CT & GST CIRCLE, ANGUL

(Under CT & GST Territorial Range, Angul

(Commissionerate of CT & GST, Finance Department, Govt. of Odisha)

Reference No. 26504 Dated. 28.11.2022

ANNEXURE TO FORM GST DRC-07
(To be uploaded with summary of order in FOMR GST DRC-07)
Sl. No. Description Particular

1 GSTIN 21AAVCS9861M1ZF
2 Legal Name / Trade Name S.N.S. INDUSTRIAL WORKS PRIVATE
LIMITED
3 Tax Period (s) 2021-22
4 Section of GST Act involved in 50(1) r/w. 75(12) of the CGST & OGST Act
the present proceeding
5 Nature of business Works Contract

PREAMBLE:

(i) At the outset I would like to make it clear that the provisions of both CGST Act &
Rule and OGST Act & Rule are same except for certain provisions. Therefore,
unless a mention is specifically made to such dissimilar provisions, a reference to
the CGST Act & Rule would also mean a reference to the same provision under the
OGST Act & Rule. Henceforth for the purpose of this order, a reference to such a
similar provision under the CGST Act/OGST Act would be mentioned as being
under ‘GST Act’ or simply under “Act”. Similarly, under the CGST Rule/OGST Rule
would be mentioned as being under ‘GST Rule’ or under ‘rule’.

(ii) Voluntary payment in DRC-03 will not set off the demand appearing in
Electronic Liability Register (Part-II) at the GST portal on account of this order.
So, the taxpayer is required to make payment towards this outstanding demand
in full in the following manner:

(a) Login to the GST Portal with valid credentials.

(b) Click the Services > Ledgers > Payment towards Demand command
(c) Click the SELECT button to select the Demand ID & make the
payment from the electronic cash ledger.

BRIEF FACT:

M/S S.N.S. INDUSTRIAL WORKS PRIVATE LIMITED (herein after referred as

taxable person or registered person) is registered under the GST Act bearing GSTIN-
21AAVCS9861M1ZF and engaged in Works Contract. The registered person is
required to file GSTR-3B within due date i.e. within 20days after the end of each tax
period as per provision u/s. 39 of the GST Act read with Rule 61(5) of GST Rules.

The returns (in GSTR-3B) filed by the registered person for the said tax periods
mentioned below were verified and it is seen that the taxable person hasn’t filed the
return in GSTR-3B within due date i.e. within 20days after the end of the tax period.
Further, the registered person has failed to discharge the interest liability suo-motto on
the belated payment of tax during the said tax periods and thereby violated the
statutory provision u/s. 50 (1) & (2) of the GST Act. The return filing position and the
interest liability on account of late filing of returns are tabulated below: -

Total tax liability(paid

Return in cash) Interest @ 18%
Return Due date of Filling date Delay in
period filling in GSTR- 3B CGST SGST days CGST SGST
May-21 05/07/2021 19/07/2021 1,25,319 1,40,288 14 865 969
Jul-21 20/08/2021 23/09/2021 3,25,075 3,25,075 34 5451 5451
Aug-21 20/09/2021 23/09/2021 64,806 67,146 3 96 99
Sep-21 20/10/2021 31/12/2021 4,86,640 4,99,227 72 17279 17726
Oct-21 20/11/2021 07/02/2022 5,10,525 5,17,116 79 19889 20146
Dec-21 20/01/2022 17/02/2022 94,608 94,608 28 1306 1306
Jan-22 20/02/2022 18/05/2022 5,43,965 5,43,965 87 23338 23338
TOTAL 68225 69035
paid in 1,306 1,307.00
GSTR-3B
Liability
Due 66919 67728

The statutory provisions relating to interest on account of belated payment of tax

are reproduced below for clarity: -
STATUTORY PROVISIONS
Section 50(1) & (2) of GST Act reads as under –
50. (1) Every person who is liable to pay tax in accordance with the
provisions of this Act or the rules made thereunder, but fails to pay the tax or
any part thereof to the Government within the period prescribed, shall for the
period for which the tax or any part thereof remains unpaid, pay, on his own,
interest at such rate, not exceeding eighteen per cent., as may be notified by
the Government on the recommendations of the Council.
1Provided that the interest on tax payable in respect of supplies made during

a tax period and declared in the return for the said period furnished after the
due date in accordance with the provisions of section 39, except where such
return is furnished after commencement of any proceedings under section
73 or section 74 in respect of the said period, shall be levied on that portion
of the tax that is paid by debiting the electronic cash ledger.
 (2) The interest under sub-section (1) shall be calculated, in such manner as
may be prescribed, from the day succeeding the day on which such tax was
due to be paid.

Section 75(12) of GST Act reads as under –

Notwithstanding anything contained in section 73 or section 74, where any

amount of self-assessed tax in accordance with a return furnished under
section 39 remains unpaid, either wholly or partly, or any amount of
interest payable on such tax remains unpaid, the same shall be recovered
under the provisions of section 79.

[Emphasis supplied]

Central Government vide notification no. 13/2017-Central Tax dated

28.06.2017 and State Government vide matching notification has notified such rate as
18%.

GROUNDS:
In view of the above provisions of the GST Act & rules made there under, it
emerges that interest u/s. 50(1) of the GST Act arises automatically. The aforesaid
provisions also make it abundantly clear that notwithstanding anything contained in
section 73 or Section 74, if there is any amount of interest payable on tax and which
had remained unpaid, the same has to be recovered directly by way of recovery
proceeding u/s. 79 ibid. As per provision u/s. 75(12) ibid.

Reliance is placed on judgment dated 23.03.2021 of Hon’ble Gujarat High

Court at Ahmadabad in Special Civil Application No. 21534 of 2019 (“M/s
Rajkamal Builder Infrastructure Private Limited Vs. Union of India”). The relevant
portion of the judgment is reproduced below for clarity: -

xxx xxx xxx

8 Rule 142(1)(a) of the Central Goods and Service Tax Rules, 2017
(for short, “the CGST Rules, 2017”) reads thus:-

“142. Notice and order for demand of amounts payable

under the Act. (1) The proper officer shall serve, along with
the-

(a) notice issued under section 52 or section 73 or section 74 or

section 76 or section 122 or section 123 or section 124 or section
125 or section 127 or section 129 or section 130, a summary
thereof electronically in FORM GST DRC-01”
9 . Thus, the plain reading of the aforesaid rules indicates that Form GST
DRC 01 can be served by the proper officer along with the notice issued
under Section 52 or Section 73 or Section 74 or Section 76 or Section 122 or
Section 123 or Section 124 or Section 125 or Section 127 or Section 129 or
Section 130 and that too, electronically as a summary of notice.

10 . We do not find reference of any notice under Section 50 so far as Rule

142(1)(a) of the CGST Rules is concerned. In such circumstances, DRC 01
could not have been issued for the purpose of recovery of the amount
towards interest on delayed payment of tax.

11. The aforesaid leads us to consider the question that if the amount
towards interest on delayed payment of tax is to be recovered, then what is
the Form in which the notice is to be issued?

12. In the aforesaid context, we may refer to Section 75(12) of the Act. It
reads thus:

"75. General provisions relating to determination of tax.

... ...

(12) Notwithstanding anything contained in section 73 or section

74, where any amount of self assessed tax in accordance with a
return furnished under section 39 remains unpaid, either wholly
or partly, or any amount of interest payable on such tax remains
unpaid, the same shall be recovered under the provisions of
section 79."

13. Thus, the aforesaid provisions make it abundantly clear that

notwithstanding anything contained in section 73 or Section 74, if there is
any amount of interest payable on tax and which had remained unpaid, the
same has to be recovered under the provisions of Section 79.

14Section 79 is with respect to recovery of tax. Section 79 provides for the

modes of recovery.

15 . We shall now look into Rule 142 of the CGST Rules. Rule 142(5) reads
as under:

"142. Notice and order for demand of amounts payable

under the Act.
... ...
(5) A summary of the order issued under section 52 or section 62
or section 63 or section 64 or section 73 or section 74 or section 75
or section 76 or section 122 or section 123 or section 124 or
 section 125 or section 127 or section 129 or section 130 shall be
uploaded electronically in FORM GST DRC07, specifying therein
the amount of tax, interest and penalty payable by the person
chargeable with tax."

16 .Rule 142 makes it clear that the order referred in sub-rule (5) shall be
treated as the notice for recovery.

17. From the aforesaid, we have reached to the conclusion that the notice
should have been issued in Form GST DRC 07. The Notice should specify
the amount of tax, interest and penalty payable by the person chargeable
with tax.
CONCLUSION:
As discussed supra, in the present case, the registered person has not paid
interest @ 18% on the belated payment of tax from the day succeeding the day on
which such tax was due to be paid suo-motto and contravened the provision u/s. 50(1)
& (2) of the GST Act. In such a situation, the statutory provision under sub-section
(12) of section 75 ibid. prescribes to recover such interest which remains unpaid as
per provision u/s. 79 ibid. Hence, a summary of the order in FORM GST DRC-07 is
uploaded electronically specifying therein the amount interest payable at Sl. No. 5-
‘Details of Demand’ and the same shall be treated as notice/intimation for recovery as
per sub-rule (5) & (6) of Rule 142 of GST Rules.
The registered person is required to pay the interest amount within a period of
thirty days from the date of service of this order, failing which recovery proceeding
shall be initiated u/s. 79 of GST Act without any further intimation. Liability fastened
on the registered person to pay interest is an automatic liability. Despite that, the
registered person has failed to discharge the said liability, which is against the interest
of Government revenue. For the above mentioned reason & in the interest of revenue,
recovery proceeding u/s. 79 shall be initiated even before the completion of 3 months
of date of service of this order as per proviso to Section 78 of the GST Act.

Digitally signed by
Manas Ranjan Manas Ranjan Behera
Behera Date: 2022.11.28
11:57:53 +05'30'
(MANAS RANJAN BEHERA)
Addl. State Tax Officer

N.B: -This will act as intimation for initiation recovery proceeding U/s 79. If you are aggrieved with the
computation/calculation of interest in this order, you can put fourth your grievance before the
undersigned and the order can be rectified by considering your submission, if found deemed proper