Demand of Tax, Interest, and Penalty in Form DRC-01A without issue of Notice u/s 74(1) TNGST Act

The Madurai Bench of Madras High Court presided by Mr. Justice M. Nirmal Kumar has held that demand of tax, interest, and penalty in Form DRC-01A without the issue of notice u/s 74(1) Tamil Nadu Goods Service Tax Act and set-asides assessment order.

The petitioner, M/s. Anantham Retail Private Limited was engaged in the trading of textiles and garments and they were also having showrooms in Kumbakonam and Thanjavur. The petitioner’s principal place of business Ramanathapuram and additional places of business Thanjavur, Kumbakonam, Pudukkottai, and go downs were inspected by the Intelligence Wing Officials under Section 67 of the TNGST Act.

During the surprise inspection, certain defects were pointed out based on the business transactions, and hence, notice was issued to the dealers. The petitioner raised objections but, according to the respondents, the objections were not convincing and not acceptable hence, confirmed the demand made in Form DRC-01A. Aggrieved, the petitioner filed a writ petition before the High Court.

The counsel for the petitioner submitted that the petitioner replied in Part-B of Form DRC-01A stating that the liability to tax as stated in subject intimation, as well as the quantification, are not agreeable as the same is not correct on facts and law.

The High Court observed that after the issuance of notice in Form DRC-01A, dated 06.12.2021, the respondent has issued Form GST DRC-01A. Thereafter, if the petitioner has got any objection and has not paid tax as ascertained, a show-cause notice has to be issued under Section 74(1) of the TNGST Act and after receiving objections, giving a personal hearing, the assessment order ought to have been finalized. The respondent failed to follow the procedure.

The single bench has set aside the assessment order and held that “the respondent is directed to issue notice after following the procedures prescribed under the TNGST Act and issue show cause notice and after allowing filing their objections, pass appropriate orders on merits and in accordance with law”.

₹1,44,616 crore gross GST Revenue collection for June 2022; increase of 56% year-on-yearRead More:

The gross GST revenue collected in the month of June 2022 is ₹144,616 crore of which CGST is ₹25,306 crore, SGST is ₹32,406 crore, IGST is ₹75887 crore (including ₹40102 crore collected on import of goods) and cess is ₹11,018 crore (including ₹ 1197 crore collected on import of goods). The gross GST collection in June 2022 is the second highest collection next to the April 2022 collection of ₹1,67,540 crore.

The government has settled ₹29,588 crore to CGST and ₹24,235 crore to SGST from IGST. In addition, Centre has also settled ₹27,000 crore of IGST on ad-hoc basis in the ratio of 50:50 between Centre and States/UTs in this month. The total revenue of Centre and the States in the month of June 2022 after regular and adhoc settlement is ₹68,394 crore for CGST and ₹70,141 crore for the SGST.

The revenues for the month of June 2022 are 56% higher than the GST revenues in the same month last year of ₹92,800 crore. During the month, revenues from import of goods was 55% higher and the revenues from domestic transaction (including import of services) are 56% higher than the revenues from these sources during the same month last year.

This is the fifth time the monthly GST collection crossed ₹1.40 lakh crore mark since inception of GST and fourth month at a stretch since March 2022. The collection in June’2022 is not only be the second highest but also has broken the trend of being low collection month as observed in the past. Total number of e-way bills generated in the month of May 2022 was 7.3 crore, which is 2% less than 7.4 crore e-way bills generated in the month of April 2022.

The average monthly gross GST collection for the first quarter of the FY 2022-23 has been ₹1.51 lakh crore against the average monthly collection of ₹1.10 lakh crore in the first quarter of the last Financial year showing an increase of 37%. Coupled with economic recovery, anti-evasion activities, especially action against fake billers have been contributing to the enhanced GST. The gross cess collection in this month is the highest since introduction of GST.

The chart below shows trends in monthly gross GST revenues since 2017-18. The table shows the state-wise figures of GST collected in each State during the month of June 2022 as compared to June 2021.

Income Tax Appeal not maintainable Insolvency Resolution Proceedings initiated on a Corporate Debtor

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the income tax appeal is not maintainable once Insolvency Resolution proceedings are initiated against a Corporate Debtor under the Insolvency and Bankruptcy Code (IBC).

The assessee, Twinkle Enviro Tech’s case has been referred to National Company Law Tribunal (NCLT) for Insolvency Resolution Process and an Interim Resolution Professional (IRP) has been appointed in the assessee company. as per the NCLT order, the proceedings under Insolvency and Bankruptcy Code (IBC) have already been initiated and moratorium has been declared for prohibiting all the proceedings against the corporate debtor including execution of any judgement, decree or order in any Court of law, Tribunal, Arbitration Panel or other authority.

A bench of Shri M.Balaganesh, Accountant Member & Shri Rahul Chaudhary, Judicial Member dismissed the appeal on ground of maintainability and observed that “the present appeals in the present format are not maintainable, being not filed by Mr. Devendra Jain, Interim Resolution Professional who is empowered to file appeal only on approval of the committee of the creditors. Hence, both the appeals (the assessee as well as the Revenue) are liable to be dismissed being not maintainable at this stage. We find that the ld. IRP had not impleaded himself in the instant case before us by filing a revised Form No.36. The Form No.36 available in our record is the one signed by the erstwhile Director of the assessee company. As per Section 14 of the Insolvency and Bankruptcy Code, 2016, no proceedings shall remain pending with any Court or Tribunal, once the Insolvency Resolution Proceedings had been initiated on a Corporate Debtor. It is not in dispute that the assessee company is a Corporate Debtor. Similarly, the Revenue has also not filed Revised Form No.36 by impleading the IRP in the instant case.”