The Jharkhand High Court, while hearing a plea challenging the demand notices for interest on late filing of GSTR-3B,has quashed the orders for the reason that the department has not followed the principles of natural justice.
The petitioner contended that no show cause notice under section 73 of 74 of the JGST Act, 2017 has been issued before passing the adjudication order in spite of clear mention in Form GST DRC-01 dated 28.01.2020.
Allowing the petition, Mr. Justice Aparesh Kumar Singh and Mr. Justice Deepak Roshan held that the Respondent (department) have themselves failed to follow the procedure stipulated under the Act as indicated by them in Form GST DRC-01A containing the intimation of the tax ascertained against the petitioner.
“Summary of the Order has been issued upon the petitioner in Form GST DRC-07 on his GSTN portal without following the principles of natural justice,” the division ebnch said.
Quashing the orders, the bench held that “We are thus satisfied that the Respondents have failed to follow the procedure prescribed in law before issuing Summary of the Order in Form GST DRC-07 holding the petitioner liable to pay interest under section 50(1) of the Act due to late filing of GSTR-3B and not depositing the due interest on its own. As such, writ petition succeeds only on the point of failure to follow the principles of natural justice and the procedure prescribed in law.”
With regard to the Petitioner’s legal plea that the interest is not payable on late filing of GSTR-3B since the amount of tax has been deposited in the Electronic Cash Ledger in accordance with Section 49 of the Act, the division bench observed that “The Revenue has not denied the tax due and as such, interest under section 50(1) which is compensatory in nature cannot be realized from it. Interest can only be charged on the tax unpaid or if the Assessee fails to pay the same by the due date, as per Section 50(1) of the Act. Since there is no delay in payment of the tax, interest is not chargeable for late filing of GSTR-3B for which, a late fee has been prescribed under Section 47 of the Act which the petitioner had duly paid. Petitioner has also submitted that only the balance amount of tax which was paid through Electronic Cash Ledger after the due date, is liable to be charged for interest which the petitioner had also paid. However, since the proceedings have been held to be vitiated on failure to follow the principles of natural justice and the procedure prescribed under section 73(1) of JGST Act, 2017, we consciously refrain from making any comments on the merits of this contention raised by the petitioner at this stage.”
M/s Narsingh Ispat Limited through its Director Sri Ajay Kumar Singh vs Union of India
CITATION: 2022 TAXSCAN (HC) 221
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