LI Network
Published on: November 02, 2023 at 19:48 IST
The Kerala High Court has clarified the obligation to impose penalties for the failure to deposit taxes within thirty days from the stipulated due date.
This significant legal decision, presided over by Justice Dinesh Kumar Singh, hinged on the interpretation of Sub-sections 6, 8, and 9 of Section 73 within the GST Act of 2017.
The court’s analysis an pointed out that these sub-sections clearly delineate the consequences of not adhering to the specified timeline for tax deposits. Sub-section 8, in particular, loses its effect when an individual subject to taxation fails to remit the collected tax within the stipulated thirty-day period from the due date of payment. In such cases, a penalty becomes applicable.
The case in question revolved around a petitioner or assessee who diligently settled all tax obligations within thirty days of receiving the official notice. Notably, the notice was dated February 28, 2022, and the tax payment was made on March 10, 2022.
The assessee cited Section 73(8) of the GST Act, 2017, which explicitly states that if an individual liable for tax payment under Section 73(1) or (3) of the GST Act remits the tax along with the associated interest within thirty days from the issuance of the notice, no penalty shall be levied. Additionally, all proceedings linked to the notice are deemed to be concluded.
However, the department contended that the applicability of Sub-section (8) comes into play when an assessee has not fulfilled tax obligations related to transactions.
In cases where an assessee has collected tax from others but failed to remit it to the government, Sub-section (11) of Section 73 becomes pertinent.
This particular sub-section commences with a non-obstante clause, asserting that a penalty under Sub-section (9) is warranted when any self-assessed tax or collected tax remains unpaid within thirty days from the due date of payment.
The central issue raised was whether an assessee who promptly remitted the tax along with interest within the thirty-day window following the notice’s issuance should still be held accountable for a penalty.
In its verdict, the Kerala High Court dismissed the petition, asserting that the assessing authority’s interpretation was correct, and no legal grounds existed for the court’s intervention.
This ruling by the Kerala High Court underscores the critical importance of timely tax remittances and reaffirms the principle that adherence to the tax law’s provisions is imperative to avoid penalties.