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2024 Supreme(Telangana) 177
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUJOY PAUL, NAMAVARAPU RAJESHWAR RAO, JJ.
M/s. Standard Chartered Bank – Petitioner
Versus
The Principal Commissioner of Central Tax and Others – Respondents
Writ Petition No. 648 of 2024
Decided On : 11-07-2024
For the Petitioner: Lakshmi Kumaran Sridharan.
For the Respondents: B. Narayan Reddy, Uday Kumar Bhagwath.
IMPORTANT POINT
A registered person can file GST returns in any state where they have a branch, especially when technical issues prevent filing in the registered state.
Headnote:
GST - Input Tax Credit - Section 140 of GST Act, 2017 - The court interpreted Section 140, emphasizing that a registered person can file returns in any state where they have a branch, especially when technical issues prevent filing in the registered state.
Fact of the Case:
The petitioner, a bank registered in Maharashtra, faced technical issues while filing GST returns in Maharashtra and filed them in Telangana instead. The credit was transferred to Maharashtra on the same day, leading to a demand for reversal of credit, penalty, and interest from the authorities.
Finding of the Court:
The court found that the petitioner acted within the law by filing in Telangana due to technical glitches in Maharashtra's portal. The court emphasized that the petitioner did not derive undue benefit and that the department could not penalize the petitioner for its own technical failures.
Issues: Whether the petitioner could file GST returns in Telangana despite having centralized registration in Maharashtra due to technical glitches in the Maharashtra portal.
Ratio Decidendi: The court held that Section 140 of the GST Act allows for filing returns in any state where a registered person has a branch, especially under circumstances where technical issues prevent filing in the registered state.
Result: The Writ Petition is allowed, setting aside the impugned show cause notice and Order-in-Original.
ORDER :
1. This petition filed under Article 226 of the Constitution contains an interesting conundrum whether the petitioner Bank which is Registered under Sales Tax and GST regime in Maharashtra, but could not file its return in GST portal of that State because of technical glitch and filed it in the GST portal of Telangana can be saddled with demand, penalty and interest despite the fact that Bank's branch, exists in the State of Telangana. Moreso, when credit taken by petitioner was transferred to Maharashtra portal on the same day. The quagmire is about the scope and ambit of Section 140 of GST Act, 2017.
FACTS:
2. The facts are in narrow compass and are not in dispute. The Headquarter of the petitioner’s bank is in Mumbai, Maharashtra and the centralized Registration of petitioner’s bank is also at Maharashtra under the Service Tax as well as under the Goods and Services Tax, 2017 (for short, the Act).
3. The Act came into being with effect from 01.07.2017 and the petitioner was entitled to enjoy the credit of Rs.1,41,26,69,646/-. The petitioner made efforts to file the Return in the official GST portal of Maharashtra, but because of technical glitch in the Maharashtra portal, his efforts went in vain. Petitioner admittedly, has a branch in Telangana and accordingly, on 18.10.2017, he filed the Returns in the portal of Telangana and took credit on the same day and transferred it on the same day to the portal of Maharashtra.
4. The petitioner was served with a pre-show cause notice on 03.09.2021 (Annexure P-16) wherein it was alleged that the credit availed by the petitioner through TRAN-I return filed by the Telangana registration is ineligible and requires to be reversed along with applicable interest and penalty. The petitioner promptly filed reply on 09.09.2021 (Annexure-P-17) and made it clear that total transitional credit of Rs.1,41,26,69,646/- was transferred to Maharashtra GST registration on the same day of filing the TRAN-1 and only the differential balance of ITC amounting Rs.2,00,000/- was available in the State of Telangana. To support the aforesaid submission, the Electronic Credit Ledger for the period July, 2017 to March, 2018 was annexed with the reply.
5. The respondents issued a show-cause notice dated 29.12.2021 and in turn the petitioner filed his detailed reply on 27.01.2022 (Annexure P-20). The respondents were not satisfied with the reply to the show-cause notice and passed the impugned Order-in-Original dated 31.10.2023, which is subject matter of challenge in this petition. By this order respondent No. 2 ordered as under:
“ORDER
(a) I confirm the demand of Rs.1,41,26,69,646/- (Rupees One hundred and forty one crores twenty six Lakhs sixty nine thousand six hundred and forty six only), being the irregularly availed transitioned credit through TRAN-1 in the State of Telangana under Section 140 of the CGST Act, 2017 read with Section 74 of the CTGST Act, 2017 and Rule 121 at CGST Rules, 2017.
(b) I confirm the demand of Interest on the amount mentioned at (a) above under Section 50 read with Section 74(9) of the CGST Act, 2017.
(c) I impose penalty equivalent to the amount mentioned at (a) above under Section 122(2)(b) read with Section 74(9) of CGST Act, 2017 for contravening the provisions of Section 140 of the CGST Act, 2017.”
Contention of the petitioner:
6. Learned Senior Counsel for the petitioner submits that the show-cause notice shows that there were technical glitches in the Maharashtra GST portal and the petitioner admittedly filed its return before due date in Telangana GST portal and transferred the credit amounting to Rs. 1,41,26,69,646/- to Maharashtra portal on the same date. Thus, the petitioner did it under compelling circumstances and there is no prohibition under the Act for filing such return electronically in another State where branch of petitioner exists. More so, when the petitioner has not derived any undue benefit from the said act nor revenue suffered any loss. In these circumstance
