When tax collected is not submitted within 30 days, a penalty is imposed
Fact and issue of the case
The present writ petition has been filed impugning Exhibit P-5 order dated 14.09.2023. The Learned Counsel for the petitioner submits that the petitioner has confined his grievance in respect of the penalty assessed in the said impugned order in the extent of Rs. 40,000/- (Rupees Forty thousand only).
Learned Counsel for the petitioner submits that the petitioner has paid all tax before thirty days from the date of the notice. The notice is dated 28.02.2022 and the petitioner has paid the tax on 10.03.2022. Learned Counsel in support of his submission has placed reliance on Sub-section (8) of Section 73 of the GST Act, 2017 and submits that in view of the express provision that if an assessee/a person chargeable with tax under Sub-section (1) or Subsection (3) of Section 73 of the GST Act, 2017 paid the tax along with the interest payable under Section 50 within a period of thirty days of issue of notice, no penalty shall be payable and all proceedings in respect of the said notice would be deemed to be concluded.
On the other hand, Learned Government Pleader, Ms. M. M. Jasmine submits that Sub-section (8) of Section 73 comes into play when an assessee has not paid the tax on the transactions. But where the assessee has collected from the others and not credited it to the Government. It is Sub-section (11) of Section 73 which comes into play. She therefore submits that Sub-section (11) of Section 73 of the GST Act, 2017 begins with a non-obstante Clause which provides that;
“notwithstanding anything contained in subsection (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax”.
The controversy involved in this writ petition falls in a narrow compass. The question is whether an assessee who had paid the tax within thirty days from the issue of notice along with interest would be held to be liable for penalty. He has collected the tax and has not paid it to the Government within thirty days from the date from he collected. The Assessing Authority in paragraph 3.6 of the impugned Exhibit P-5 order has held as under; “
Verified the reply and documents produced in detail. The taxable person had remitted the short paid amount of Rs.38,969.00 under IGST and Rs.552.00 each under CGST and SGST along with interest through DRC 03 vide ARN:AD320322003809G dated 10.03.2022 as against the discrepancies 1 and 2. As the collected tax is not paid within 30 days from the due date, vide section 73(11) of the CGST/KSGST Act, the penalty under section 73(9) of the CGST/KSGST Act read with section 20(xxv) of the IGST Act 2017 shall be payable at the notice state itself. In this case, the taxable person has remitted the short paid amount of Rs.38,969.00 under IGST and Rs.552.00 each under CGST and SGST along with interest only through DRC 03 on 10.03.2022, ie, after the issuance of show cause notice. Hence the taxable person has to pay the penalty as per section 73(9) read with section 73(11) of the CGST/KSGST Act 2017 and section 20(xxv) of the IGST Act 2017.”
Sub-sections (6), (8) and (9) of Section 73 of the GST Act, 2017 respectively reads as under; (6) The proper officer, on receipt of such information, shall not serve any notice under subsection (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
(8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and 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 person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
Observation of the court
Considering the provisions of Sub-sections 6, 8 and 9 of Section 73 of the GST Act, 2017 it is provided that if a person chargeable to tax fails to deposit the tax collected by him within a period of thirty days from the due date of the payment of the such tax, Sub-section 8 will not have any effect and such a person is liable to pay penalty.
Considering the above facts and the circumstances of the case, I find that the Assessing Authority has taken the correct view in the matter and, therefore, I do not find any error of law which requires interference by this Court. Hence the present writ petition is hereby dismissed.
