GST: Section 80 benefit not available if Assessee not filed returns & not paid tax

K. I. International (India) Ltd. Vs Principal Secretary (Madras High Court)

The object of Section 80 is to benefit an assessee who approaches the Commissioner for a scheme of instalments. The sole exception to the application of Section 80 is in respect of admitted tax. The language in Section 80 is ‘other than the amount due as per the liability self assessed in any return’.

The petitioner thus argues that the form GSTR I does not comprise a return and thus the exclusion that is set out under Section 80 would not apply to it. This argument is rejected in limine for the following reasons. Section 2 (37) defines ‘a return’, to mean ‘any return prescribed or otherwise required to be furnished by or under this Act or the Rules made thereunder‘.

Section 37 onwards till Section 48 falling under Chapter IX and entitled ‘Returns‘ proceeds on the basis that the various forms prescribed for filing by assessees, either setting out details of inward or outward supplies or tax credit, would all constitute returns.

Inter alia Section 39 refers to ‘a return, .. , of inward and outward supplies of goods or services or both..’. The return of outward supplies is in form GSTR 1 and is the return that has been filed by the petitioner. Thus, the argument that GSTR 1 only deals with ‘details’ and hence would not constitute a statutory return is unacceptable and contrary to the scheme of the Act.

16. Learned counsel for the petitioner also attempts to state that the impugned order under Section 80 has been passed even prior to the assessment having framed under Section 73. However, Section 80 makes no reference to an assessment at all. It only talks of turnover that has been self-assessed. In this case, the petitioner has filed the prescribed form setting forth the details of the outward supplies and the question of assessment does not arise. Incidentally, an assessment has also been made proximate to the proceedings for inspection when also the petitioner has acceded to the position that there has been suppression of sales.

Accepting the argument of the petitioner would tantamount to a situation wherein a delinquent assessee, one who has omitted to file a return of monthly turnover but has filed the prescribed return reflecting taxable sales, is allowed the benefit under Section 80, of an instalment scheme. The object of Section  80  is  only  to  benefit  an  assessee  who  has  been  complaint  in effecting payment of the admitted tax.

In this case, while the petitioner has filed returns it has not paid the tax and hence its barred from obtaining benefit under Section 80.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner is a Company and an assessee to State Value Added Tax under the provisions of the Tamil Nadu Goods and Services Tax Act, 2017. Admittedly, it did not file returns in Form – GSTR-3B for the period September, 2018 – March, 2019. (period in question)

2. There was an inspection in the premises of the petitioner on 11.03.2019 when several discrepancies were noted. The petitioner has unequivocally admitted to those discrepancies even at the time of inspection as revealed from communication dated 22.10.2019 wherein it accedes to the position that there has been non-payment of GST for the period in question.

3. Their explanation was to the effect that the Company had incurred loss on account of the fall in the prices of imported coal and that it was holding huge stock and was compelled to sell the same at unviable prices to avoid demurrage, interest and other dues to the port at Krishnapatanam.

4. At the time of inspection, sworn statement has also been recorded wherein the petitioner has likewise admitted liability for the period in question. The abstract of Goods and Services Tax payable for the aforesaid months has been, computed as per the petitioner and as set out in that communication is as follows:-

“For the month of September, 2018:

For the month of October, 2018:

For the month of November, 2018:

For the month of December, 2018:

For the month of January, 2019:

For the month of February, 2019:

For the month of March, 2019:

5. They conclude with a plea for mercy assuring the respondents that they would remit the amounts due in 24 instalments along with interest. This request has come to be rejected on 31.10.2019 by the Commissioner holding that the facility of grant of instalments under Section 80 is only in respect of disputed tax and not admitted tax.

6. It is to be noted, and this is very relevant, that on 11.11.2019, the assessment of the petitioner for the period 2018 – 2019 had been taken up under Section 73 of the Act. Notices had been issued to the petitioner and responses solicited. One of the issues that arose related to the very lacunae that had been deducted at the time of inspection, that the petitioner had filed details of outward supplies in Form GSRT – 1 for the period in question which showed that substantial sales had been made by it, though it had not filed monthly returns in Form GSTR – 3B.

7. The allegation as against the petitioner was that there had been sales suppression. In alignment with the stand taken by the petitioner at the time of inspection and even thereafter pleading for instalments, the petitioner conceded to this issue at the time of assessment. Based on the sales suppression, the tax due was computed at a sum of Rs.9,20,83,550/-.

8. The relevant portion in the order of assessment reads as follows:-

“Difference between Taxable value reported in GSTR-3B and GSTR-I (Suppression of outward supply)

The lesser reporting of outwards supply in GSTR-3B when compared to GSTR-1, for the year 2018-19 prove that the registered tax payer had not reported certain outward supplies. The reason for the same may be furnished, failing which necessary tax for those outward supply will be levied according to the provisions of the Act.

9. The response of the petitioner before the Assessing Authority was that they accepted the tax demanded and would remit the same after adjusting available credit. After considering the reply of the petitioner, this is conclusion of the officer:-

“Proper Officer’s Remarks:

The reply of the person is perused and it is ordered that the tax difference of Rs.92083550/- is payable along with interest u/s 50(3) of TNGST Act, 2017.

Please note that the interest has been calculated up-to the date of passing of the order. While making payment, for the period between the date of order and the date of payment shall also be worked out and paid along with the dues stated in the order.”

10. The petitioner continued its request for instalments and the request filed on 04.02.2020 has been rejected by impugned order dated 20.05.2020 reiterating the original view that had been expressed by the first respondent to the effect that Section 80 would not be applicable in cases of arrears in payment of admitted tax.

11. This writ petition has been instituted on the ground that benefit under Section 80 of the grant of instalments should have been extended to the petitioner. Section 80 reads as follows:-

“On an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly instalments not exceeding twenty four, subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed:

Provided that where there is default in payment of any one instalment on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.”

12. The object of Section 80 is to benefit an assessee who approaches the Commissioner for a scheme of instalments. The sole exception to the application of Section 80 is in respect of admitted tax. The language in Section 80 is ‘other than the amount due as per the liability self assessed in any return’.

13. The petitioner thus argues that the form GSTR I does not comprise a return and thus the exclusion that is set out under Section 80 would not apply to it. This argument is rejected in limine for the following reasons. Section 2 (37) defines ‘a return’, to mean ‘any return prescribed or otherwise required to be furnished by or under this Act or the Rules made thereunder‘.

14. Section 37 onwards till Section 48 falling under Chapter IX and entitled ‘Returns‘ proceeds on the basis that the various forms prescribed for filing by assessees, either setting out details of inward or outward supplies or tax credit, would all constitute returns. Specific reference may be made to Section 39 which deals with furnishing of returns and reads as follows:-

“Furnishing of returns.—

(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof.

(2) A registered person paying tax under the provisions of section 10 shall, for each quarter or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of turnover in the State or Union territory, inward supplies of goods or services or both, tax payable and tax paid within eighteen days after the end of such quarter.

(3) Every registered person required to deduct tax at source under the provisions of section 51 shall furnish, in such form and manner as may be prescribed, a return, electronically, for the month in which such deductions have been made within ten days after the end of such month.

 (4) Every taxable person registered as an Input Service Distributor shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, within thirteen days after the end of such month.

 (5) Every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, within twenty days after the end of a calendar month or within seven days after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier.

 …………………….

(7) Every registered person, who is required to furnish a return under subsection (1) or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.

(8) Every registered person who is required to furnish a return under subsection (1) or sub- section (2) shall furnish a return for every tax period whether or not any supplies of goods or services or both have been made during such tax period.”

15. Inter alia Section 39 refers to ‘a return, .. , of inward and outward supplies of goods or services or both..’. The return of outward supplies is in form GSTR 1 and is the return that has been filed by the petitioner. Thus, the argument that GSTR 1 only deals with ‘details’ and hence would not constitute a statutory return is unacceptable and contrary to the scheme of the Act.

16. Learned counsel for the petitioner also attempts to state that the impugned order under Section 80 has been passed even prior to the assessment having framed under Section 73. However, Section 80 makes no reference to an assessment at all. It only talks of turnover that has been self-assessed. In this case, the petitioner has filed the prescribed form setting forth the details of the outward supplies and the question of assessment does not arise. Incidentally, an assessment has also been made proximate to the proceedings for inspection when also the petitioner has acceded to the position that there has been suppression of sales.

17. Accepting the argument of the petitioner would tantamount to a situation wherein a delinquent assessee, one who has omitted to file a return of monthly turnover but has filed the prescribed return reflecting taxable sales, is allowed the benefit under Section 80, of an instalment scheme. The object of Section  80  is  only  to  benefit  an  assessee  who  has  been  complaint  in effecting payment of the admitted tax.

18. In this case, while the petitioner has filed returns it has not paid the tax and hence its barred from obtaining benefit under Section 80. The conclusion as aforesaid is supported by a decision of the Orissa High Court in the case of M/s. P.K. Ores Pvt Ltd @ M/s.PK Minings Pvt Ltd v Commissioner of Sales Tax & another [W.P.(c) No.10335 of 2022 dated 06.05.2022].

19. Impugned order is thus sustained and this writ petition is dismissed. No costs. Connected miscellaneous petition is closed.