Bidyut Autotech Private Limited And Anr vs. The Assistant Commissioner Of State Tax, Bureau Of Investigation, South Bengal (Hq) And Ors

Held

The Court held that the GST authorities should not ignore the effect of Form GSTR-9, especially when the petitioners assert they have not availed ITC on Cess paid on inward supplies and are being burdened with Cess collected on outward supplies without credit for unavailed ITC. Such an act could offend Article 265 of the Constitution. Regarding Section 44(2), the Court found that the earlier version of Section 44(2) (prior to the 2023 amendment) did not prohibit filing GSTR-9 beyond the prescribed date, and the mandatory prohibition in the amended Section 44(2) (effective October 1, 2023) does not apply as the return was filed on August 28, 2023. The explanation to Section 44(2) provided a date but lacked fatal consequences for late filing or a negative mandate prohibiting late filing. The Court accepted that the judgment in Ankit Kumar Agarwal could not be cited as a precedent. However, applying the law and Article 265, the Court held that the appellate authority must give due regard to the GSTR-9 and the payment of the differential sum, which renders the initial non-disclosure revenue neutral. The matter was remanded to the appellate authority for reconsideration.

Facts

The petitioners, dealers of motor vehicles, purchased vehicles and paid GST and Cess during FY 2017-2018. The Cess paid on inward supplies was reflected in GSTR-2A. The petitioners collected Cess on outward supplies but did not disclose it in GSTR-3B, believing they had sufficient accumulated Cess from inward supplies. Upon realizing their mistake, they disclosed the entire Cess amount in their annual return, GSTR-9, stating it was revenue neutral. A show-cause notice was issued under Section 74 of the GST Act for non-payment of Cess amounting to Rs. 44,71,625/-. An order was passed holding the petitioner liable for Rs. 41,31,946/- in taxes, with interest and penalty totaling Rs. 1,28,26,999/-. The petitioners appealed, arguing no suppression, willful misstatement, or fraud occurred, and the mistake was rectified in GSTR-9. They also contended that ITC on inward Cess should offset outward Cess demand. The appellate authority converted the proceedings to Section 73 but confirmed the tax liability, reduced the penalty, and did not consider the accumulated Cess on inward supplies.

Key Issues

1. Whether the appellate authority erred in not considering the effect of the annual return filed in Form GSTR-9, which disclosed the accumulated Cess on inward supplies and indicated the initial non-disclosure in GSTR-3B was revenue neutral, despite accepting that there was no willful misstatement or suppression? (Section 44 of the CGST/WBGST Act, 2017) 2. Whether the provisions of Section 44(2) of the CGST/WBGST Act, 2017, as amended by the Finance Act of 2023, apply to the petitioners' case, given that the annual return was filed prior to the amendment's effective date? Petitioner's arguments: The appellate authority erred by not considering the GSTR-9 disclosure, which showed the error was revenue neutral. The petitioners paid the differential sum, making the initial non-disclosure inconsequential. They rely on judgments in Ankit Kumar Agarwal vs. Assistant Commissioner of State Tax (Cal) and Sri Shanmuga Hardwares Electricals vs. State Tax Officer (Mad), and Bisweswar Midhya vs. The Joint Commissioner (Cal). State's arguments: The judgment in Ankit Kumar Agarwal cannot be treated as a precedent. The petitioners cannot take advantage of the GSTR-9 disclosure as it was filed beyond the prescribed period under Section 44(2) as amended by the Finance Act of 2023. Even prior to the amendment, the explanation to Section 44(2) provided an exact filing date.