Facts of the Case

The petitioner, sole proprietor of M/s. R.C. Reddy IAS Study Circle, Hyderabad, was earlier registered under Service Tax and was required to migrate to GST from 1.7.2017 under Rule 24 of the Central Goods and Services Tax Rules, 2017. He alleged that, without his knowledge, the 5th respondent's office effected a suo motu migration using a mobile number and email belonging to a departmental officer rather than the petitioner, preventing him from receiving the OTPs needed to file returns; despite repeated representations from 2018, the error was corrected only in February 2019, delaying GSTR-3B filings till January 2019. On 29.3.2022 the department demanded interest of Rs.30,07,927 for the delayed filing; representations went unanswered, and a garnishee order dated 21.6.2022 was issued under Section 79(1)(c) to recover the amount from the petitioner's bank. An earlier writ (W.P. No.27336 of 2022) was disposed of on 29.6.2022, directing the Commissioner (respondent no.3) to decide the representations after a hearing and keeping the garnishee order in abeyance. Despite this, the impugned speaking order dated 24.11.2022 demanding the interest was passed not by the Commissioner but by respondent no.4, the Deputy/Assistant Commissioner.

Issues Involved

  1. Whether the speaking order dated 24.11.2022 demanding interest was validly passed, given that the Court's earlier order specifically directed the Commissioner (respondent no.3), not the Assistant Commissioner (respondent no.4), to decide the representations.
  2. Whether the delay in filing GSTR-3B returns, allegedly caused by the department's own erroneous suo motu GST migration, could justify the interest demand.

Petitioner's Arguments

  • The suo motu migration effected by the 5th respondent, using a wrong mobile number and email id, was without authority and in clear violation of Rule 24 of the CGST Rules, 2017.
  • Despite repeated representations seeking correction, the department failed to act for over a year, directly causing the delay in filing returns through no fault of the petitioner.
  • The impugned order dated 24.11.2022 was passed by respondent no.4, who lacked authority to do so, since the Court's earlier order in W.P. No.27336 of 2022 had specifically directed respondent no.3 (the Commissioner) to consider the representations.
  • Relied on Supreme Court rulings including Haryana Financial Corporation v. Rajesh Gupta and Union of India v. Kamalakshi Finance Corporation Ltd. to argue the department could not be permitted to take advantage of its own wrong.

Respondent's Arguments

  • Conceded the delay in filing GSTR-3B returns but contended the petitioner had other means (EVC, DSC, e-sign) to authenticate returns and change the registered mobile number/email, and could not blame the department entirely.
  • Argued that a mere balance in the electronic cash ledger does not amount to actual payment of tax unless GSTR-3B is filed and the ledger debited, under Section 49 of the CGST Act read with Rule 87 of the CGST Rules.
  • Contended that under Circular No.3/3/2017-GST, the jurisdictional Assistant Commissioner is the "proper officer" competent to decide the representations, and the impugned order was therefore validly passed.

Court Order/Findings

  • Held that the Court's earlier direction in W.P. No.27336 of 2022 was specifically to the Commissioner of Central Tax and Customs (respondent no.3), and an Assistant Commissioner is not a "Commissioner" as defined under Section 2(24) of the CGST Act; the Assistant Commissioner therefore had no authority to decide the representations or pass the impugned order.
  • Held the impugned speaking order dated 24.11.2022, passed by respondent no.4 instead of respondent no.3, was in clear violation of the Court's own earlier direction and could not be sustained.
  • Quashed the order dated 24.11.2022 and directed respondent no.3 to consider the petitioner's representations dated 18.4.2022 and 28.4.2022 afresh, after affording an opportunity of hearing, within 30 days.
  • Allowed the writ petition with no order as to costs.

Important Clarification

  • Where a court order directs a specifically named authority (such as "Commissioner") to decide a matter, an order passed instead by a subordinate officer, even one otherwise designated as "proper officer" under a departmental circular, is without jurisdiction.
  • A departmental circular authorising a lower officer as "proper officer" cannot override a specific judicial direction naming a higher authority to decide the issue.
  • Delay attributable to the department's own erroneous suo motu GST migration is a relevant factor that must be considered before fastening interest liability on the assessee for delayed return filing.

Sections Involved

  • Rule 24 of the Central Goods and Services Tax Rules, 2017 – governs migration of persons registered under earlier tax laws to the GST regime.
  • Section 79 of the Central Goods and Services Tax Act, 2017 – provides for recovery of tax dues, including through garnishee proceedings against a defaulter's bank.
  • Section 2(24) of the Central Goods and Services Tax Act, 2017 – defines "Commissioner" under the Act.

Decision – In Favour of

The order is in favour of the Assessee. The speaking order demanding interest was quashed, and the representations remitted for fresh consideration by the correct authority after a hearing.

Related Case Laws

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

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No. 7730 of 2023
  • CNR: Not available on record
  • Coram: Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty
  • Decision Date: 11.10.2023
  • Disposal Nature: Allowed (impugned speaking order demanding interest set aside; representations remitted)

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.