) The case of the Petitioner is that, he has discharged the tax liability of Rs.4,18,42,306/- through DRC-03 and also through GSTR-3B return, and intimated the details of payment to 2nd Respondent, vide letter, dated 10.08.2020.

7) Later, the Petitioner addressed a letter, dated 19.08.2020, to 2nd Respondent intimating that he is not liable to pay Cess since none of the outward supplies of the Petitioner fall within the ambit of cess and the amount of Rs.8,78,836/- was inadvertently mentioned in Cess column of the returns instead of IGST Column. A Writ Petition came to be filed before the court challenging the penalty.

8) For the period January 2019 to December 2019, the 2nd Respondent issued another Notice, dated 28.07.2020, in Form GSTR ASMT-10 under Section 61(1) of CGST Act, showing the discrepancy of tax between GSTR-1 and GSTR-3B of Rs.1,76,02,936/-. The same was explained by the Petitioner, vide letter, dated 26.08.2020, and requested three months time to discharge the liability wherever applicable.

9) Insofar as the period January 2020 to June 2020 is concerned, another notice, dated 21.07.2020, came to be issued, requiring the Petitioner to file returns within a period of 15 days, and on failure to file the returns, the 2nd Respondent passed an Assessment Order, dated 13.08.2020, in Form ASMT-13 under Section 62 of CGST Act.

10) The Impugned Garnishee Notice, dated 26.08.2020, came to be issued by the 1st Respondent requiring the 4th Respondent to pay an amount of Rs.12,14,61,114/-, on behalf of the Petitioner, under Section 79(1)(c) of CGST Act, 2017, the details of which, read as under:

11) The Counsel pleads that, to impose penalty under Section 122 of CGST Act, the procedure under Section 73 and 74 is required to be followed. It is further averred that, without giving any opportunity or notice about imposing penalty, passing an order directing the Petitioner to pay Rs.4,27,19,191/- as penalty is illegal, improper and incorrect.

12) The same is disputed by the Counsel appearing for the Revenue. A counter came to be filed stating that, the Petitioner herein has failed to pay GST liabilities and also file periodical returns i.e. GSTR-3B for various months within the prescribed due dates. It is stated that, though, the Petitioner has filed GSTR-1 for certain months, but failed to file GSTR-3B returns for the corresponding months.

13) In view of the above, it is urged that, no revenue is actually transferred to the Government, and on the other hand, the customers to whom the Petitioner has issued invoices would avail GST Credit, which the Petitioner has not paid. He further pleads that, failure on the part of the Petitioner to submit GSTR 3B returns within the prescribed time lead the authorities to recover the GST liability, which is inclusive of penalty.

14) The point that arises for consideration is, whether the Garnishee Notice issued by the 1st Respondent is in tune with the principles of natural justice?

15) For the tax period January 2020 to June 2020 is concerned, the Office of the Superintendent of Central Tax, Nandyal, passed an Assessment Order in Form ASMT-13, dated 13.08.2020. A reading of the Assessment Order shows that, appeal against this order shall lie before the Commissioner of Central Tax [Appeals] on payment of amount, and the period for filing the appeal shall be within three [03] months from the date of communication from the said Order, and the amount to be paid for admitting the appeal would be 10% of the remaining amount of tax in dispute arising from the said order.

16) The Assessment Order came to be passed on 13.08.2020, thereby the Petitioner had three months time for preferring the appeal, but, without waiting for the said period, the impugned Garnishee Notice came to be issued, on 26.08.2020.

17) Insofar as the recovery for the period January 2019 to December 2019 is concerned, notice intimating the discrepancy in the return came to be issued in Form GSTR ASMT-10, on 28.07.2020, wherein, the Petitioner was directed to explain the reasons for the discrepancies contained therein, on or before 27.08.2020. Even before waiting till 27.08.2020, the Garnishee Notice, for the said period, came to be issued, on 26.08.2020. Infact, as seen from the record, it was not even an order, which was passed by the authority, but, only a notice seeking explanation about the discrepancies contained therein, on or before 27.08.2020. Thus, without waiting for the explanation and without waiting till the said period is over, the Garnishee Notice came to be issued to the bank, in terms of Section 79(1)(c) of CGST Act, 2017. Therefore, initiating recovery proceedings even before the period given for filing reply is over, is in contravention of principles of natural justice.

18) Insofar as the period February 2018 to May 2018 is concerned, the Petitioner is said to have filed a valid return for part demand to the extent of Rs.1,67,84,058/- within 30 days of service of assessment order and by virtue of Section 62(2) of the Act, the assessment order to the extent of which the valid return is 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.

19) It is pleaded that, recovery of Cess is without authority of law and as such, the Petitioner vide letter, dated 19.08.2020, submitted to 2nd Respondent stating that, it has declared the amount in E-way bill due to clerical error by entering such amount in Cess column instead of IGST column inadvertently and therefore, no further Cess is payable and that, the recovery proceedings are initiated without any authority of law. Without considering the same, the 1st Respondent issued the Garnishee Notice directing the 4th Respondent to recover an amount of Rs. 1,05,61,683/-. It is pleaded that, the said action is against legal position of CBIC Circular No. 129/48/2019-GST, dated 24.12.2019.

20) Having regard to all the circumstances referred to above and as the Garnishee Notice came to be passed without hearing, the Writ Petition is allowed setting aside the impugned Garnishee Notice C.No. V/05/04/Misc/2019-GST ARC, dated 26.08.2020, issued by the 1st Respondent, however, leaving it open to the authorities to proceed in accordance with law. No Order as to Costs.

21) Consequently, miscellaneous petitions pending, if any, shall stand closed.

________________________
JUSTICE C. PRAVEEN KUMAR

________________________
JUSTICE J. UMA DEVI

Date: 20.10.2020

Equivalent .