Non-Disclosure of CESS in GSTR-3B Revenue Neutral, Dept Overlooked GSTR-9 Filing: Calcutta HC Remands Matter [Read Order]

In a recent ruling, the Calcutta High Court held that when the non-disclosure of CESS in GSTR-3B is revenue neutral, the GST authorities cannot overlook the petitioner’s GSTR-9 filing, especially when it was submitted before the amended Section 44(2) of the Goods and Services Tax (GST) Act came into force.

Bidyut Autotech Private Limited and another petitioner approached the High Court challenging an appellate order dated 6 February 2025 passed under Section 107 of the West Bengal GST Act and the CGST Act. The petitioners are motor vehicle dealers who had paid GST and CESS on their inward supplies during 2017-2018.

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The company believed that since they had sufficiently accumulated CESS credit, the CESS collected on outward supplies did not require separate disclosure in GSTR-3B. Later, when finalizing their accounts, they realised this mistake and disclosed the entire CESS in their annual return filed in Form GSTR-9.

A show-cause notice was issued alleging non-payment of CESS of Rs. 44,71,625 on outward supplies. As no reply was submitted to the notice, an order under Section 74 was passed demanding tax, interest and penalty totaling Rs. 1,28,26,999.

The petitioners appealed and argued that there was no fraud or suppression and that the omission was later corrected in GSTR-9. They further argued that they were entitled to ITC on the CESS paid on inward supplies, making the issue revenue neutral.

The appellate authority accepted that there was no wilful misstatement or suppression and converted the proceeding from Section 74 to Section 73 of the GST Act but did not consider the effect of the GSTR-9 disclosure and maintained the tax liability while reducing the penalty. This resulted in the present writ petition.

The petitioners’ counsel argued that since the GSTR-9 return had been filed on 28 August 2023 before amended Section 44(2) came into force on 1 October 2023 the department could not disregard it. They also argued that the appellate authority itself had relied on GSTR-9 to conclude that Section 74 was not applicable, which showed that it could not question the validity of the return.

The department’s counsel responded that the petitioners could not rely on GSTR-9 because it had been filed beyond the prescribed date and also argued that a prior Division Bench judgment cited by the petitioners could not be treated as a precedent. The petitioners denied this and pointed out that the law before the 2023 amendment did not impose a strict prohibition or any fatal consequence for filing GSTR-9 after the prescribed date.

The bench comprising Justice Om Narayan Rai observed that under Article 265 of the Constitution, tax cannot be collected without authority of law, and if the authorities ignored the petitioner’s unavailed CESS ITC while demanding full outward CESS, such action could offend Article 265 of the Indian Constitution.

The court explained that the earlier version of Section 44(2) did not bar late filing of GSTR-9 and that the presence of late fees under Section 47 indicated that late filing was permissible. The court also pointed out that the appellate authority should have properly considered the GSTR-9 disclosure and the differential amount paid by the petitioners, which made the omission in GSTR-3B revenue neutral.

The court held that the appellate authority’s order was unsustainable and remanded the matter for fresh consideration after examining the GSTR-9 return and the petitioners’ claim of unavailed ITC. The writ petition was disposed of without costs.

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