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2020 Supreme(AP) 785
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
C. PRAVEEN KUMAR, J. UMA DEVI, JJ.
Godway Furnicrafts - Appellant
Versus
State of A.P. and Ors. - Respondents
W.P. No. 10350 of 2020
Decided On : 11-11-2020
For the Appellant : P.S.P. Suresh Kumar.
For the Respondents: G.P.
Point of law: legislature was conscious enough, when the word 'preceding' was used before the word 'financial year' in Section 10(1) and also in the second proviso to Section 10(1)(c), while extending benefits under a scheme
Headnote:
Central Goods & Services Tax Act, 2017 – Section 9, 10(1) , 10(5) and 74 - Paying tax under composite scheme - Payment of 1% of GST on turn over - That the option exercised by the petitioner in the web portal cannot, be accepted without due verification - Value Added Tax is a consumption tax that is assessed on products at each stage-of the production process from labour, and raw materials to the sale of the final product - Essential vision is to create one nation and one market wherein all the goods irrespective of their territory suffer the same tax and have the same costs - Whether the petitioner is entitled for payment of GST as per the composite scheme, as his turn over after the GST regime came to force is less than Rs. 1 crore - Whether the authorities were right in directing the petitioner to pay tax at 28% (14% S.GST. and 14% C.GST) and also as to what the word "preceding financial year" appearing in Section 10(1) of Act would mean
Finding of the court : If the word 'preceding financial year' is restricted to the period commencing from GST regime, then all the assesses, who have submitted their returns with false declarations in the GST regime for the financial year 2017-2018, would go scot free and would not be liable to pay any tax, as there would not be any preceding financial year in the GST regime for the period 2017-2018 - This could not have been the intention of the legislature at all. If the intention of the legislature was to exclude the declarations made under VAT regime, the same would, have found place in Section 10(1) of the Act itself - Word 'preceding' appearing before the word 'financial year' cannot be ignored and if done, one would doing mockery of the words 'financial year does not exceed Rs. 50 lakhs' - No illegality in taking into consideration the previous year's turn over (under VAT regime) for the purpose of extending benefits under the composite scheme or for collecting taxes and penalty –
Result :Writ Petition dismissed.
ORDER :
C. Praveen Kumar, J.
1. The petitioner firm, represented by its proprietrix, was doing business in furniture after obtaining permission and licence from the concerned Departments, including erstwhile Sales Tax Department. When GST Act came into force, the petitioner, along with other dealers, got registered and obtained GST registration number vide registration No. 37AABPA9728J1ZJ from the Department, which was with effect from 1.7.2017. The petitioner claims to have opted for paying tax under composite scheme as per the procedure contemplated under Section 10(1) of GST Act and got it registered through GST portal. The petitioner has been filing GST returns and Form GSTR-IV from the quarter ending September, 2017 and the taxes were paid as per the said scheme, which postulates payment of 1% of GST on the turn over. According to the petitioner, the Department accepted the taxes paid/returns filed, till the date of issuance of show cause notice by the 3rd respondent on 14.2.2018, wherein the action of the petitioner claiming payment of tax under the composite scheme was rejected on the ground that the turnover of petitioner for the "previous year" under the VAT regime was Rs. 2.09 crores. The petitioner is said to have given an explanation to the show cause notice, but the same was rejected on 26.7.2018 in Form-GSTCMP-07. Consequently, the petitioner was issued with a show cause notice on 27.7.2018, in terms of Section 74 and Section 10(5) of the State GST Act, stating that she is liable to pay S.GST @ 14% and C.GST @ 14% from the date of initial registration i.e., from 1.7.2017. Though an explanation was given stating that she is not liable to pay an amount of Rs. 15,93,708/-, as demanded in the show cause notice, the same was rejected by the 3rd respondent on 19.9.2018 confirming the demand along with interest and penalty. Challenging the order of the 3rd respondent, the petitioner preferred an appeal before the 2nd respondent, but the same was rejected on 12.2.2020. Aggrieved by the said order, the present writ petition came to be filed in the month of June, 2020.
2. Sri P.S.P. Suresh Kumar, the learned counsel for the "petitioner, would contend that the orders passed by the 2nd and 3rd respondents directing the petitioner to pay GST @ 28% from 1.7.2017 is illegal, improper and incorrect. According to him, the respondents having accepted the option exercised by the petitioner in the web portal and having permitted him to pay tax at 1% of the total turn over in terms of the composite scheme, cannot now turn around and reject the option exercised and consequently direct the petitioner to pay GST as per the regular rates. He would further plead that a reading of Section 10(1) of the Act, does not anywhere prescribe inclusion of VAT regime for the purpose of deciding the tax to be paid under Section 10(1) of GST Act. In other words, his plea is that the provisions of GST Act are not retrospective in operation and that the word "preceding financial year", has no relevance for the taxes paid for the financial year 2017-2018. He further pleads that even if the turn over from 1.7.2017 is taken into consideration, the petitioner's turn over would be below Rs. 1 crore and hence the word 'preceding financial year' appearing in Section 10(1) would be from financial year, after the GST regime came into force and not otherwise. He took us through the provisions of GST Act in support of his plea.
3. The learned Government Pleader for Commercial Taxes opposed the same contending that the option exercised by the petitioner in the web portal cannot, be accepted without due verification. Merely because the petitioner has exercised an option, which was on his own, and that the authorities have collected the taxes for four quarters basing on self-declaration, the same does not by itself mean that the authorities have accepted the scheme opted by the petitioner. He pleads that having regard to the fact that the new regime came into effect from
