The Andhra Pradesh High Court has upheld the penalty and held that non-filing of monthly return amounts to wilful suppression of fact.
The bench of Justice R. Raghunandan Rao and Justice Maheswara Rao Kuncheam has observed that the defense of the petitioner is that his sole client, viz., M/s. Vijay Nirman Company had not paid its dues, due to which the petitioner could not remit the necessary taxes along with returns. The appellate authority held that the petitioner had been paid certain amounts by his main client M/s. Vijay Nirman Company and as such, there was no impediment for the petitioner to remit the necessary taxes. On this basis, the appellate authority held that there was wilful suppression and upheld the penalty.
The petitioner is a partnership firm, established in January 2017 and carrying on the business of a works contractor, which is executing infrastructure based Engineering Procurement Construction contracts. The petitioner registered itself under the GST Act. The primary and main business of the petitioner, for the relevant period from July, 2017 to March 2018, was the execution of works, as a sub-contractor, for one M/s. Vijay Nirman Company Ltd.
The petitioner raised nine invoices with an aggregate value of Rs.20,92,02,422. These invoices, were inclusive of GST of Rs.3,19,12,234. The said invoices were raised in the month of March, 2018.
The petitioner, though paid certain amounts, by M/s. Vijay Nirman Company Ltd., was unable to pay GST as the payments received from M/s. Vijay Nirman Company Ltd., were not sufficient even for executing the works awarded by it. As the GST portal, does not accept filing of returns, unless accompanied by payment of tax, the petitioner was unable to file the GSTR- 3B returns within the statutory time limit.
The principal place of business of the petitioner was inspected, by the DGGI officers, on the authorization given by the Joint Director, DGGI, Visakhapatnam Zonal Unit, Visakhapatnam. In the course of the said inspection, the officers had seized certain documents and records and had also recorded the statement of the Managing Partner of the petitioner.
At that stage, the petitioner, having realized its mistake of non-filing of GST returns and non-payment of GST, had taken steps to deposit necessary tax. The petitioner, in four installments, between 31.07.2018 to 29.09.2018, had deposited a sum of Rs.3,36,51,468/- and also filed all the pending GSTR-3B’s for the financial year 2017-2018 by 29.09.2018.
The department confirmed the demand, raised in the show cause notice. Aggrieved by the same, the petitioner filed the appeal. The penalty was upheld. Thereafter, the department issued a notice dated 19.08.2023, demanding payment of Rs.3,20,72,233/- failing which recovery action would be initiated under Section 79 of the CGST Act, 2017.
The petitioner contended that non- filing of tax returns and non-payment of tax, could not have been invoked against the petitioner, as the petitioner had time, up to 07.02.2020, to file the annual returns under Section 44.
The court while dismissing the petition held that non- filing of monthly returns and non-payment of GST along with such monthly returns, subject to the requirement of making out a case of fraud, wilful misstatement or suppression of fact, would be sufficient for invoking Section 74 of the CGST Act.
Case Details
Case Title: M/s. Sriba Nirman Company Versus The Commissioner (Appeals)
Case No.: W.P.No.25826 of 2023
Date: 29-01-2025
Counsel For Petitioner: V. Raghu Ram, Sr. Counsel
Counsel For Respondent: Santi Chandra S.C.
