Case Law Details
Alamelu Construction Vs Assistant Commissioner of GST & Central Excise (Madras High Court)
The case of Alamelu Construction Vs Assistant Commissioner of GST & Central Excise, heard by the Madras High Court, revolves around the imposition of penalties despite the discharge of GST liabilities.
The petitioner in this case had discharged their GST liability before the issuance of the show cause notice. Despite this, the impugned order imposed both interest and penalty. The petitioner argued for the applicability of the proviso to Section 50(1) of the Central Goods and Services Tax Act, 2017, which would exempt them from paying interest due to the pre-discharge of tax liability.
However, the respondent argued that the petitioner had collected taxes but failed to remit them on time. They contended that since the liability was discharged after the commencement of proceedings, the proviso to Section 50(1) could not be invoked.
The Madras High Court observed that while the petitioner did discharge their GST liability, the imposition of a 100% penalty warranted reconsideration. Considering the circumstances, the court allowed the petitioner to file a statutory appeal, subject to the condition that the petitioner remits a sum of Rs.2.5 lakhs (Rupees two lakhs fifty thousand only) towards interest liability as agreed to within a period of three weeks from the date of receipt of a copy of this order..
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original dated 27.09.2023 is assailed only in so far as it pertains to interest and penalty liability. Proceedings were initiated against the petitioner by issuing a show cause notice dated 27.02.2023. Even prior thereto, the petitioner had discharged the GST liability on 31.03.2019, 03.04.2019 and 23.04.2019 through the electronic credit ledger. The impugned order was issued in these facts and circumstances.
2. Learned counsel for the petitioner submitted that the petitioner is entitled to the benefit of the proviso to Section 50(1) of the Central Goods and Services Tax Act, 2017 and is, consequently, not liable to pay interest. Because the tax liability was discharged prior to the issuance of show cause notice, it is also submitted that the petitioner is not liable to penalty. Learned counsel further submits that the petitioner may be permitted to approach the appellate authority by way of statutory appeal.
3. Mr. Ramesh Kutty, learned senior standing counsel, accepts notice for the respondent. He submits that the petitioner collected taxes in respect of the outward supply of goods/services but failed to remit tax. He also submits that the petitioner discharged the liability after the commencement of proceedings and therefore is not entitled to the benefit of the proviso to Section 50(1).
4. The impugned order records that the petitioner discharged GST liability on 31.03.2019, 03.04.2019 and 23.04.2019. Therefore, the limited scope of challenge is with regard to interest and penalty. The order discloses that 100% penalty was imposed. By taking into account the fact that the petitioner discharged the GST liability in 2019 and the fact that 100% penalty was imposed, it is just and appropriate that the petitioner be permitted to present a statutory appeal. Since the time limit for filing such appeal expired, the petitioner shall be put on terms.
5. Learned counsel for the petitioner submits, on instructions, that the petitioner is willing to remit a sum of Rs.2.5 lakhs as a condition for being permitted to present a statutory appeal.
6. Therefore, W.P.No.9681 of 2024 is disposed of by permitting the petitioner to present a statutory appeal before the appellate authority subject to the condition that the petitioner remits a sum of Rs.2.5 lakhs (Rupees two lakhs fifty thousand only) towards interest liability as agreed to within a period of three weeks from the date of receipt of a copy of this order. Subject to remittance of the amount specified above, if a statutory appeal is presented within the aforesaid period of three weeks, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation. There will be no order as to costs. Consequently, connected miscellaneous petitions are closed.
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