Tvl. Nagaraj Sellappan Vs State Tax Officer (Madras High Court)
The Madras High Court addressed a writ petition challenging two GST orders for the Tax Period 2021-22. The first, dated 20.03.2023, confirmed a demand of Rs. 30,23,512/- comprising SGST, CGST, interest, and penalties under Section 74 of the respective GST enactments. The second, dated 14.08.2023, partially rejected an application for rectification filed under Section 161, reducing the total payable amount to Rs. 4,70,808/-. The petitioner had voluntarily paid Rs. 3,38,310/- towards SGST and CGST under Section 73(5) via Form DRC-03. The 14.08.2023 order noted that under Section 74(11), a person served with an order under Section 74(9) could settle the liability within thirty days by paying tax, interest, and 50% penalty, which the petitioner had not availed.
The petitioner argued for an opportunity to appeal the imposition of penalty under Section 74(9), citing that the 20.03.2023 order was ex parte. The Government Advocate contended that the writ petition was filed after a significant delay and that the petitioner had admitted tax liability but failed to pay interest on time. Considering that the petitioner had partly discharged the tax liability and the grievance was partially redressed, the High Court declined to remit the matter to the Respondent.
The Court focused on whether the petitioner was liable for penalty on belated payment of admitted SGST and CGST. It observed that while the statutory limitation for filing an appeal had expired, the petitioner could still challenge the 14.08.2023 order. The Court granted liberty to file a statutory appeal within thirty days from receipt of the order, provided the petitioner deposits 25% of the disputed tax amount along with interest on belated payment. Upon proof of such deposit, the Appellate Authority is directed to decide the appeal on merits without reference to limitation.
If the petitioner fails to comply with the conditions, the authorities are free to proceed as though the writ petition had been dismissed. The Court disposed of the writ petition with no costs, and connected miscellaneous petitions were also closed. The decision clarifies that a rectification order does not reset the limitation period for appeal, and delayed appeals may be permitted conditionally, emphasizing that interest and partial pre-deposit are prerequisites for consideration on merits.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr. V. Prashanth Kiran, learned Government Advocate takes notice for the Respondent.
2. With the consent of the learned counsel for the Petitioner and learned Government Advocate for the Respondent, this Writ Petition is being disposed of at the time of admission.
3. In this Writ Petition, the Petitioner has challenged the impugned Order dated 20.03.2023 passed by the Respondent for the Tax Period 2021-2022 and impugned Order dated 14.08.2023 whereby the application filed under Section 161 of the respective GST enactments was partially rejected.
4. It is noticed that the Petitioner was issued with a Show Cause Notice dated 15.02.2023 in GST DRC-01, issued under Section 74 of the respective GST enactments.
5. By the aforesaid Show Cause Notice dated 15.02.2023, a sum of Rs.6,61,408/- each was demanded towards SGST and CGST and Rs.1,65,352/-each was demanded as penalty under SGST Act and CGST Act.
6. By the impugned Order dated 20.03.2023, a sum of Rs.30,23,512/- was confirmed as detailed below:-
| Sl. No. | Tax Period | Tax (In Rs.) |
Interest (In Rs.) |
Penalty (In Rs.) |
Total (In Rs.) |
|
|---|---|---|---|---|---|---|
| From | To | |||||
| 1 | APR 2021 | APR2021 | 6,61,408.00 | 1,88,940.00 | 6,61,408.00 | * 15,11,756.00 |
| 2 | APR 2021 | APR 2021 | 6,61,408.00 | 1,88,940.00 | 6,61,408.00 | # 15,11,756.00 |
| Total | 13,22,816.00 | 3,77,880.00 | 13,22,816.00 | 30,23,512.00 | ||
* SGST Rs.15,11,756.00/-
# CGST Rs.15,11,756.00/-
7. The Petitioner thus filed an application for rectification of the said Order dated 20.03.2023. Out of the aforesaid sum of Rs.30,23,512/-, the Petitioner claims to have voluntarily paid a sum of 3,38,310/- (Rs.1,69,155/-x 2) towards SGST and CGST under Section 73(5) of the respective GST enactments by way of Intimation of payment in Form GST DRC-03 dated 07.07.2023.
8. By an Order dated 14.08.2023 (which is also impugned in this Writ Petition), the Respondent reduced the amount payable under Section 74(1) of the respective GST enactments as follows:-
| Sl. No. |
Tax Period | Tax (In Rs.) |
Interest (In Rs.) |
Penalty (In Rs.) |
Total (In Rs.) |
|
|---|---|---|---|---|---|---|
| From | To | |||||
| 1 | APR 2021 | APR 2021 | 2,201.00 | 61,847.00 | 1,71,356.00 | * 2,35,404.00 |
| 2 | APR 2021 | APR 2021 | 2,201.00 | 61,847.00 | 1,71,356.00 | # 2,35,404.00 |
| Total | 4,402.00 | 1,23,694.00 | 2,34,712.00 | 4,70,808.00 | ||
* SGST Rs.2,35,404.00/-
# CGST Rs.2,35,404.00/-
9. The impugned Order dated 14.08.2023 itself stipulates that as per Section 74(11) of the respective GST enactments, if any person served with an Order passed under Section 74(9) of the respective GST enactments pays the tax along with interest payable thereon under Section 50 of the respective GST enactments and a penalty equivalent to 50% of tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded. However, the Petitioner failed to take advantage of the same.
10. Learned counsel for the Petitioner submits that the Petitioner may be given one opportunity to file an appeal against the impugned Order dated 14.08.2023 insofar as the imposition of penalty under Section 74(9) of the respective GST enactments.
11. Learned counsel for the Petitioner however confirms that the Petitioner has not remitted the interest on the belated payment of tax till date.
12. Learned Government Advocate for the Respondent submits that this Writ Petition is devoid of merits as the Petitioner has filed this Writ Petition long after the impugned Orders came to be passed on 20.03.2023 and 14.08.2023.
13. That apart, it is submitted that the Petitioner has admitted to the tax liability and paid the amounts on the dates mentioned above and therefore, there is no scope for interfering with the impugned Order dated 14.08.2023 seeking to reduce penalty under Section 74(11) of the respective GST enactments as the Petitioner has failed to pay interest in time.
14. By way of rejoinder, the learned counsel for the Petitioner submits that the impugned Order dated 20.03.2023 itself was an ex parte Order and therefore the Petitioner may be given one opportunity to explain the case afresh since the Petitioner has discharged the tax liability.
15. Though the Petitioner failed to participate in the proceedings before the Respondent by filing a Reply to the Show Cause Notice in GST DRC-01 dated 15.02.2023, considering the fact that the grievance of the Petitioner has been partly redressed and taking note of the amounts already deposited by the Petitioner on 19.04.2022 and on 07.07.2023, and also the submissions made by the learned counsel for the Petitioner and the learned Government Advocate for the Respondent, the case need not be remitted back to the Respondent at this distant point of time.
16. The only issue that arises for consideration is whether the Petitioner is liable to pay penalty on account of belated payment of admitted tax liability towards SGST and CGST under Section 74(9) of the respective GST enactments.
17. At best, the Petitioner can be given liberty to challenge the impugned Order dated 14.08.2023, though limitation for filing an appeal has already expired considering the fact that the Petitioner has discharged the tax liability on the dates mentioned above.
18. Under these circumstances, liberty is given to the Petitioner to file a statutory appeal before the Appellate Authority within a period of thirty (30) days from the date of receipt of a copy of this order coupled with payment of 25% of the disputed amount of tax together with interest on the belated payment of admitted tax liability.
19. Subject to the Petitioner complying with the above condition and furnishing the proof of the same with the Appellate Authority, the Appellate Authority shall dispose of the appeal on merits after hearing the Petitioner without reference to the aspect of limitation.
20. In case the Petitioner fails to comply with the condition stipulated above, the Authorities under the Act are at liberty to proceed against the Petitioner in accordance with law as if this Writ Petition was dismissed in limine
21. This Writ Petition stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.
