Penalty leviable when Person chargeable to Tax fails to Deposit Tax collected by him within 30 days from Due Date of Payment of such Tax under GST Act: Kerala HC [Read Order]

The Kerala High Court observed that the penalty leviable when person chargeable to tax fails to deposit tax collected by him within 30 days from due date of payment of such tax under the Goods and Service Tax (GST) Act, 2017.

The present writ petition has been filed impugning the order dated 14.09.2023. The Counsel for the petitioner submits that the petitioner has confined his grievance in respect of the penalty assessed in the said impugned order in the extent of Rs. 40,000/- (Rupees Forty thousand only).

The Counsel for the petitioner submitted that the petitioner has paid all tax before thirty days from the date of the notice. The notice is dated 28.02.2022 and the petitioner has paid the tax on 10.03.2022. The Counsel in support of his submission has placed reliance on Sub-section (8) of Section 73 of the GST Act, 2017.

It was submitted that in view of the express provision that if an assessee/a person chargeable with tax under Sub-section (1) or Subsection (3) of Section 73 of the GST Act, 2017 paid the tax along with the interest payable under Section 50 within a period of thirty days of issue of notice, no penalty shall be payable and all proceedings in respect of the said notice would be deemed to be concluded.

The Government Pleader, submitted that Sub-section (8) of Section 73 comes into play when an assessee has not paid the tax on the transactions. But where the assessee has collected from the others and not credited it to the Government. It is Sub-section (11) of Section 73 which comes into play.

The Counsel therefore submitted that Sub-section (11) of Section 73 of the GST Act, 2017 begins with a non-obstante Clause which provides that; “notwithstanding anything contained in subsection (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax”.

The controversy involved in this writ petition falls in a narrow compass. The question is whether an assessee who had paid the tax within thirty dasy from the issue of notice along with interest would be held to be liable for penalty and has collected the tax and has not paid it to the Government within thirty days from the date from he collected.

A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the provisions of Sub-sections 6, 8 and 9 of Section 73 of the GST Act, 2017 it is provided that if a person chargeable to tax fails to deposit the tax collected by him within a period of thirty days from the due date of the payment of the such tax, Sub-section 8 will not have any effect and such a person is liable to pay penalty.”

To Read the full text of the Order CLICK HERE

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