GST System not Accepting Return without Tax Payment causing Multiple Penalties on Assessee: Kerala HC admits Petition, allows Interim Relief [Read Petition]

The Kerala High Court has admitted a petition challenging the errors in GST system including non-acceptance of return without payment of tax amount, causing multiple loss to the assessee including payment of late fee, interest and cancellation of GST registration etc.

While admitting the petition, Justice T R Ravi directed the department to open the GST site for the petitioners to continue with the trading activities. The grievance of the petitioner was that there was no option on the GST system to file the return without making the payment. If the option was there, the petitioner could file the return and pay the tax amount along with interest, as permissible under the GST law.

The petitioner, Apco Automobiles Private Limited, is an authorised dealers for TATA Automobiles and spare parts. The petitioners were aggrieved with the order for cancellation of GST Registration on ground of non-filing of return.

Sec. 29(2) of Central Goods and Services Tax Act provides for “cancellation of registration” held by an assessee for “failure to file returns” in terms of the various provisions of the Act.

Sec. 47 of the GST Act provides for “levy of late fee” at the rate of Rs. 100 per day for failure to file Returns in Form 3B and/or 2B within the time stipulated under the Act where the tax payable after setting off the “input credit” etc. against the “output tax liability”.

Sec. 50 of the Act provides for levy of interest on delayed payment of tax – which would cover the tax payable as per the Returns provided under the Act on “outward supplies” at rates “not exceeding 18%”.

The petitioners contended that when GST operations were computerized and GST site prepared in terms of the Act and rules, overlooking the fact that the delay in filing returns and delay in paying taxes are distinct and separate offences with separate penalties, GST site provides that unless taxes payable in terms of the returns “prepared” are paid, system will not accept the returns, resulting in multiple penalties on the assessee including, late fee, interest and cancellation of registration.

“There will be a direction to the 3rd/4th respondent to keep open the GST site so as to enable the petiitoners to continue their trading activities in relation to the stocks held by them at the time of passing of Ext.P3 order for a period of two weeks from today. Respondents may bring up the case for variation of the interim order, if so advised.”

Advocates Mr. P.Raghunathan and Mr. Premjit Nagendran appeared for the Petitioners.

To Read the full text of the Order CLICK HERE

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