Sriba Nirman Company Vs Commissioner (Appeals) (Supreme Court of India)
The Supreme Court dismissed the Special Leave Petition and declined to interfere with the judgment of the Andhra Pradesh High Court, thereby affirming the levy of penalty under Section 74 of the CGST Act, 2017. The dispute arose from non-filing of monthly GST returns and non-payment of GST for the period July 2017 to March 2018 by a registered works contractor, despite issuance of invoices and receipt of partial payments from its principal contractor. Although the entire tax liability was eventually paid between July and September 2018 and returns were filed, the payments were made only after inspection by tax authorities. Show cause notices issued in 2020 invoked Section 74, alleging suppression of facts and proposing penalties equivalent to tax, interest, and other statutory penalties.
Also Read HC Judgment in this case: AP HC Upholds Penalty for Willful Suppression/non-filing of GST Returns
The High Court examined whether Section 74, which applies only where non-payment is by reason of fraud, wilful misstatement, or suppression of facts to evade tax, was validly invoked. It held that GST law mandates monthly filing of returns with payment of tax under Sections 37 to 39, independent of the annual return under Section 44. Non-filing of monthly returns amounts to “suppression” as defined in Explanation 2 to Section 74. On facts, the Court accepted the appellate authority’s finding that partial payments had been received and that failure to remit tax could not be justified solely on cash-flow issues, thereby constituting wilful suppression. Since tax was paid before issuance of notice but interest and the mandatory 15% penalty under Section 74(5) were not paid prior to notice, the statutory bar on issuance of notice did not apply. The Court upheld invocation of Section 74 and the consequential penalties.
The Supreme Court, after hearing senior counsel and examining the record, found no reason to interfere with this reasoning and dismissed the SLP, giving finality to the view that non-filing of monthly returns with non-payment of tax can justify penalty under Section 74 where facts establish wilful suppression, even if tax is later paid before issuance of the show cause notice without complying fully with Section 74(5).
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Exemption Application is allowed.
2. Having heard the learned Senior counsel appearing for the petitioner and having gone through the materials on record, we see no good reason to interfere with the impugned order passed by the High Court of Andhra Pradesh at Amaravati.
3. The Special Leave Petition is, accordingly, dismissed.
4. Pending applications, if any, shall also stand disposed of.
