Kerala High Court Dismisses Writ Petition on GST Demand and Penalty

Case Name:

WP(C) NO. 13181 OF 2023 - M/S. Premier Auto Sales & Service v. The Additional Commissioner, Central GST & Central Excise, and others

Key Takeaways:

1. The High Court of Kerala dismissed a writ petition challenging an order on GST demand and penalty.
2. The petitioner, M/S. Premier Auto Sales & Service, had not filed statutory GSTR-3B returns and had not discharged their GST liability.
3. The order confirmed a demand of Rs.8,27,93,915/- and imposed a penalty of Rs.82,79,392/-.
4. The court found that the order was within the jurisdiction of the first respondent and there was compliance with the principles of natural justice.
5. The petitioner has the option to file an appeal against the order before the appellate authority under the provisions of Section 107 of the CGST Act, with the extended limitation for filing the appeal up to 31.1.2024 for the assessment years 2017-18 and 2018-19.

Case Synopsis:

This is a judgment from the High Court of Kerala at Ernakulam in the case of WP(C) NO. 13181 OF 2023. The judgment was delivered by the Honourable Mr. Justice Dinesh Kumar Singh on Wednesday, the 8th day of November 2023.

The petitioner in this case is M/S. Premier Auto Sales & Service, represented by its partner, Mohammed Basheer Koothradan. The respondents in the case are:

1. The Additional Commissioner, Central GST & Central Excise, C R Building, Mananchira, Kozhikode -673 001.
2. The Commissioner of Central Tax & Central Excise, Central GST & Central Excise, C R Buildings, Mananchira, Kozhikode -673001.
3. The Commissioner of State Taxes, State Goods & Services Tax Department, 9th Floor, Tax Tower, Killipalam, Karamana, Thiruvananthapuram - 695002.
4. State of Kerala, represented by its Secretary, Taxes Department, Government Secretariate, Thiruvananthapuram-695001.
5. Union of India, represented by Secretary to Government, Ministry of Finance (Department of Revenue), North Block, New Delhi -110001.

The writ petition was filed under Article 226 of the Constitution of India, questioning the order dated 24.3.2023 passed by the first respondent under the provisions of Section 73 (of Income Tax Act, 1961) of the Central Goods and Services Tax Act, 2017 (CGST Act) and Kerala State Goods and Services Tax Act, 2017 (Kerala SGST Act) read with Section 20 (of Income Tax Act, 1961) of the Integrated Goods and Services Tax Act, 2017 (IGST Act). The impugned order confirmed the demand of Rs.8,27,93,915/- in respect of the IGST, CGST, SGST, and Cess, and imposed a penalty of Rs.82,79,392/-.

The petitioner, a partnership firm, is a registered dealer under the provisions of the CGST Act and Kerala SGST Act for the supply of “motor cars and other motor vehicles” falling under HSN 8703, “motor vehicles for transport of goods” falling under HSN 8704, and “parts and accessories of vehicles” falling under HSN 8714. The petitioner is an authorized dealer and service center for Mahindra and Mahindra vehicles and has branches at Tirur, Pulikkal, Ponnani, Perinthalmanna, and Nilambur.

The officers of CGST, Kozhikkode Commissionerate gathered intelligence indicating that the petitioner had not filed statutory GSTR-3B returns for the months from May 2018 to January 2019 and had not discharged their GST liability. The petitioner was summoned for investigation, and a show cause notice was issued to the petitioner asking them to show cause as to why the amount of Rs.8,27,93,915/- towards IGST, CGST, SGST, and Cess for the period from April 2018 to March 2019 should not be demanded and recovered from the petitioner under Section 73(1) (of Income Tax Act, 1961) of the CGST Act and Kerala SGST Act.

The petitioner filed a response and deposited an amount of Rs.8,21,56,286/-. However, the petitioner was also demanded interest and penalty under the provisions of the CGST Act, Kerala SGST Act, and IGST Act. Instead of filing an appeal against the order, the petitioner approached the High Court to challenge the order.

The High Court, in its judgment, stated that it does not exercise appellate jurisdiction but only exercises limited jurisdiction of judicial review. The court found that the order passed by the first respondent was within their jurisdiction and there was full compliance with the principles of natural justice. Therefore, the court dismissed the writ petition. However, the court mentioned that the petitioner has the option to file an appeal against the impugned order before the appellate authority under the provisions of Section 107 of the CGST Act, with the extended limitation for filing the appeal up to 31.1.2024 for the assessment years 2017-18 and 2018-19.

FAQ:

Q1: What was the writ petition about?

A1: The writ petition was filed to challenge an order on GST demand and penalty passed by the first respondent.

Q2: What was the demand and penalty amount?

A2: The demand amount was Rs.8,27,93,915/- and the penalty amount was Rs.82,79,392/-.

Q3: What did the High Court decide?

A3: The High Court dismissed the writ petition, stating that the order was within the jurisdiction of the first respondent and there was compliance with the principles of natural justice.

Q4: Can the petitioner file an appeal against the order?

A4: Yes, the petitioner has the option to file an appeal before the appellate authority under the provisions of Section 107 of the CGST Act, with the extended limitation for filing the appeal up to 31.1.2024 for the assessment years 2017-18 and 2018-19.

The present writ petition under Article 226 of the Constitution of India has been filed questioning Ext.P4 order dated 24.3.2023 passed by the first respondent under the provisions of Section 73 of the Central Goods and Services Tax Act, 2017 ('CGST Act', for short) and Kerala State Goods and Services Tax Act, 2017 ('Kerala SGST Act', for short) read with Section 20 of the Integrated Goods and Services Tax Act, 2017 ('IGST Act', for short). Vide the impugned order, the demand of Rs.8,27,93,915/- in respect of the IGST, CGST and SGST and Cess, has been confirmed under the provisions of Section 73(1) of the CGST Act and Kerala SGST Act. Penalty of Rs.82,79,392/- has been imposed under Section 73(9) (of Income Tax Act, 1961) read with Section 73(11) of the CGST Act and Kerala SGST Act read with Section 20 of the IGST Act.

2. The petitioner, a partnership firm, is a registered dealer under the provisions of the CGST Act and Kerala SGST Act for supply of “motor cars and other motor vehicles” falling under HSN 8703; “motor vehicles for transport of goods” falling under HSN 8704 and “parts and accessories of vehicles” falling under HSN 8714. The petitioner is an authorised dealer and service centre for Mahindra and Mahindra vehicles. It has branches at Tirur, Pulikkal, Ponnani, Perinthalmanna and Nilambur.

3. Intelligence gathered by the officers of CGST, Kozhikkode Commissionerate indicated that the petitioner had not filed statutory GSTR-3B returns for the months from May 2018 to January 2019 and had not discharged their GST liability. The petitioner was summoned by the Superintendent (Anti Evasion), Central Tax and Central Excise, Headquarters Office, Kozhikkode for investigation.

4. The petitioner's response was considered and having been dissatisfied with the response, show cause notice, Ext.P1, dated 6.6.2022 was issued to the petitioner asking the petitioner to show cause as to why the amount of Rs.8,27,93,915/- towards IGST, CGST, SGST and Cess for the period from April, 2018 to March, 2019 as detailed in Annexure-A to the said notice should not be demanded and recovered from the petitioner under Section 73(1) of the CGST Act and Kerala SGST Act.

It appears that the petitioner had filed GSTR-3B return thereafter and an amount of Rs.8,21,56,286/- was deposited. The petitioner was also demanded interest under the provisions of Section 50 (of Income Tax Act, 1961) and penalty under the provisions of Section 73(9) (of Income Tax Act, 1961) read with Section 73(11) of the CGST Act and Kerala SGST Act and Section 20 of the IGST Act, respectively.

Admittedly, Ext.P4 order passed by the first respondent is an appealable order under Section 107 of the CGST Act. Instead of filing appeal as above, the petitioner has approached this Court impugning the order in Ext.P4.

5. This Court does not exercise appellate jurisdiction, but only exercise limited jurisdiction of judicial review. The order, Ext.P4, passed by the first respondent cannot be said to be without jurisdiction or in violation of the principle of natural justice. The order passed is well within the jurisdiction of the first respondent. There has been full compliance of the principle of natural justice, that the petitioner was afforded opportunities of response to the show cause notice and of having been heard, and thereafter the impugned order has been passed.

In view thereof, I do not find any ground to entertain the present writ petition and the same is hereby dismissed. However, it will be open to the petitioner to file appeal against the impugned order before the appellate authority under the provisions of Section 107 of the CGST Act, inasmuch vide notification No.53/23 issued by the Central Board of Indirect Taxes, Ministry of Finance, Government of India, the limitation for filing the appeal has been extended up to 31.1.2024 for the assessment years 2017-18 and 2018-19. Interim order, if any, granted in the present case shall stand vacated.

Pending interlocutory application , if any, in the writ petition stands dismissed.

Sd/-

DINESH KUMAR SINGH

JUDGE