Title: M/S Rama Brick Field v. Additional Commissioner Grade-2 And 2 Others
Citation: WRIT TAX No. – 909 of 2022
Decided on: 6.11.2023
Coram: Justice Piyush Agarwal
Introduction
The Allahabad High Court ruled that, within the GST system, all information and returns submitted can be accessed on the GST Department’s portal, and authorities can easily confirm the tax amount deposited by a dealer by checking the GSTR-1 and GSTR 3B filings. Consequently, the penalty order was invalidated by Justice Piyush Agrawal, who noted that all necessary information is readily available on the GST department’s portal, and the authorities should have verified the tax payments made by the seller, Rohit Coal Traders, following the submission of GSTR-1 and GSTR 3B.
Facts of the case
Through this writ petition, the petitioner is challenging the orders issued under Section 74 of the Act for the period from May 2018 to June 2018 for the Assessment Year 2018-19. These orders were passed by the Commercial Tax Officer Sardhana (respondent no. 2) and the Additional Commissioner under Section 74/161 of the UP GST Act.
In the ordinary course of business, the petitioner procured various materials, and valid tax invoices were issued for these transactions. After paying the applicable taxes, the goods were received. The petitioner had filed for compounding for the period from October 1, 2017, to March 21, 2019, and this application was accepted. It’s important to note that once compounding has been accepted, the petitioner is not entitled to claim input tax credit. During the assessment period in question, the petitioner purchased coal from Rohit Coal Traders, who issued a tax invoice charging CGST, SGST, and GST composition cess. However, the petitioner did not claim any input tax credit. Subsequently, proceedings were initiated under Section 74 on the grounds that Rohit Coal Traders was not found to be in existence. As a result, an order was issued, imposing a tax and penalty amounting to Rs. 2,00,235/-. The petitioner’s request for rectification was not granted, and an appeal filed by the petitioner was also dismissed.
Court’s observation and analysis
The Court noted that although Rohit Traders’ registration was canceled in October 2019, at the time of the transaction, the seller was indeed registered under the GST Act. It’s a well-known fact that after filing GSTR-1, a window automatically opens for filing Form GSTR-3B to make the tax payment, and Form GSTR-2A can be viewed by the buyer. The Court emphasized that the issuance of these forms to Rohit Traders was never contested by the authorities. Therefore, the Court concluded that both the purchaser and the supplier were registered at the time of the transaction. The Court pointed out that if Rohit Coal Trader was found to be non-existent during the survey, then proceedings could have been initiated. However, the authorities made an error by disregarding the fact that GSTR returns were filed by the seller, a crucial detail that was not mentioned in the impugned order. Instead, the proceedings were justified on the grounds that the petitioner failed to provide substantial evidence that Rohit Coal Traders had deposited the tax. The Court asserted that the authorities had the means to verify the tax amount deposited by accessing the online GST portal, which contains all the necessary information. Consequently, the penalty order was annulled, and the case was sent back to the first appellate authority for fresh consideration.
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Written by- Amrita Rout
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