Facts of the Case

The appellant, M/s. Global Plasto Wares, was issued a show cause notice dated 28.02.2022 intimating differential tax dues. It paid the tax on 10.03.2022. By order dated 14.09.2023 (Ext.P5), the first respondent imposed a penalty of Rs.40,000 on the appellant under Section 73(11) of the CGST/SGST Act, on the ground that the differential tax had not been paid within 30 days of the show cause notice. The appellant's case was that Ext.P1 notice referred only to a possible penalty under Section 73(9)/73(8), not Section 73(11), and that imposing a penalty under a provision not cited in the notice violated principles of natural justice. The learned Single Judge dismissed the writ petition, finding that the appellant, having collected tax from its customers but not remitted it promptly, squarely attracted Section 73(11), and the assessment was correctly made. The present writ appeal challenged that dismissal.

Issues Involved

  1. Whether imposing a penalty under Section 73(11) of the CGST/SGST Act, when the show cause notice referenced only Section 73(8)/73(9), violated principles of natural justice.
  2. Whether, on the admitted facts, Section 73(11) was correctly applied to a taxpayer who collected tax from customers but paid it to the Department only after demand.

Petitioner's Arguments

  • The show cause notice (Ext.P1) referred only to the possibility of penalty under Section 73(9)/73(8) of the CGST/SGST Act; it was not open to the Assessing Authority to travel beyond the notice and impose penalty under Section 73(11).
  • This departure from the notice violated principles of natural justice and prejudiced the appellant's ability to respond to the actual charge.

Respondent's Arguments

  • The Assessing Authority correctly found that the appellant, a firm that had not remitted tax collected from its customers to the Department, was liable to penalty under Section 73(11), which the Single Judge upheld.
  • The differential tax was paid only when demanded, not voluntarily and promptly, triggering the higher liability under Section 73(11) rather than Section 73(8).

Court Order / Findings

  • The Court found that the differential tax pertained to invoices in which the appellant had clearly shown both the price and the tax amount due from customers, but had failed to remit the collected tax amounts along with its returns.
  • On the admitted facts — that tax collected from customers was not paid to the State until demanded — it is Section 73(11), and not Section 73(8), that applies as a matter of law, regardless of which sub-section the notice specifically cited.
  • Since the facts triggering the statutory provision were admitted by the appellant, the mere non-citation of Section 73(11) in the notice caused no prejudice.
  • The writ appeal was dismissed, upholding the judgment of the Single Judge and the penalty order.

Important Clarification

  • Where the facts giving rise to liability under a specific statutory sub-section are admitted, non-citation of that precise sub-section in the show cause notice does not by itself vitiate the order, provided the substance of the charge was otherwise clear and no real prejudice is shown.
  • Collecting tax from customers and failing to remit it to the Government, even if paid upon demand, attracts the enhanced penalty regime under Section 73(11) rather than the lesser penalty under Section 73(8).

Sections Involved

  • Section 73(8), CGST/SGST Act, 2017 — penalty where tax is paid voluntarily/within prescribed time after notice.
  • Section 73(11), CGST/SGST Act, 2017 — penalty where tax collected from recipients is not paid within 30 days of the due date of payment.

Decision – In Favour of

Department. The writ appeal was dismissed and the penalty under Section 73(11) upheld.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: W.A. No.1874 of 2023 (against WP(C) 33787/2023)
Coram: Dr. A. K. Jayasankaran Nambiar, J. and Dr. Kauser Edappagath, J.
Decision Date: 01.11.2023
Disposal Nature: Writ appeal dismissed

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