Andhra Pradesh High Court – Amravati
Adigarla Bapinaidu, vs The State Of Andhra Pradesh, on 29 January, 2025
Author: R Raghunandan Rao
Bench: R Raghunandan Rao
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W.P.No.25826/2023
APHC010498482023
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3488]
(Special Original Jurisdiction)
WEDNESDAY, THE TWENTY NINTH DAY OF JANUARY
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO
THE HONOURABLE SRI JUSTICE HARINATH.N
WRIT PETITION NO: 25826/2023
Between:
Sriba Nirman Company ...PETITIONER
AND
The Commissioner Appeals and Others ...RESPONDENT(S)
Counsel for the Petitioner:
1. ANIL KUMAR BEZAWADA
Counsel for the Respondent(S):
1. SANTHI CHANDRA (Jr. Standing Counsel for CBIC)
2. GP FOR COMMERCIAL TAX
3.
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The Court made the following Order:
(per Hon’ble Sri Justice R. Raghunandan Rao)
Heard Sri V. Raghu Ram, learned Senior Counsel representing Sri Anil
Bezawada, learned counsel appearing for the petitioner, Smt. Santi Chandra,
learned Standing Counsel appearing for respondents 1 to 3 and learned
Government Pleader for Commercial Tax appearing for the 4th respondent.
2. The facts in the present case, as stated by the petitioner, are as
follows:
a) The petitioner is a partnership firm, established in January 2017
and carrying on the business of a works contractor, which is executing
infrastructure based Engineering Procurement Construction contracts. The
petitioner registered itself under the GST Act. The primary and main business
of the petitioner, for the relevant period from July, 2017 to March 2018, was
the execution of works, as a sub-contractor, for one M/s. Vijay Nirman
Company Ltd.
b) The petitioner raised nine invoices with an aggregate value of
Rs.20,92,02,422/-. These invoices, were inclusive of GST of Rs.3,19,12,234/-.
The said invoices were raised in the month of March, 2018.
c) The petitioner, though paid certain amounts, by M/s. Vijay Nirman
Company Ltd., was unable to pay GST as the payments received from M/s.
Vijay Nirman Company Ltd., were not sufficient even for executing the works
awarded by it. As the GST portal, does not accept filing of returns, unless
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accompanied by payment of tax, the petitioner was unable to file the GSTR-
3B returns within the statutory time limit.
d) On 31.07.2018, the principal place of business of the petitioner
was inspected, by the DGGI officers, on the authorization given by the Joint
Director, DGGI, Visakhapatnam Zonal Unit, Visakhapatnam. In the course of
the said inspection, the officers had seized certain documents and records
and had also recorded the statement of the Managing Partner of the
petitioner. At that stage, the petitioner, having realized its mistake of non-filing
of GST returns and non-payment of GST, had taken steps to deposit
necessary tax. The petitioner, in four installments, between 31.07.2018 to
29.09.2018, had deposited a sum of Rs.3,36,51,468/- and also filed all the
pending GSTR-3B’s for the financial year 2017-2018 by 29.09.2018.
e) After these payments had been made and after the returns had
been filed, the 3rd respondent issued a show cause notice, dated 21.08.2020,
calling upon the petitioner to pay tax liability, (which had already been paid, as
shown above) interest and penalty. Thereafter, the 3rd respondent again
issued a show cause notice, dated 03.09.2020, to show cause as to why a tax
amount of Rs.3,19,12,233/- payable under the CGST, SGST and IGST Acts,
should not be demanded; the payments made by the petitioner to the tune of
Rs.3,19,12,233/- earlier, should not be adjusted against such a demand;
interest at the applicable rates, under Section 50 of the CGST and
corresponding Sections of CGST, SGST and IGST Acts, should not be
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demanded; penalty equivalent to the output tax mentioned above, should not
be imposed under Section 122(1) read with Section 74(1) of the CGST Act,
2017 for contravention of CGST, SGST and IGST Acts. Penalty under Section
122 (2) and (b) of the CGST Act, 2017 and corresponding Sections of CGST,
SGST and IGST Acts; penalty under Section 122(3) (d) of the CGST Act and
corresponding Sections of CGST, SGST and IGST Acts; penalty under
Section 125 of the CGST Act, 2017 and corresponding Sections of CGST,
SGST and IGST Acts; and late fee under Section 47 of the CGST Act, 2017
and corresponding Sections of CGST, SGST and IGST Acts.
f) The petitioner filed a detailed reply on 23.09.2021 to these show
cause notices and also availed a personal hearing, on 23.09.2021 itself. The
2nd respondent confirmed the demand, raised in the show cause notice, by
way of an order, dated 24.12.2021. Aggrieved by the same, the petitioner had
approached the 1st respondent, by way of an appeal, on 05.05.2022. The 1st
respondent, after considering the submissions made by the petitioner, upheld
the penalty imposed under the original order. Thereafter, the 4th respondent
issued a notice dated 19.08.2023, demanding payment of Rs.3,20,72,233/-
failing which recovery action would be initiated under Section 79 of the CGST
Act, 2017.
3. The petitioner being aggrieved by these proceedings, has
approached this Court challenging the appellate order of the 1st respondent,
dated 26.07.2022, upholding penalty under Section 74 of the GST Act, along
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with other penalties imposed in the original order of the 2nd respondent dated
24.12.2021.
4. Sri V. Raghuram, learned Senior Counsel representing Sri Anil
Bezawada, learned counsel appearing for the petitioner, assails the impugned
orders, essentially on three grounds:
a) The provisions of Section 74 (5) of the GST Act, 2017 could not
have been invoked merely on the ground that the petitioner had not paid
pending GST taxes till the visit of the tax authorities on 31.07.2018. Such non-
payment cannot be treated to have been done by way of fraud or that there
was wilful misstatement or suppression of facts to evade tax.
b) Section 74 of the GST Act can be invoked only where payment of
tax had not been made before issuance of show cause notice under Section
74. In the present case, payments of all taxes had been completed by
September 2018 itself whereas the show cause notice was issued on
03.09.2020, which is almost two years after the payment of the tax. As such,
the necessary jurisdictional facts, to invoke Section 74 are not available.
c) The last date for filing of annual returns and payment of any tax
dues would actually be 07.02.2022, by virtue of Section 44 of the CGST Act,
and the relevant circulars and proceedings. The question of non-payment of
taxes would arise only after that date.
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5. The learned Government Pleader for Commercial Tax contends
that none of the aforesaid contentions can be raised, in as much as, the
factual matrix, necessary for raising such contentions, is absent in the present
case. The learned Government Pleader for Commercial Tax would contend
that Sections 37 to 39 of the CGST Act, read with necessary Rules, requires
the registered dealers under the GST regime, to submit returns on a monthly
basis, which is on or before the 20th day of the month succeeding the said tax
period. The contention of the petitioner that non-filing of monthly returns
cannot be treated as suppression of facts, till the due date of the filing of the
annual returns, is not acceptable, in as much as, the non-filing of monthly
returns and non-payment of tax along with such monthly returns would
amount to contravention of the provisions of Section 37 of the CGST Act and
consequently, would also amount to suppression of fact and evasion of tax.
Consideration of the Court:
6. Section 37 of the CGST Act, which is in pari materia with the
corresponding provision under the APGST and IGST Act, read with Sections
38 and 39, stipulates that every registered person, is required to furnish a
return electronically of inward and outward supplies of goods and services or
both, input tax credit available, tax payable, tax paid, and such other
particulars, in the prescribed format, for every calendar month or part thereof,
within 10 days of the expiry of the said month. Section 44 also requires an
annual return to be filed by every registered person, within such time and
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format as may be prescribed. The prescribed time, for the purpose of this
case, would be till 07.02.2020.
7. In the event of non-filing of returns and non-payment of tax, the
CGST Act provides for certain penalties. These penalties are under Section
73, 74, 122 of the Act. Apart from this, interest can be levied for delayed
payment, under Section 50 of the CGST Act.
8. Sri V. Raghuram, learned Senior Counsel, contends that the
annual returns had been filed, by the petitioner, for the relevant period, within
the time stipulated under Section 44 of the CGST Act, and that the necessary
tax had also been paid by the said date. He would contend that such filing of
return and payment of tax is sufficient compliance of the requirement of CGST
Act and as such the question of invoking the penal provisions of either Section
73 or Section 74 or Section 122 of the CGST Act would not arise. He would
further submit that as far as the interest payable under Section 50 of the
CGST Act is concerned, necessary interest of Rs.25,49,481/- was paid, on
20.07.2022, by way of debiting the same in the electronic cash ledger of the
petitioner.
9. There is no dispute between the petitioner and the tax authorities
that a sum of Rs.3,19,12,233/- is the tax liability of the petitioner under the
CGST, SGST and IGST Acts. There is also no dispute that this amount had
been paid. The petitioner also does not appear to dispute the fact that a sum
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of Rs.25,49,481/- is payable in terms of interest payable under Section 50 of
the Act and that the same has been paid.
10. The primary dispute is on the question of whether penalty under
Section 74(1) of the CGST Act can be levied, along with the other penalties,
on the petitioner.
11. Section 74 of the CGST Act, reads as follows:
74. Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly
availed or utilized by reason of fraud or any wilful-
misstatement or suppression of facts.– (1) Where it
appears to the proper officer that any tax has not been paid
or short paid or erroneously refunded or where input tax
credit has been wrongly availed or utilized by reason of
fraud, or any wilful-misstatement or suppression of facts to
evade tax, he shall serve notice on the person chargeable
with tax which has not been so paid or which has been so
short paid or to whom the refund has erroneously been
made, or who has wrongly availed or utilized input tax
credit, requiring him to show cause as to why he should not
pay the amount specified in the notice along with interest
payable thereon under section 50 and a penalty equivalent
to the tax specified in the notice.
(2) The proper officer shall issue the notice under sub-
section (1) at least six months prior to the time limit
specified in sub-section (10) for issuance of order.
(3) Where a notice has been issued for any period under
sub-section (1), the proper officer may serve a statement,
containing the details of tax not paid or short paid or
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erroneously refunded or input tax credit wrongly availed or
utilized for such periods other than those covered under
sub-section (1), on the person chargeable with tax.
(4) The service of statement under sub-section (3) shall be
deemed to be service of notice under sub-section (1) of
section 73, subject to the condition that the grounds relied
upon in the said statement, except the ground of fraud, or
any wilful-misstatement or suppression of facts to evade
tax, for periods other than those covered under sub-section
(1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of
notice under sub-section (1), pay the amount of tax along
with interest payable under section 50 and a penalty
equivalent to fifteen per cent. of such tax on the basis of
his own ascertainment of such tax or the tax as
ascertained by the proper officer and inform the proper
officer in writing of such payment.
(6) The proper officer, on receipt of such information, shall
not serve any notice under sub-section (1), in respect of
the tax so paid or any penalty payable under the provisions
of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the
amount paid under sub-section (5) falls short of the amount
actually payable, he shall proceed to issue the notice as
provided for in sub-section (1) in respect of such amount
which falls short of the amount actually payable.
(8) Where any person chargeable with tax under sub-
section (1) pays the said tax along with interest payable
under section 50 and a penalty equivalent to twenty-five
percent of such tax within thirty days of issue of the notice,
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all proceedings in respect of the said notice shall be
deemed to be concluded.
(9) The proper officer shall, after considering the
representation, if any, made by the person chargeable with
tax, determine the amount of tax, interest and penalty due
from such person and issue an order.
(10) The proper officer shall issue the order under sub-
section (9) within a period of five years from the due date
for furnishing of annual return for the financial year to
which the tax not paid or short paid or input tax credit
wrongly availed or utilized relates to or within five years
from the date of erroneous refund.
(11) Where any person served with an order issued under
sub-section (9) pays the tax along with interest payable
thereon under section 50 and a penalty equivalent to fifty
per cent. of such tax within thirty days of communication of
the order, all proceedings in respect of the said notice shall
be deemed to be concluded.
Explanation 1.–For the purposes of section 73 and this
section,–
(i) the expression ―all proceedings in respect of the said
notice‖ shall not include proceedings under section 132;
(ii) where the notice under the same proceedings is issued
to the main person liable to pay tax and some other
persons, and such proceedings against the main person
have been concluded under section 73 or section 74, the
proceedings against all the persons liable to pay penalty
under sections 122, 125, 129 and 130 are deemed to be
concluded.
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Explanation 2.–For the purposes of this Act, the
expression ―suppression shall mean non-declaration of
facts or information which a taxable person is required to
declare in the return, statement, report or any other
document furnished under this Act or the rules made
thereunder, or failure to furnish any information on being
asked for, in writing, by the proper officer.
12. The provisions of Section 73 (2) to (11) may not be relevant for
the purposes of this case. However, Section 73(1) has to be considered.
73. Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly
availed or utilized for any reason other than fraud or
any wilful-misstatement or suppression of facts.–
(1) Where it appears to the proper officer that any tax has
not been paid or short paid or erroneously refunded, or
where input tax credit has been wrongly availed or utilized
for any reason, other than the reason of fraud or any wilful-
misstatement or suppression of facts to evade tax, he shall
serve notice on the person chargeable with tax which has
not been so paid or which has been so short paid or to
whom the refund has erroneously been made, or who has
wrongly availed or utilized input tax credit, requiring him to
show cause as to why he should not pay the amount
specified in the notice along with interest payable thereon
under section 50 and a penalty leviable under the
provisions of this Act or the rules made thereunder.
13. Under Section 74 (1) of the Act, a penalty, equivalent to the tax, is
leviable, where a tax has not been paid or short paid or erroneously refunded,
or where input tax credit has been wrongly availed or utilized ( for purposes of
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brevity the said scenario is being referred to as the ” non payment of tax”).
Similarly, under Section 73 (1) read with Section 73 (9) a penalty, equivalent
to 10% of the tax not paid or Rs.10,000/-, whichever is higher, can be levied.
14. The differentiation, between invocation of Section 73 and the
invocation of section 74, is on the basis of the circumstances in which such
tax has not been paid. Section 74 is to be invoked where non-payment of tax
occurs on account of fraud, wilful misstatement or suppression of facts for the
purpose of evading tax. Where non-payment or short payment is for reasons
other than the aforesaid reasons set out under Section 74, the provisions of
Section 73 of the GST Act would be applicable.
15. The learned Senior Counsel relied upon the judgments in CCE
vs. Adecco Flexione Workforce Solutions Ltd.,1; Commissioner of
Central Excise, Viskahaptanam vs. Tirupathi Fuels Pvt. Ltd.,2; Uniworth
Textiles Ltd., vs. CCE 3; and CBIC Instruction 05/2023, dated 13.12.2023,
to explain the scope of Section 74 of the Act.
16. The learned Senior Counsel relied upon paragraph-3 of CCE vs.
Adecco Flexione Workforce Solutions Ltd., which reads as follows:
3. Unfortunately, the assessing authority as well as the
appellate authority, seem to think, if an assessee does not
pay the tax within the stipulated time and regularly pays
tax after the due date with interest. It is something which is1
2012 (26) S.T.R. 3 (Kar)
2
2017 (7) GSTL 142 (AP)
3
2013 (288) E.L.T. 161 (S.C)
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W.P.No.25826/2023not pardonable in law. Though the law does not say so,
authorities working under the law seem to think otherwise
and thus they are wasting that valuable time in proceeding
against persons who are paying service tax with interest
promptly. They are paid salary to act in accordance with
law and to initiate proceedings against defaulters who
have not paid service tax and interest in spite of service of
notice calling upon them to make payment and certainly
not to harass and initiate proceedings against persons
who are paying tax with interest for delayed payment. It is
high time, the authorities will change their attitude towards
these tax payers, understanding the object with which this
enactment is passed and also keep in mind the express
provision as contained in sub-sec. (3) of Sec. 73. The
Parliament has expressly stated that against persons who
have paid tax with interest, no notice shall be served. If
notices are issued contrary to the said Section, the person
to be punished is the person who has issued notice and
not the person to whom it is issued. We take that, in
ignorance of law, the authorities are indulging in the
extravaganza and wasting their precious time and also the
time of the Tribunal and this Court. It is high time that the
authorities shall issue appropriate directions to see that
such tax payers are not harassed. If such instances are
noticed by this Court hereafter, certainly it will be a case
for taking proper action against those law breakers.”
17. However, this is a case where the assessee had paid both
service tax and interest for delayed payments before the issue of a show
cause notice under the Act. The Court relying upon the provisions of sub-
section (3) of Section 73 of the Finance Act, 1994, which stipulates that no
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notice can be issued after the payment of service tax and interest, had made
the afore said observations.
18. The learned Senior Counsel relied upon Commissioner of
Central Excise, Visakhapatnam vs. Tirupathi Fuels Pvt. Ltd. In this case,
the assessee, after the authorities had found that the assessee had not filed
the returns or paid the tax, had sought to levy penalty on the assessee.
However, the assessee paid the service tax and interest before any show
cause notice could be issued. The argument before the Hon’ble High Court
was that the penalty could not have been levied, in view of the fact that
Section 78 prohibits initiation of any penalty proceedings, if tax and interest
had already been paid. The Hon’ble High Court, in terms of the specific
language of Section 73(3) of the Finance Act, 2015, had held in favour of the
assessee. However, the language of Section 73(3) stipulated that no penalty
could be levied if the service tax payable, had been paid by the assessee on
his own verification or on the basis of tax ascertained by a Central Excise
Officer. In this case, the statute itself stipulated that the assessee can escape
payment of penalty, if he pays the unpaid tax, even after the authorities find
out about the non-payment of tax, if such payment is made before the notice
is issued. The language in Section 73 and 74 of the GST Act does not provide
for any such situation.
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19. The learned senior counsel relies upon Uniworth Textiles Ltd.,
vs. CCE. More specifically, paragraph-12 of the said judgment, which reads
as follows:
12. We have heard both sides, Mr. R.P. Bhatt, learned
Senior Counsel, appearing on behalf of the appellant, and Mr.
Mukul Gupta, learned Senior Counsel appearing on behalf of
the Revenue. We are not convinced by the reasoning of the
Tribunal. The conclusion that mere non-payment of duties is
equivalent to collusion or wilful misstatement or suppression of
facts is, in our opinion, untenable. If that were to be true, we fail
to understand which form of non-payment would amount to
ordinary default? Construing mere non-payment as any of the
three categories contemplated by the proviso would leave no
situation for which a limitation period of six months may apply.
In our opinion, the main body of the section, in fact,
contemplates ordinary default in payment of duties and leaves
cases of collusion or wilful misstatement or suppression of
facts, a smaller, specific and more serious niche, to the proviso.
Therefore, something more must be shown to construe the acts
of the appellant as fit for the applicability of the proviso.
20. In this case, the assessee, had procured furnace oil for running
the captive power plant of a sister unit, which was supplying electric energy to
the assessee. The purchase of furnace oil was exempted from payment of
customs duty on the basis of a notification which stated that customs duty was
exempted on goods, which are used for manufacture etc., of goods, which are
exported. At one stage, on account of certain difficulties, the sister concern
was unable to supply electric power and the assessee obtained such power
from another unit by supplying furnace oil to the said unit. The revenue took
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the view that the claim of exemption from customs duty of such furnace oil
was not permissible and sought to penalize the assessee for such purpose. In
that situation, the Hon’ble Supreme Court made the aforesaid observations.
21. Apart from the judgments, cited by the learned Senior Counsel, it
may be appropriate to consider the scope of section 74, on the plain language
of the provision. At the cost of repetition, the relevant part of section 74(1)
reads as follows:
Where it appears to the proper officer that any tax has
not been paid or short paid or erroneously refunded or
where input tax credit has been wrongly availed or utilized
by reason of fraud, or any wilful-misstatement or
suppression of facts to evade tax,
22. Non-payment of tax, would attract penalties, under Section 74 (1),
in three circumstances. The first two circumstances are fraud and wilful mis-
statement. Both these require an intention to evade tax by unfair or illegal
means. The third circumstance is suppression of fact, which is also defined, in
Explanation-2, as non-declaration of relevant information. In view of the
collocation of the terms, before this term, and in view of the requirement,
under the two earlier terms of mens rea, the term “suppression of facts” would
have to be read as wilful or deliberate suppression of fact, for evading tax. The
term “evade” puts this issue beyond controversy, as this term means that the
suppression must be for the purpose of evasion, which clearly requires
intention and mens rea.
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23. The learned Senior Counsel relied upon the instructions of CBIC,
which came to be issued on the basis of the directions of the Hon’ble
Supreme Court in the case of Northern Operating Systems Private Limited
(Nos) Instruction No.5/2023-GST (F.No.CBIC-20004/3/2023-GST), Dated
13.12.2023, while considering Section 74(1) of the CGST Act, stated as
follows:
3.3. From the perusal of wording of Section 74(1) of
CGST Act, it is evident that Section 74(1) can be invoked
only in cases where there is a fraud or wilful misstatement
or suppression of facts to evade tax on the part of the said
taxpayer. Section 74(1) cannot be invoked merely on
account of non-payment of GST, without specific element
of fraud or wilful misstatement or suppression of facts to
evade tax. Therefore only in the cases where the
investigation indicates that there is material evidence of
fraud or wilful misstatement or suppression of fact to
evade tax on the part of the taxpayer, provisions of
Section 74(1) of CGST Act may be invoked for issuance of
show cause notice, and such evidence should also be
made a part of the show cause notice.”
24. There can be no quarrel with this view relating to Section 74(1) of
CGST Act. Every non-payment of tax cannot be treated as evasion of tax by
way of fraud, wilful misstatement or suppression of facts. Every case needs to
be looked into for ascertaining whether necessary evidence of fraud, wilful
misstatement or suppression of fact, for the purpose of evading tax, is
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W.P.No.25826/2023available in the record and whether such material has been demonstrated
before the authority.
25. Though Section 74 provides for a penalty of 100% of the tax not
paid, the said provision itself provides for reduction of such liability. This
liability can be reduced, by the tax payer, if he accepts that there was non-
payment of tax, on account of any of the three circumstances set out In
section 74 (1), and voluntarily pays tax, interest and penalty, as per the
provisions of Section 74. The following table sets out the payments that need
to be made:
Section Point of time of Tax and penalty
payment
Section 74(5) Before service of notice Tax along with interest under
Section 50 and penalty equivalent
to 15% of such tax.
Section 74(8) Within 30 days of issue Tax along with interest under
of notice Section 50 and penalty equivalent
to 25% of such tax
Section 74(11) Within 30 days of Tax along with interest under
communication of the Section 50 and penalty equivalent
order under Section to 50% of such tax
74(9)
26. The scheme, under section 74, appears to be in the nature of a
permanent amnesty/settlement/compunding scheme, where the tax payer,
liable to pay penalty under Section 74, is given an opportunity to voluntarily
accept wrong doing and reduce the penalty that would be payable. In such
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circumstances, the contention of the Petitioner, that action can not be taken,
under section 74, against him may have force. However, this issue is not
being decided as the petitioner does not meet the requirements of section 74
(5). This provision, read with Section 74(6), as extracted above, sets out that
the proper officer cannot issue a notice, under sub-section (1) of Section 74,
where the person chargeable with tax, has already paid the tax and the
interest payable under Section 50 and penalty equivalent to 15% of such tax
even before the issuance of notice. While the petitioner had paid the tax prior
to the issuance of notice under Section 74(1) of the CGST Act, the interest
payable under section 50, was paid after the notice had been issued. Further
penalty of 15% was not paid.
27. In that context, the contention of the learned Senior Counsel that
a notice under Section 74 could not have been issued as the tax had been
paid prior to the issuance of the notice would have to be rejected.
28. The next contention of the learned Senior Counsel was that, non-
filing of tax returns and non-payment of tax, could not have been invoked
against the petitioner, as the petitioner had time, up to 07.02.2020, to file the
annual returns under Section 44. This contention, however, side steps the
requirement to file monthly returns along with payment of tax under Section 37
to 39 of CGST Act. Section 39 of the Act, read with Rule 61(1) of the CGST
Rules, requires registered persons, like the petitioner, to file returns, in form
GST3B, for each month, on or before the twentieth day of the month
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succeeding such month. Rule 61 (2) of the CGST Rules requires the person,
filing GSTR-3B returns, to clear the taxes due under such returns. The
affidavit filed, in support of the writ petition, by the managing partner of the
petitioner, himself states that the GSTR-3B returns had not been filed, though
they needed to be filed. In the light of these pleadings, the contention of the
learned Senior Counsel would have to be rejected. It must be held that non-
filing of monthly returns and non-payment of GST along with such monthly
returns, subject to the requirement of making out a case of fraud, wilful
misstatement or suppression of fact, would be sufficient for invoking Section
74 of the CGST Act.
29. In the present case, there has been a failure, on the part of the
petitioner, in filing the monthly returns and making payment of tax under the
said monthly returns. This may not amount to fraud or misstatement.
Explanation-2 to Section 74 states that suppression, for the purpose of the
Act, would mean non-declaration of facts or information which is required to
be declared in the returns, statement or report or any other document which
needs to be furnished under the Act. To that extent, non-filing of the monthly
return would amount to suppression of fact. However, the requirement under
Section 74 is not fulfilled on mere suppression of fact. The said suppression of
fact would have to be wilful suppression of facts.
30. The petitioner herein has neither filed the monthly returns nor
made the necessary payments of tax. The defense of the petitioner is that his
21
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W.P.No.25826/2023
sole client, viz., M/s. Vijay Nirman Company had not paid its dues, due to
which the petitioner could not remit the necessary taxes along with returns.
The appellate authority held that the petitioner had been paid certain amounts
by his main client M/s. Vijay Nirman Company and as such, there was no
impediment for the petitioner to remit the necessary taxes. On this basis, the
appellate authority held that there was wilful suppression and upheld the
penalty. In such a situation it is difficult to accept the contention, of the
petitioner, that there was no wilful intention to suppress facts or the turnover of
the petitioner and the requirement to pay tax. The other penalties levied
against the petitioner are natural corollaries of the above finding and do not
require any further consideration.
31. Consequently, the writ petition fails and the same is dismissed.
There shall be no order as to costs. As a sequel, pending miscellaneous
petitions, if any shall stand closed.
_______________________
R RAGHUNANDAN RAO, J
______________
HARINATH.N, J
Js.
22
RRR,J & HN,J
W.P.No.25826/2023
THE HON’ABLE SRI JUSTICE R RAGHUNANDAN RAO
AND
THE HON’BLE SRI JUSTICE HARINATH. N
WRIT PETITION No.25826 of 2023
(per Hon’ble Sri Justice R Raghunandan Rao)
29th January, 2025
Js
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