M/S. Ecc Trading Private Limited vs. Additional Commissioner Of Central Tax
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
PS,I(,J & NTR,J W.P.No.2124 oJ 2O24 THE HON'BLE SRI JUSTICE P.SAM KOSI{Y AND THE HON'BLE SRI JUSTICE N.TUKARAMJI Writ Petition No2L24 OF 2o24 OFI-DER: per rron'ble Si Justtce P.SAM KOSHY) The challenge in the present Writ Petition is to the order, dated 09. ll.2023 passed by respondent No.1, q,,hereb)' respondent No.1 has passed art order affirming the demand of Rs.2,11,69,253/- under Section 73(1) of Central Goods and Services Tax Act, 2Ol7 (for short "the Act") and also imposed a penalty of Rs.21,16,925/- under Section 73 of the Act i.e., lOo/o of the demard raised by the Department.
The u,hole dispute arose on account of the error on the part of the petitioner while submitting its GST returns for the period July, 2Ol7 i.e., at the stage when GST law was at its primitive stage upon being implemented rvith effect lrom Ol.O7 .2O17 .
According to the learned counsel for the petitioner, in the course of submission of GST return for the period July, 2OI7, inadvertcntl-v while reflecting the amount of CGST and SGST Tax component, for CGST component amount of 3
PSK,J 8. MIR,J W.P.No.2724 oJ 2024 Rs.22,96,928. 12 was reflected. However, inspite of having the same figure under SGST column, the arnount got wrongly typed as Rs.2,22,96,92A.12, the said return was lrled on 23.08.2017. Immediately, the petitioner senr an email to the respondent-authorities on 23.08.20 l7 i.e., on the same day, intimating them about the error that crept in the excess input credit under SGST. The petitioner also sought perrnission to adjust the excess amount reflected from the IGST input available.
Subsequently, when the petitioner submitted its Form GSTR-3B in September, 2018, the petitioner again made a mistake by reflecting the ITC reversal under the IGST instead of SGST. When the return of the petitioner was subjected to audit, the petitioner immediately brought it to the notice of the authorities about the second mistake again which has arisen so far as availing ITC reversal in IGST instead of SGST.
Meanwhile, respondent-authorities issued a show cause notice to the petitioner under Section 73 of the Act alleging excess availment of ITC during the period 2O1Z-lB. 4
PSK,J& MTR,J The petitioner immediately entered appearance before the respondent-auttrorities and submitted its detailed reply on 2O.1O.2O23 (Annexure-P17), categorically bringing to the notice of the respondent-authorities about the alleged inadvertent mistakes that occurred on the part of the petitioner initially while reflecting the SGST tax component and subsequently while availing ITC reversal for the said amount. Though a detailed reply has been filed by the petitioner before the respondent-authorities, without touching any of those contentions that the petitioner herein has raised in its reply, the respondent-authorities have in a mechanical manner passed the impugned order, dated 09.11.2023 (Annexure-Pl) confirming the demand of Rs.2,11,69,253/- and also imposed penaltSz at the rate of lOok on the said amount. The entire reading of the impugned order would clearly reveal that none of the contentions that the petitioner has raised in its reply to the show cause notice have been dealt with and the authority concerned has passed the order in a routine manner 5
PSr,J& rUtR,J W.P.No.2124 oJ 2O24
At this juncture, learned counsel appearing for the petitioner contended that the error as has arisen in the instant case, has a-lso occurred to various other assessees across the Country. Similar disputes have been adjudicated by many other High Courts as well. In support of his contention, he refers to a recent decision of the High Court of Karnataka, Bengaluru Bench in W.p.No.29 l1 of 2022, in the case of M/s.Orient Traders Vs. The Deputg Comrnissioner of Commercial Taxes and another, whereby the High Court of Karnataka in paragraph Nos. ll and 12 held as under:
"
As rightly contended by the learned Senior Counsel for thc petitioner, the authorities must avoid a blinkered view while adjudicating/assessing the tax liability of a dealer under the Act. In thi instant case, the respondents have, in the absence of a prescribed GSTR 2- A for the relevant tax periods referred to the IGST import {igures reflected in the ICE GATE portat of the Customs Department for all the months except those in which the errors have been committed. This ctearly indicates that the respondents are aware of the actual {igures and also that there is an error committcd by the petitioner, but has chosen to selectively ignore the IGST import amounts reflected in the tCE GATE portal for the tax periods in disputc, which is yet another circumstance to uphold the claim of r he petitioner.
In view of the aforesaid facts and circumstanccs, I am of the consiclerccl opinion that the petitioner is entitled for thc limited reHt of being permitted to make thc neccssary changes to its 6
7 PSr<,J & -l\l:rR,J W.P.No.2724 oJa 2024 Court GSTR 3-B returns for the months of July 2Ol7 ar,d March 2018, particularly, since doing so would not cause any prejudice to the respondents-Revenue nor would it upset the chain of credit under the GST scheme and liberty is to bc reserved in favour of the revenue to proceed with the impugned show cause notice dated 17 .O1.2022 after permitting the pelitioner to make the necessary amendments to its -CSfn S-g Returns for the above tax periods ' While making the said observations, the High has also passed the following directions:
"
In the result, I pass the following:- (i) (ii) The petition is hcreby partly allou'ed. The respondents are hereby directed to permit the petitioncr to make neccssary corrections to the GSTR-3B for the months of July-2O17 to March-20 1 8. The respondents are lurthcr directed to permit the petitioner to carry out the said corrections online by reopening the portal for a Iimited period to be notifred to the petitioner. Due to technical gtitches / defects, if it is not possibtc for the respondcnts to permit such corrections online or on the portal, respondents are hereby directed to permit to carry out such corrections via manualll'/ phYsicallY ORDER Till the resPondcnts directions issued above, comply with the they shall not take (iii) (iv) (v) (vi) precipitative steps pursuant to the show-cause notice dated 17 .O1.2022. lt is madc clearr that the above order is in the peculiar lacts arld circumstgnces of tl]g case' particularlv sincc the tzrx peiiods inVblved retate to thc first 1'car of introduction of GST and this ordcr shall not be treated as a precedcnt nor.ha',e any precedential value for any PurPose \t'hatsoever' Court in the case of M/s.Sun Dge Chem Vs. Assistcnt Commisstoner (ST) & Ors.r and also that of Pentacle Plant Machineries htt. Ltd.. Vs. Ollice orGS? Councit & Board. oJ Excise & Custom-s qnd. Ors.e and the decision and Ors.t; and relying upon those judgments the Bombay High Court, in paragraph Nos.20 to 22, has held as under: 8 "2O. On the interpretation of the provisions as made b-r, us and the common thread running through the decisions as noted above, it would lead us to observe that the GST regime as contemplated I 2O2O TIOL I858 HC MAD GST , 2O2I -TIOL-6O1,HC-MAD GST 3 MANU/OR/0s22l2O23 r I\rANU/JH/ tOO3 /2022
9 PS'K,J & I TR,J W.P.No,2724 oJ 2024 under the GST Law unlike the prior regime, has evolved a scheme which is largely based on the electronic domain. The diversity, in which the traders and the assessees in our country function, with the limited expertise and resources they would have, cannot be overlooked, in the expectation the present regime would have in the traders/ assessees complying with the provisions of the GST Laws. There are likety to be inadvertent and bonafide human errors, in the assessees adopting themselves to the new regime. For a system to be understood and opcrate perfectly, it certainly tales some time. The provisions of law are required to be alive to such considerations and it is for such purpose the substantive provisions of sub-section (3) of Section 37 and sub-section (9) of Section 39 minus the proviso, have permitted rectihcation ol inadvertent errors.
We ma1' also observe that the situation like in the prcsent case, was also the situation in the procccdings before the different High Courts as noted by us above, wherein the errors of the assessee were inadvertent and bonafrde. There was not an iota of an illegal gain being derived by the assessees. In [act, the scheme of the GST laws itself would contemplate correct data to be available in each and every return of tax, being filed by the assessecs. Any incorrecl particulars on the varied aspects touching the GST returns would have serious cascad ing effect, prejudicial not only to the assessee, but also to the third parties.
It is considering such object and the ground realities, the lau'u,ould be required to be interpreted and applied by the Department. This necessarily would mean, that a bonafide, inadvertent error in furnishing dctails in a GST return needs to b€ recognized, and permitted to be corrected by the dcpartment, rvhen in such cases the department is awarc that there is no loss of revenue to the Government. Such freeplay in the joint requires an eminent recognition. The department needs to avoid unwarrantcd litigation on such issues, and make the system morc assessee friendly. Such approach
to PSK,J &,,I\':TR,J would also foster the collection of taxes." interest of revenue in the The Bombay High Court while concluding made the foliowing orders, which, for ready reference, is reproduced hereunder:
"23. ln the aforesaid circumstances, we have no manner of doubt that the petition is required to be allowed. It is accordingly allowed by the folowing order: - ORDER (l) The respondents are directed to permir the petitioner to amend/ rectify the Form GSTR_ 1 for the period July 202 1, November 2O2l and Janu:rn. 2022, either through Online or manual mcans within a period of four weeks from today. (lI) Petition stands disposed of in the above Lerms. No costs." B. There is yet another decision by the Kerala High Court in W.P.(C).No. 14096 of 2019, dared O2.O3.2022 wherein the High Court taking the same vieu, held as under " 1 1. As far as the GST regime is conce rned. thc period between 2OlT and.2O2O ought to be regarded as the nascent period of legislition. Rd mlttedly several glitches had occurred even from the part o[ the Department. The said period was regarded bv the courts as a .trial and error phase,-as far a.s implementation of the statute was concerncd_ .lhc taxpayers were also in a state of confusion, during those periods. Unfamiliarity with the ncw regime caused formidable and unprecedented difficultiej". As observed-by the High Court of Delhi in Brancl trquity Treaties Limited and Others v. Union of India and Others (MANU/DE/ lOOg/2O2Ol these probtems PSI(,J& ,l\l:rR,J could be attributed either to the failure of the system maintained by the Department or even on the inexperience ofthe assessees in the ways and means provided by the new regime. The court went on to observe that the Department, which ought to have come to the rescue of the taxpayers, especially during the nascent stage of its legislation, has faited in respect of the petitioner to provide succor for the difliculty faced by it.
In view of the above, I set aside Ext.P7 and direct the competent amongst the respondents [o iacilitate revising of form GST TRAN- 1 submittcd by rhe petitioner on O1-O9-2O17 and to file form GST TRAN- 2 by making necessary arrangements on the n'eb portal. If in case the same is not possible, to permir the manual liling of such returns by the petitioner, as expeditiously as possible, at any rate, u,ithin a period of two months from the date of receipt of a copy of the judgment."
In view of the aforesaid series of decisions rendered by various High Courts across the Country and also taking note of the fact that the impugned order being totall,y silent about the contentions and submissions made by the petitioner in its reply to the show cause notice; u,,e are inclined to interdict the impugned order and setting aside the same further remitting the matter back to respondent No.1 for reconsideration of the submissions of rhe petitioner that were raised in its repl-y to the shorv cause notice and to pass orders afresh. It is directed that respondent No.1 may grant fresh personal hearing to thc
12 concerned As a sequel, mrscellaneous appl icatio n s any in this Wri t petition, shall stand closed petitioner. In order to avoid further delay, we ar the petitioner to remain present before the concerned on 22.02.2O24, for wltich there would not be any necessity of issuarrce of a fresh notice by the authority *.,.*:31,i,iffiX e directing authorit5r pending if 10. Since the matter is being remitted back upon the impugned order being set_aside, the petitioner would be permitted to make fresh submissions in support of its contentions on the said date ald the authority concerned is expected to take a decision on it5 611,n merits by taking into consideration the entire lactual matrix of the case and a-lso considering the decisions rendered by the various High Courts on similar set of facts. 1 1. Accordingly, this Writ petition stands allowed. There sha_ll be no order as to costs. To, //rRuE copytt r;r3;?.i[fyEH[ym v. one fair copy to the HoNorpapr E o^, .. .^_ sEcTloN oFFlcER 1.". r,'"ffiF. i[:.,"'"tffE P'.AM KosHY One fair copy to the HON 1ro,. Hi.offi ?iF. ?[',.,fl:Jjg i N. TUKARAMJ r 1 2 1 1 L.R. Copies I*:,r::fl,iltt$iary, union or rndia, Ministry or Law, Jusrice and company
MP GJP
The Secretary, Telangana Advocates Builclings, Hyderabad Association Library, High Court
The Additional Commissioner of Central Tax, Secunderabad GST Commissionerate, Office of the Commissioner of Central Tax, Excise -& Service Tax, GST Bhavan, L.B.Stadium Road, BasheerUagn, HydbraGdtOO
The Secretary, Ministry of Finance, Union of tndia, No.136-4, North Block, New Delhi.
The Principal Secretary to Government, Revenue (CT-ll) Department, State of I elangana, Secretariat, Hyderabad
One CC to SRI MUKTINUTALAPATT RAMACHANDRA MURTHY, Advocate loPUcI
One CC to Mr. DOMINIC FERNANDES, Senior Standing Counsel for CBIC loPUcl
One CC to SRI GADI PRAVEEN KUMAR, Deputy Soticitor General of lndia loPUCl 1O.One CC to SRI N. BHUJANGA Commercial Taxes [OPUC] '1 1 . Two CD Copies RAO, Special Standing Counsel for \c\-'
\ )--J HIGH COURT DATED:30 tO1t2OZ4 1HE srAi o 1i nm nu 6I * * sPArct\t:r/ ORDER WP.No.2124 of 2OZ4 ALLOWING THE WRIT PETITION WITHOUT COSTS .d'n Y^t 6\'' \
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.