Case Law Details
Ayiswarya Polymers Vs Assistant Commissioner of GST And Central Excise (Madras High Court)
The Madras High Court considered a writ petition challenging an order rejecting the petitioner’s application for waiver under Section 128-A of the applicable GST enactments.
An Order-in-Original was issued on 30.12.2022. Pursuant to the said order, the petitioner made payments on 27.03.2023 and 06.09.2024. It was common ground between the parties that the entire tax demand under the Order-in-Original had been discharged. However, the petitioner mistakenly remitted a sum of ₹3,69,334 under the IGST head instead of the CGST and SGST heads. On that basis, the application for waiver under Section 128-A was rejected, and the rejection order was challenged before the High Court.
The respondent submitted that no interference was warranted since the petitioner had admittedly made payment under the IGST head instead of the CGST and SGST heads.
The Court noted that under Section 128-A, a person is eligible to seek waiver if the full amount of tax payable under a show cause notice, an order under Section 73, or an appellate order under Section 107 has been paid. In the present case, it was undisputed that the petitioner had discharged the entire tax liability, although payment had been made under the wrong tax head.
The petitioner contended that the payment under the IGST head was merely a clerical error, pointing out that it had no IGST liability. The Court recorded that this factual assertion was not disputed by the respondent. The respondent, however, submitted that neither the GST statute nor the rules framed thereunder provided a mechanism for transferring the amount from one tax head to another.
The Court observed that provisions relating to waiver or exemption are to be construed strictly with respect to substantive requirements, whereas substantial compliance is sufficient in relation to procedural requirements. It noted that this principle had been affirmed by the Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and Others, (2018) 9 SCC 1.
Considering that the petitioner had remitted the entire tax liability pursuant to the order under Section 73 within the prescribed time limit, the Court held that there was substantial compliance with the requirements of Section 128-A. Consequently, it concluded that the matter required reconsideration.
Accordingly, the High Court set aside the impugned order and remanded the matter for fresh consideration. It directed the respondent to reconsider the petitioner’s waiver application after providing a reasonable opportunity of hearing and after taking note of the observations made in the judgment. A fresh order was directed to be issued within three months from the date of receipt of a copy of the judgment. The Court also directed the petitioner to comply with any procedural requirements necessary to ensure that the tax is remitted under the appropriate tax head.
The writ petition was disposed of on these terms. The connected miscellaneous petitions were closed, and no order as to costs was made.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order in original was issued on 30.12.2022. Pursuant thereto, the petitioner made payments on 27.03.2023 and 06.09.2024. It is common ground that the entire tax demand under said order in original was discharged. The petitioner, however, erroneously remitted a sum of Rs.3,69,334/- in the wrong head, i.e., IGST, instead of CGST and SGST. On that basis, the application for waiver under Section 128-A of applicable GST enactments was rejected. Said order is challenged herein.
2. Mr. K. S. Ramasamy, learned standing counsel, accepts notice on behalf of the respondent. He submits that no case is made out for interference because the petitioner admittedly made payment under the IGST head instead of CGST and SGST.
3. Under Section 128-A, a person is eligible to apply for waiver if such person pays the full amount of tax payable as per the show cause notice or order under Section 73 or appellate order under Section 107. In the case at hand, the agreed position is that the entire tax liability was discharged, albeit by making payment under the wrong head.
4. Learned counsel for the petitioner asserts that this was merely a clerical error in as much as the petitioner has no IGST liability. This factual possession is not controverted by the respondent. Learned counsel for the respondent, however, adds that the statute and the rules framed therein do not enable transfer from one head to the other.
5. A provision for waiver or exemption is required to be construed strictly with regard to substantive requirements. As regards procedural requirements, substantial compliance is sufficient. This principle was affirmed by the Supreme Court in cases such as Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and Others, (2018)9 SCC 1.
6. Given the fact that the petitioner remitted the full tax upon receipt of an order under Section 73 within the time limit specified in that regard, I am of the view that there is substantial compliance. Consequently, the matter warrants reconsideration. To enable such re-consideration, the impugned order is set aside and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, the application for waiver shall be re-considered after taking note of the observations contained in this order. A fresh order shall be issued within three months from the date of receipt of a copy of this order. The petitioner shall comply with any procedural requirements in order to ensure that the tax is remitted into the appropriate head.
7. The writ petition is disposed of on the above terms. Consequently, connected writ miscellaneous petitions are closed. There shall be no order as to costs.
Author Bio
