A two-judge bench of the Jharkhand High Court comprising Justices Aparesh Kumar Singh and Deepak Roshan has quashed the demand of interest for the delay in filing GSTR-3B for the reason that the GST department has not initiated appropriate adjudication proceedings before confirming such demand.
The petitioner challenged the levy of interest amounting to Rs.83,96,873/- on the alleged ground of delay in furnishing GSTR-3B return for the period July 2017 to December 2019 has been levied by the impugned letter dated 28th February 2020 /22nd March 2020 issued by the respondent no.2 Assistant Commissioner, CGST and Central Excise, Ranchi. The same has been challenged on the specific ground that since the liability has been disputed by the petitioner, the same could not have been levied without any adjudication proceeding under Section 73 or 74 of the CGST Act which has not been done admittedly in this case.
The Revenue contended that if the returns have been filed belatedly and the tax dues have not been paid within time by default interest and late fee are confirmed demands within the meaning of Section 50 and 47 of the Act respectively which do not require any adjudication process under Section 73 or 74 of the CGST Act
The bench recalled a decision rendered by the Coordinate Bench of the same Court where while quashing the impugned order and the garnishee notices, the Court granted liberty to the respondent authorities to initiate appropriate adjudication proceedings either under Section 73 or 74 of the CGST Act against the petitioner-assessee and determine the liability of interest, if any, in accordance with law after giving due opportunity of hearing to the petitioner.
Disposing the petition, the bench held that “we are of the considered opinion that the case of the present petitioner stands covered by the ratio rendered by this Court in the case of Mahadeo Construction Co. (supra) as despite disputing the liability towards interest, the revenue has raised a demand for payment of interest on the ground of delay in furnishing of GSTR-3B return for the period July 2017 to December 2019 without initiating any adjudication proceedings under Section 73 or 74 of the CGST Act, 2017. Earlier by an order dated 8th May 2020 a Coordinate Bench of this Court had been pleased to grant interim protection from any coercive steps against the petitioner pursuant to the impugned demand at Annexure-4.”
“In the light of the discussions made herein above and for the reasons recorded, the impugned demand contained in letters dated 28th February 2020 / 2nd March 2020 (Annexure-4) is quashed. Liberty is left to the respondent authorities to initiate appropriate adjudication proceedings and determine the liability of interest against the petitioner-assessee under the relevant applicable provisions Section 73 or 74 of the CGST Act, as the case may be, in accordance with law and after opportunity of hearing to the petitioner,” the bench held.
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