Taxpayer's failure to register under GST and to discharge tax obligations constitutes willful suppression of facts, justifying penalties under GST Act.

ORDER :

K. KUMARESH BABU, J.

This writ petition has been filed chalenging the order in original dated 23.02.2022 and order in Appeal dated 29.07.2022 passed by second respondent and confirmed by the first respondent respectively that demanded the petitioner to pay GST liability along with interest and full penalty for GST liability.

2. Heard Mr.Joseph Prabhakar, learned counsel appearing for the petitioner, and Mr.R.Gowri Shankar, learned Standing counsel appearing for the respondents .

3. Mr.Joseph Prabhakar, learned counsel for the petitioner submits that the petitioner is the charitable trust having registered office at Karur. Under the said trust petitioner runs a marriage hall under the name and style of M/s.Prem Mahal at Kovai Road. He submits that the petitioner registered as service provider under CGST Act w.e.f. 14.02.2020.

4. He contends that the CGST department preventive unit visited marriage hall on 23.01.2020 and asked to handover entire accounts and records. Hence, the manager of the petitioner submitted the same. Further, on summon the petitioner submitted ITR, Balance Sheet and Profit and Loss account upto 31.03.2019 along with bank statement of the Trust and Trustees. Moreover, the petitioner specifically stated that some amounts are reimbursable to the persons concerned.

5. He submits that on perusal of the documents the GST authority of Preventive Unit arrived at a receipt of Rs.3,86,36,410/- for the marriage hall from July, 2017 to January, 2020. He further submits that in the meanwhile, the petitioner paid a sum of Rs. 58,93,702/- as GST liability and a sum of Rs.8.84,056/- as penalty liability under cum-tax basis method applying Rule 35 of CGST Rules. He contends that the second respondent issued show cause notice dated 31.12.2021 arriving a sum of Rs.69,54,554/- as GST liability for the total value of Rs.3,86,36,410/- and rejected the cum-tax basis benefit claimed by the petitioner. Further, demanded balance GST liability of Rs.10,60,852/- along with interest and full amount of GST liability as penalty ie.Rs.69,54,554/-. He submits that the petitioner gave a reply on 12.01.2022, to justify the application of cum-tax basis method and objected the interest and to invoke Section 74 (1) CGST Act that the petitioner neither suppressed any payments nor willfully misrepresented. He submits that the total value arrived by the second respondent includes advance, reimbursable amount and GST. He contends that the second respondent assumption is against the basic principles of indirect taxation and the petitioner is not liable to pay service tax as it is agent of government which has to be paid by the person concerned.

6. He further submits that after submission of objection by the petitioner the second respondent passed an order in original dated 23.02.2022, demanding balance GST liability of Rs.10,60,852/- along with interest and full amount of GST liability as penalty ie.Rs.69,54,554/-. Thereby, the second respondent invoking Section 74 (1) of CGST Act rejected the petitioner claim of cum tax basis benefit was rejected. He expostulates that the second respondent had not even established the petitioner involved in fraud or willfull misstatement or suppression of facts available to invoke Section 74 (1) of CGST Act.

7. He submits that against the order in original, the petitioner preferred appeal before the first respondent. The petitioner contend that tax element is included in the total value of taxable supply and petitioner is entitled to arrive GST liability applying cum tax basis under Rule 3