Bank Cannot Be Penalised For Filing Return On Another State's GST Portal Due To Techincal Glitch: Telangana HC
The Telangana High Court has observed that the bank cannot be saddled with demand, interest and penalty for filing the tax return on the Goods and Services Tax (‘GST’) portal of another State due to a technical glitch.
The Division Bench of Justice Sujoy Paul and Justice Namavarapu Rajeshwar Rao observed, “Needless to emphasise that it was the duty of the Department to keep their portal functional. If the portal was not functional or having technical glitch and because of that the petitioner was compelled to file return in the portal of Telangana, the petitioner cannot be saddled with demand, interest and penalty. In other words, the Department cannot take benefit of its own wrong. In Devendra Kumar v. State of Uttaranchal, the Supreme Court held that a person having done wrong cannot take advantage of his own wrong. In such a case, the legal maxim ‘Nullus Commodum Capere Potest De Injuria Sua Propria’ applies.”
Senior Counsel Lakshmi Kumaran Sridharan appeared for the Petitioner while Senior Counsel B. Narayan Reddy appeared for the Respondent.
The Petitioner-Bank was registered under the Sales Tax and the GST regime in Maharashtra. The Bank filed its return in the GST Portal of the State of Telangana and there was a technical glitch in the portal of Maharashtra. Therefore, the writ petition was filed under Article 226 of the Constitution of India raising a conundrum as to whether the Petitioner-Bank could be saddled with demand, penalty and interest despite the fact that the Bank's branch existed in the State of Telangana.
The petitioner was served with a pre-show cause notice wherein it was alleged that the credit availed by the petitioner through the TRAN-I return filed by the Telangana registration is ineligible and requires to be reversed along with applicable interest and penalty.
The Respondent- Principal Commissioner of Central Tax (‘Revenue’) submitted that assuming that the portal of Maharashtra had any technical glitch, the petitioner was not remediless and he should have approached the higher authorities of the GST Regime of Maharashtra for redressal of his grievance and he should not have filed the return on the GST portal of Telangana, and for this reason alone, no fault can be found in the action of the Respondents.
The Court referred to Section 140 (1) of the Goods and Services Tax Act, 2017 (‘GST Act’) and said that the registration number/Permanent Account Number of the petitioner is the same nationwide and thus, sub-section (1) of Section 140 does not permit the respondents to arrive at a conclusion that the petitioner was obliged to file the return electronically only in the GST portal of Maharashtra.
“Pertinently, the respondents did not dispute the stand of the petitioner that because of technical glitch in the GST portal of Maharashtra, the petitioner was constrained to file return in the GST portal of Telangana. This is also not the stand of the Revenue that during the relevant time, GST portal of Maharashtra was functional and yet, the petitioner had chosen to file return in the GST portal of Telangana.”, the Court added.
The Court concluded that the foundation of the show cause notice itself was bad in law and the assumption of respondent No.2 that return could not have been filed in the GST portal of Telangana is not flowing from Section 140 of the GST Act.
Therefore, the Court allowed the Writ Petition and set aside the impugned show cause notice.
Cause Title: M/s Standard Chartered Bank v. The Principal Commissioner of Central Tax & Ors.
Appearances:
Petitioner: Senior Counsel Lakshmi Kumaran Sridharan.
Respondent: Senior Counsel B. Narayan Reddy and Advocate Uday Kumar Bhagwath.