Alagarsamy .P vs. The Assistant Commissioner (St)

Facts

The petitioner, P. Alagarsamy, filed a writ petition challenging an order dated 13.06.2023 passed by the Assistant Commissioner (ST), the first respondent. The challenge was specifically to the penalty of Rs. 7,38,396/- levied under Section 73 of the GST Act, 2017, or Section 125 of the GST Act, 2017 read with the TNGST Act, 2017. The petitioner stated that the entire tax and interest had already been paid, and the discrepancy arose from a difference between GSTR 3B and GSTR 1 filings. The petitioner also claimed to have missed the personal hearing due to ill health and expressed willingness to pay 10% of the penalty, requesting a final opportunity to present their case. The revenue did not object, considering the tax and interest payment, the offer to pay 10% of the penalty, and the reason for absence.

Held

The Court allowed the writ petition, setting aside the impugned order dated 13.06.2023, specifically concerning the penalty of Rs. 7,38,396/-. The Court directed the first respondent to re-hear the limited issue of penalty. The reasoning was based on the petitioner's submission that the entire tax and interest had been paid, the alleged discrepancy was not due to fraud or willful suppression, and the petitioner's inability to attend the personal hearing due to ill health. The Court also noted the petitioner's willingness to pay 10% of the penalty. The operative direction was for the first respondent to pass orders afresh after providing the petitioner an opportunity of hearing. The petitioner was directed to submit their objections within two weeks of receiving the order, which would then be considered by the authority after granting a reasonable opportunity. The ratio decidendi is that a taxpayer who has paid the due tax and interest, and missed a hearing due to genuine reasons like ill health, should be granted a fresh opportunity to present their case, especially when the revenue does not object and the penalty amount is substantial.

Key Issues

1. Whether the penalty of Rs. 7,38,396/- levied under Section 73 of the GST Act, 2017, or Section 125 of the GST Act, 2017 read with the TNGST Act, 2017, is sustainable, considering the petitioner has paid the entire tax and interest and claims no fraud or willful suppression occurred. Petitioner's arguments: The petitioner argued that since the entire tax and interest were paid, and the difference in tax arose from a discrepancy between GSTR 3B and GSTR 1 filings without any element of fraud, willful misstatement, or suppression, the imposition of a 100% penalty under Section 73 of the GST Act may not be warranted. Furthermore, the petitioner contended that they were unable to attend the personal hearing due to ill health and sought a final opportunity to present their case, offering to pay 10% of the penalty amount. Revenue's arguments: The learned Government Advocate for the official respondent did not raise any serious objection to the petitioner's request, taking into account the payment of tax and interest, the petitioner's willingness to pay 10% of the penalty, and the reason provided for the absence from the hearing.