SIS Cash Services Pvt. Ltd. Vs Union of India (Patna High Court)
The Patna High Court recently addressed a petition filed by SIS Cash Services Pvt. Ltd. challenging the recovery of tax despite the company having filed its return and paid the tax amount, albeit with a delay. The case highlights the complexities surrounding best judgment assessments under the Bihar Goods and Services Tax Act (BGST Act) and the avenues available to taxpayers for recourse.
The dispute originated from SIS Cash Services’ failure to file its GSTR-3B return for June 2019 and pay the corresponding tax by the due date of July 20, 2019. Consequently, the Assessing Officer initiated proceedings under Section 62 of the BGST Act, which allows for a best judgment assessment when a registered person fails to furnish a return. On September 2, 2019, the Assessing Officer issued an order determining a total tax liability of Rs. 22,16,963.44/-.
According to Section 62(2) of the BGST Act, if a registered person furnishes a valid return within thirty days of the service of the assessment order, the best judgment assessment order is deemed to have been withdrawn. In this instance, SIS Cash Services filed its return and paid the admitted tax amount of Rs. 20,35,031/- on October 4, 2019.
The petitioner contended that while the payment was not strictly within the thirty-day window stipulated by Section 62, it was made shortly thereafter. The Assessing Officer, however, maintained that an order had been passed under Section 62, and at that stage, a review was not permissible. The government’s representative emphasized that the statutory provision itself outlines the condition for withdrawal of the best judgment order, which is contingent upon filing the return and paying the tax within one month.
The High Court acknowledged the facts of the case, noting the petitioner’s failure to file the return by the due date and the subsequent best judgment assessment order. The court meticulously examined the timeline, observing that the assessment order was passed on September 2, 2019, and served on September 3, 2019. The thirty-day period for filing the return and paying the tax, therefore, expired on October 2, 2019, which was a public holiday (Gandhi Jayanti). The court pointed out that the deadline effectively extended to October 3, 2019, being the next working day. Since the petitioner made the payment on October 4, 2019, there was a delay of one day.
Despite the minimal delay, the High Court declined to interfere with the matter in proceedings under Article 226 of the Constitution of India. The court’s reasoning was rooted in the principle that interfering would contravene the clear statutory provisions of Section 62 of the BGST Act, which mandates compliance within the specified timeframe for the automatic withdrawal of the best judgment assessment order.
However, the court took note of a significant development: Notification No. 53 of 2023-Central Tax, issued by the Central Board of Indirect Taxes and Customs on November 2, 2023. This notification provides a special procedure for filing appeals against orders passed by the Proper Officer under Sections 73 and 74 of the BGST Act on or before March 31, 2023. The court observed that this notification effectively extends the period for filing delayed appeals beyond the usual one-month period provided under Section 107(4) of the BGST Act.
The court’s interpretation extended the applicability of this notification to orders passed under Section 62 as well, considering that Section 62 provides a mode of assessment, notwithstanding anything contrary in Sections 73 or 74. The notification allows for filing an appeal against such orders in FORM GST APL-01 on or before January 31, 2024. It also stipulates certain conditions for filing the appeal under this special procedure. These conditions include the appellant paying the full admitted amount of tax, interest, fine, fee, and penalty, and a sum equal to twelve and a half per cent of the remaining disputed tax amount, with a portion of this pre-deposit required to be paid from the Electronic Cash Ledger.
The court highlighted that SIS Cash Services has a viable remedy of appeal against the best judgment assessment order under this special procedure. While the petitioner had already filed the return and paid the amounts, the Appellate Authority has the jurisdiction to review and potentially interfere with the best judgment assessment. If the appeal is successful, the department would be liable to refund the excess amounts collected, including any interest.
Applying equitable principles, the High Court stated that if the Appellate Authority orders a refund, no interest would be payable to the petitioner on the refunded amount for the period between October 4, 2019 (when the tax was paid) and the date of the refund, provided the appellate order is passed within three months. However, if the appeal is not disposed of within three months, interest would accrue from the date of expiry of the three-month period.
The court directed SIS Cash Services to file an appeal before the Appellate Authority by January 31, 2024, in strict accordance with the conditions and procedures outlined in Notification No. 53 of 2023-Central Tax. The Appellate Authority was directed to consider and dispose of the appeal expeditiously.
This judgment underscores the importance of adhering to statutory timelines under GST law. While the High Court did not exercise its extraordinary writ jurisdiction due to the clear statutory framework, it guided the petitioner towards the alternative remedy of appeal, made available through a subsequent notification, providing a potential path for relief. The case serves as a reminder for taxpayers to be diligent in filing returns and making payments by the due dates to avoid best judgment assessments and potential legal challenges.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
