Kerala High Court Upholds Penalty for Failure to Deposit Tax Within Thirty Days

LI Network

Published on: November 02, 2023 at 00:22 IST

The Kerala High Court has ruled that a penalty is applicable when an individual fails to deposit tax collected within a thirty-day period from the tax’s due date.

Justice Dinesh Kumar Singh, presiding over the case, observed that under Sub-sections 6, 8, and 9 of Section 73 of the GST Act, 2017, it is specified that if a person liable for tax fails to deposit the collected tax within thirty days from the tax’s due date, Sub-section 8 will not exempt them from penalties, and they will be liable to pay a penalty.

The petitioner, or the assessee in this case, had indeed paid all taxes within thirty days from the notice’s date. The notice had been issued on February 28, 2022, and the tax was paid on March 10, 2022.

The assessee relied on Section 73(8) of the GST Act, 2017, which states that if an individual liable for tax under Section 73(1) or (3) pays the tax along with the applicable interest under Section 50 within thirty days of receiving the notice, no penalty is payable, and all proceedings related to the notice are deemed concluded.

However, the department argued that Sub-section (8) of Section 73 comes into play when an assessee has not paid tax on the transactions they were liable for. In cases where the assessee has collected tax from others but failed to remit it to the government, Sub-section (11) of Section 73 is applicable.

Sub-section (11) includes a non-obstante clause and stipulates that a penalty under Sub-section (9) is payable when self-assessed tax or tax collected from others has not been paid within thirty days of the tax’s due date.

The issue at hand revolved around whether an assessee who had paid the tax within thirty days of receiving the notice, along with interest, could still be held liable for a penalty.

The Court, while dismissing the petition, affirmed that the assessing authority had correctly interpreted the law in this matter and found no legal errors necessitating intervention by the Court.

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