Home GST Not Legal to Charge GST Interest for Failing to File GSTR-3B After GSTN Cancellation

Not Legal to Charge GST Interest for Failing to File GSTR-3B After GSTN Cancellation

Not Legal to Charge GST Interest for Failing to File GSTR-3B After GSTN Cancellation
Kerala HC’s Order for Hilton Garden Inn

The Excessive Courtroom of Kerala within the case of M/S. HILTON GARDEN INN Vs. THE COMMISSIONER OF KERALA GST has dominated that GST curiosity couldn’t be imposed on the non-filing of GSTR-3B due to GSTN Cancellation.

The present writ petition seeks to overturn Exhibit P-14, which instructs the petitioner to instantly pay the curiosity due beneath Part 50(1) of the CGST/SGST Act, 2017. Failure to conform may immediate the respondent to take motion beneath Part 79 of the CGST Act. The curiosity accrued, amounting to Rs. 5,30,919 between July 2017 and March 2018, pertains to the delayed tax cost by the petitioner.

Initially registered beneath the Kerala Worth Added Tax Act, 2003, and the Kerala Tax on Luxuries Act, 1957, the petitioner transitioned to turning into a supplier beneath the CGST Act, efficient from July 1, 2017.

The petitioner managed a number of vertical companies, every with separate GSTIN registrations as detailed in paragraph 4 of the writ petition. Hilton Backyard Inn, the petitioner’s entity, obtained registration quantity GSTIN 32AAECM1840M3ZI on June 28, 2017. Apparently, the identical GSTIN was additionally issued to a different firm, The Muthoot Skychef (Airline Catering Unit), on July 25, 2017. The duplication of GSTINs led the petitioner to hunt help from the GST Assist Desk.

On July 26, 2017, The Muthoot Sky Chef utilized for a brand new registration, and subsequently, on August 2, 2017, it was granted a brand new registration quantity, GSTIN – 32AAECM1840M7ZE. Based on the petitioner, in July 2017, a GST cost of Rs. 29,24,100 was made on August 21, 2017, the final submitting date for Type GSTR 3B. Nonetheless, on account of a technical glitch within the GST community, the cost made by the petitioner wasn’t mirrored within the money ledger throughout the return module. Consequently, the petitioner couldn’t full the e-filing of the return on the identical day, i.e., on August 21, 2017.

On August 24, 2017, the petitioner reached out through electronic mail to helpdesk@gst.gov.in, outlining the problem and requesting steering or help in crediting the tax cost to the money ledger and finishing the return submitting.

The petitioner obtained a response to their electronic mail on 05.10.2017, acknowledging a transaction of Rs.29,24,100 on 21.08.2017 in opposition to CPIN 17083200013355 dated 18.08.2017, credited to their money ledger. Nonetheless, the petitioner found their GSTIN had been cancelled on 24.08.2017 with out prior discover.

Learn Additionally: Kerala HC: SCN Response Time of 4 Days is Thought of Invalid as Per IT Act’s Provision

They promptly knowledgeable the involved authority through electronic mail on the identical day. Regardless of submitting purposes on 30.08.2017 and 26.09.2017 to reactivate their GSTIN, it was solely on 15.11.2017 that the petitioner was directed to contact tax authorities for help with their grievance.

Because of the GSTIN cancellation on 24.08.2017, the petitioner couldn’t file returns for July 2017, regardless that that they had already paid taxes on 21.08.2017. Subsequently, for August, September, October, and November 2017, the petitioner sought reduction by submitting W.P.(C) No. 41314 of 2017 on this Courtroom. On 21.12.2017, the Courtroom issued an interim order, instructing the respondent to promptly restore the petitioner’s registration or present an alternate registration inside every week.

Though no penalty was imposed for the delay in submitting the return, curiosity has been charged by Exhibit P-14 on account of delayed tax remittance after the return submitting. The petitioner’s counsel argues that the cancellation of the petitioner’s GSTIN lacked due course of and was restored solely following an interim courtroom order in W.P.(C) No. 41314 of 2017 dated 21.12.2017. Because of this, the petitioner shouldn’t be held accountable for delayed GST remittance, as they couldn’t have paid the tax with out entry to the positioning for remittance. The net submitting of returns and tax remittances solely happens by means of the Items and Companies Tax Portal linked to the GSTIN. When the petitioner’s GSTIN was revoked, they lacked the means to pay the tax or file returns till entry was restored per the interim order dated 21.12.2017 in W.P.(C) No.41314 of 2017. The petitioner’s counsel contends that any legal responsibility for curiosity, if relevant, ought to begin solely twenty days after the GSTIN’s restoration and never for some other period. The Division has the authority to levy curiosity for any delay occurring after the twentieth day from the restoration of the GSTIN, which is on 12.01.2018. Thus, the demand for curiosity regarding the supposed delay in tax remittance from July 2017 to March 2018 is totally unjustified and needs to be invalidated.

In the meantime, Mr. Akhil Shaji, the realized Standing Counsel, contends that in keeping with Part 50 of the CGST /SGST Act, 2017, any particular person obligated to pay taxes as per the Act and its corresponding Guidelines, but fails to remit the quantity owed to the Authorities throughout the stipulated interval, is topic to curiosity fees of as much as 18%. He additional asserts that the petitioner, having collected taxes from their prospects however not remitted this sum to the Authorities, utilized these funds for their very own enterprise functions. Consequently, the petitioner is held accountable for curiosity on the delayed cost of the tax quantity owed to the Authorities.

But, the assertion submitted by the respondents asserts the cancellation of the petitioner’s GSTIN on 24.08.2017, restored solely by 26.12.2017. It stays indeniable that within the absence of a GSTIN, the petitioner couldn’t have fulfilled tax funds or filed returns. The petitioner can’t be held accountable for the cancellation of their GSTIN on 24.08.2017. Upon the quick cancellation of their GSTIN on 24.08.2017, the petitioner promptly contacted the GST authorities through electronic mail, notifying them of the cancellation. Regardless of the petitioner’s request, no motion was taken till W.P.(C) No.41314 of 2017 was filed earlier than this Courtroom. It was solely following the interim order issued by this Courtroom on 21.12.2017 that the petitioner’s GSTIN was ultimately restored. Subsequently, the petitioner filed returns for the interval spanning from July 2017 to December 2017 and settled the taxes owed.

In gentle of this, the Courtroom finds it grossly unfair to implement curiosity, as per Part 50 of the Revenue Tax Act, 2017, in opposition to the petitioner for the delay in submitting returns and tax funds throughout this era. The petitioner can’t be deemed at fault for not remitting the tax since doing so with out a legitimate GSTIN was unimaginable. Nonetheless, if the petitioner had did not remit the tax after 26.12.2017, inside twenty days following the restoration, they might then be liable to pay curiosity beneath Part 50 of the CGST/SGST Act, 2017.

Beneath these circumstances, this writ petition is resolved. The contested order is overturned, granting the authorities the liberty to levy fines for delayed GST funds ranging from the twentieth day after 26.12.2017, relevant as much as December 2017. For the following months, if any delay happens, the petitioner is chargeable for paying the curiosity. A recent discover needs to be issued to the petitioner accordingly. Upon receiving the discover, the petitioner is required to remit the curiosity in case of any delay highlighted within the response affidavit.


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