Mahadeo Construction Co VS Union Of India

The main issue addressed in this summary is whether interest liability under Section 50 of the Central Goods and Services Tax Act, 2017 (CGST Act) can be determined without initiating any adjudication process under sections 73 or 74 of the CGST Act, especially when the taxpayer disputes the liability of interest. Additionally, it considers whether recovery proceedings under Section 79 of the CGST Act can be initiated for the recovery of interest under Section 50 without first initiating and completing adjudication proceedings under the Act.

The case in question involves a partnership firm registered under the CGST Act, which is required to furnish monthly returns as per Section 39 of the Act. The petitioner, in this case, is disputing the imposition of interest under Section 50 of the CGST Act and is seeking clarity on whether the interest liability can be determined without going through the adjudication process outlined in sections 73 or 74 of the Act. Furthermore, the petitioner questions whether recovery proceedings under Section 79 can be initiated for interest recovery without first completing adjudication proceedings.

This summary suggests that the case revolves around the interpretation and application of specific provisions within the CGST Act concerning interest liability and recovery procedures. The court is likely to examine the legislative intent behind these provisions and may consider relevant case law to determine whether interest liability can indeed be established without formal adjudication and whether recovery proceedings can be initiated independently of adjudication.

The case at hand revolves around two main legal questions concerning the Central Goods and Services Tax Act, 2017 (CGST Act) and the proceedings initiated under it:

1. Interest Liability Determination without Adjudication Process (Sections 73 and 74): The primary query is whether interest liability under Section 50 of the CGST Act can be established without initiating any formal adjudication process under either Section 73 or Section 74 of the CGST Act, especially when the taxpayer disputes the liability of interest.

2. Recovery Proceedings without Completion of Adjudication (Section 79): Another aspect under consideration is whether recovery proceedings under Section 79 of the CGST Act can be initiated for the recovery of interest under Section 50 without first initiating and completing the adjudication proceedings as mandated by the Act.

The petitioner, a partnership firm registered under the CGST Act, encountered difficulties due to technical issues with the GSTN Portal, the online platform for GST compliance. As per Section 39 of the CGST Act, registered persons are required to file monthly returns, known as GSTR-3 Returns, by the 20th day of the succeeding month. However, due to ongoing issues with the GSTN Portal, the generation of GSTR-3 Returns was hindered, leading to the introduction of a temporary alternative, the GSTR-3B Return, under Rules 61(5) and 61(6) of the CGST Rules.

The obligation to pay taxes as per the return filed under Section 39(1) of the CGST Act is reinforced by Section 39(7), which stipulates that taxes must be paid no later than the last date for filing the return. However, due to the suspension of filing GSTR-3 Returns and the requirement to file GSTR-3B Returns, the situation became complex.

The petitioner claims that they filed their GSTR-3B Returns for February and March 2018 within what they believed to be the extended due date of March 31, 2019, based on information displayed on the GSTN Portal. Nevertheless, they received a demand for interest totaling Rs. 19,59,721/- from the tax authorities for the alleged delay in filing these returns.

The petitioner contests this demand, arguing that they reasonably relied on the information provided on the GSTN Portal regarding the due date extension. They challenge the validity of the demand letter issued by the Superintendent of Goods and Services Tax and Central Excise.

The crux of the matter lies in whether the interest liability can be determined and recovery proceedings initiated without adherence to the adjudication process mandated by the CGST Act. This case highlights the challenges faced by taxpayers in navigating the complexities of GST compliance, particularly in the context of technical glitches and evolving regulatory frameworks.

The case at hand revolves around two main legal questions concerning the Central Goods and Services Tax Act, 2017 (CGST Act):

(i) Interest Liability Determination: Can interest liability under Section 50 of the CGST Act be determined without initiating an adjudication process under Sections 73 or 74, especially when the assessee disputes the liability?

(ii) Recovery Proceedings: Can recovery proceedings under Section 79 of the CGST Act be initiated for the recovery of interest under Section 50 without completing the adjudication process under the Act?

The petitioner, a partnership firm registered under the CGST Act, highlights issues arising from the filing of monthly returns. The standard monthly return, GSTR-3, has been suspended, and an alternative return, GSTR-3B, is being filed due to technical problems with the GSTN Portal. The petitioner claims to have filed their returns within the due date as per the portal’s information, which showed an extended deadline.

However, the tax authorities issued a demand for interest due to alleged delays in filing the GSTR-3B returns for February and March 2018, citing the original due dates. Subsequently, they initiated garnishee proceedings under Section 79 for recovery.

The petitioner contends that the interest demand and garnishee proceedings are unlawful as they were initiated without following the adjudication process prescribed under Sections 73 or 74 of the CGST Act. They argue that since they filed returns within the deadline indicated on the GSTN Portal, there was no delay on their part in tax payment. Therefore, they assert that any determination of interest liability should be through the proper adjudication process.

Furthermore, the petitioner argues that Section 79 proceedings for recovery can only be initiated for amounts established as payable after adjudication. They assert that without initiating the adjudication process, the authorities cannot determine the amount payable, and hence, cannot proceed with recovery proceedings under Section 79.

In summary, the petitioner challenges the demand for interest and the initiation of garnishee proceedings, arguing that they are premature and unlawful without prior adjudication to determine the actual liability. They seek relief from the court against these actions of the tax authorities.

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