Madras HC: GST Section 73 Restricts 100% Penalty on Assessee If SCN is Issued

The Hon’ble Madras High Court in the case of K.S. Janarthanam v. Deputy State Tax Officer [W.P. No. 1848 of 2024 on January 31, 2024] disposed of the writ petition, hence holding that, a 100 per cent penalty could not get levied if an SCN is issued under Section 73 of Tamil Nadu Goods and Services Act, 2017 (“the TNGST Act”).

Key Points

K.S. Janarthanam (“the Petitioner”) is a civil works contractor registered under GST. A notice in Form GST-ASMT-10 about differences in returns filed by the Petitioner is been obtained by the Petitioner. A notice under section 73 of the TNGST Act is been issued to the applicant. The assessment order on September 4, 2023 (“the Impugned Order”) is been passed through the Revenue Department against the applicant in which a 100% penalty was levied.

The applicant was dissatisfied with the impugned order and filed a writ application to the Hon’ble Madras High Court.

Reason for Issuing a SCN

Whether Penalty be imposed at 100 per cent when a Show Cause Notice (SCN) is issued under Section 73 of the TNGST Act?

Determination

The Hon’ble Madras High Court in W.P. No. 1848 of 2024 ruled as under:

• It has the opinion that the impugned order needs to interfere with a 100% penalty levied on the SGST dues on issuing notice under section 73 of the TNGST act.
• Ruled that the impugned order is quashed hence disposing of the writ petition.
• The case is remanded back to the assessing officer for reconsideration concerning the levied penalty under the impugned order.

Read Also: Madras HC: The Clustering of GST Show Cause Notices Contradicts the Intent of Section 73

Appropriate Provision:

Section 73(9) of the TGST Act:

“Section 73: Resolution of tax not filed or short paid or incorrectly refunded or input tax credit incorrectly claims or utilized for any reason excluding bogus or any wilful-misstatement or suppression of facts.

(9) The proper officer post acknowledging the representation, if any, made by a person levied to tax, specifying the amount of tax, interest, and a penalty equivalent to 10 percent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.”

Case Title	K.S.Janarthanam Vs. Deputy State Tax Officer
Citation	W.P.No.1848 of 2024 and W.M.P.Nos.1921, 1922 of 2024
Date	31.01.2024
Petitioner by	Ms.Vijayalakshmi
Respondent by	Mrs.K.Vasanthamala
Madras High Court	Read Order