Case Law Details
On Time Services Having At Office Vs Union of India and 3 others (Allahabad High Court)
Allahabad High Court has partially set aside a GST demand order against On Time Services Having At Office, directing the tax authorities to reconsider the petitioner’s request for adjusting CGST and SGST liabilities against its available IGST balance. The case arose from a demand notice issued by the Deputy Commissioner, State Tax, Prayagraj, for the financial year 2018-19, seeking tax payment of ₹2,77,396 along with a penalty of ₹27,738. The petitioner responded to the show cause notice under Section 73 of the GST Act, arguing that the CGST and SGST dues should be offset against its IGST credit of ₹16,75,668. However, the assessing authority proceeded with the demand without addressing this request.
The court acknowledged that while the tax determination itself was not in question, the petitioner’s plea for IGST adjustment had not been considered, which could impact interest and penalty calculations under Section 128A of the GST Act. Consequently, the court remanded the case to the tax authority for reconsideration of this specific issue. The petitioner has been directed to appear before the authority on February 5, 2025, for a fresh hearing, where a revised decision will be made. If the IGST adjustment is accepted, the interest and penalty implications will be reassessed accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This petition has been filed by the petitioner aggrieved of the order dated 16.12.2023 and demand notice dated 24.04.2024 issued by the Deputy Commissioner State Tax, Sector – 12, Prayagraj for the period April, 2018 to March, 2019, wherein a demand of tax of Rs. 2,77,396/- and penalty to the tune of Rs. 27,738/- has been raised.
2. The petitioner was issued show cause notice under Section 73 of the Goods and Services Tax Act, 2017 (for short ‘the Act’), inter alia, on two aspects. The petitioner gave response to the same and also prayed that as the balance of IGST is Rs. 16,75,668.29/-, the demand of CGST and SGST be adjusted from the same. The respondent-Authority passed the order impugned raising the demand as noticed hereinbefore.
3. Learned counsel for the petitioner though attempted to make submissions seeking to question the determination made with reference to provisions of Section 16(2)(c) of the Act, qua demand raised to the tune of Rs. 23,909/- for CGST and similar amount of SGST, however, made submissions that once in the response, a prayer was made to adjust the amount from IGST, the said aspect was not considered and in case, the same amount was adjusted, in terms of provisions of Section 128A of the Act, the interest and penalty would have been waived.
4. A perusal of the record indicates that while the aspects on which notice was issued have been determined, the submissions made by the petitioner for adjusting the demand of CGST and SGST from IGST have not been dealt with and penalty has been imposed along with direction to pay interest in terms of provisions of Section 50 of the Act.
5. Learned counsel for the respondents made submissions that insofar as the determination is concerned, no fault can be found, however, so far as the proposal/suggestion made for adjusting the amount of demand from IGST is concerned, the same may now be determined by the Authority.
6. In view of the above fact situation, wherein admittedly, the proposal/suggestion made by the petitioner for adjusting the amount of CGST and SGST from IGST has not been considered by the Authority, which has a consequence under provisions of Section 128A of the Act, the order impugned dated 12.2023 and demand dated 24.04.2024 are set aside only to the limited extend of consideration of the prayer made by the petitioner for adjusting the demand of CGST and SGST from the balance available in IGST.
7. The petitioner shall appear before the Authority on 05.02.2025. On that day, the Authority, after providing opportunity of hearing to the petitioner, would pass an appropriate order on the said prayer and in case, the prayer is accepted, consequence pertaining to the interest and penalty would follow.
8. With the above directions, the petition stands disposed of.
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