LI Network
Published on: November 02, 2023 at 17:45 IST
The Kerala High Court has emphasized that a penalty is indeed applicable in cases where an individual or entity fails to deposit the tax collected within thirty days from the due date of payment. This important decision was handed down by Justice Dinesh Kumar Singh, who delved into the provisions of the Goods and Services Tax (GST) Act, 2017.
The court’s verdict was rooted in the scrutiny of Sub-sections 6, 8, and 9 of Section 73 of the GST Act, 2017. These sections clearly stipulate that if a person who is liable for tax neglects to deposit the collected tax within the specified thirty-day timeframe following the due date, Sub-section 8 loses its effect, and the individual becomes subject to a penalty.
The specific case before the court involved a petitioner or assessee who had promptly remitted all taxes within the stipulated thirty-day period. The notice, which bore a date of February 28, 2022, prompted the petitioner to settle the tax dues on March 10, 2022.
The petitioner relied on the provisions of Section 73(8) of the GST Act, 2017, which clearly states that if a taxpayer pays the tax along with the requisite interest within thirty days of receiving the notice, no penalty shall be imposed, and all proceedings associated with the notice would be deemed concluded.
However, it’s essential to note that the department argued that Sub-section (8) of Section 73 applies when an assessee has not fulfilled the tax obligations related to the transactions.
In cases where an assessee has collected tax from others but failed to remit it to the government, it is Sub-section (11) of Section 73 that becomes relevant. This particular sub-section commences with a non-obstante clause, stipulating that a penalty under Sub-section (9) will be imposed if any self-assessed tax or tax collected has not been paid within thirty days from the due date.
The crux of the issue revolved around whether an assessee who had dutifully paid the tax along with interest within the thirty-day period following the notice issuance would still be liable for a penalty. In its verdict, the Kerala High Court dismissed the petition, asserting that the assessing authority had correctly interpreted the law, and there was no legal basis for the court to intervene.
This significant ruling by the Kerala High Court underscores the importance of timely tax remittance and serves as a reminder that penalties can be enforced if tax collection obligations are not met within the prescribed time frame.
It clarifies the distinction between different sub-sections of Section 73 within the GST Act and affirms the principle that adherence to the tax law’s provisions is crucial to avoid penalties.