Self-Assessed Tax Already in GSTR-3B Not Recoverable Under Section 75(12): High Court

A petition was filed, challenging the order dated 20th December, 2024, issued by the respondent GST Department (the respondents) along with the summary of the order thereof issued in DRC-07 dated 6th January, 2025 whereby, the respondents have purported to make recovery of dues payable by the petitioner, by invoking the provisions of Section 75(12) of the GST Act, 2017.

Facts of the case:

• A notice in Form ASMT 10 dated 20th September, 2024 was issued, identifying certain discrepancies in the GSTR-9 and GSTR-3B returns filed by the petitioner in respect of the financial year 2020-2021, which led to a demand of Rs. 8,09,248.
• It was claimed that the petitioner had mistakenly disclosed a higher liability of IGST of Rs. 29998122 in Table 4N of GSTR-9 against the actual liability of Rs. 29122135/- in the IGST column, which had been declared in GSTR 9C Table 9 filed on 7th October, 2024.
• Insofar as discrepancy of delafees and interest is concerned, the petitioned filing of return in GSTR 3B attracting late er admitted that there had been a delay and having regard thereto, the petitioner had sought for payment of interest on the sum due in instalments.
• Records revealed that immediately after the aforesaid explanation, a demand had been raised, which had been communicated to the petitioner in Form DRC 07 dated 6th January, 2025, though the detailed order thereto appears to have been passed on 20th December, 2024.

Contention of the Petitioner:

No show-cause notice had been issued as is required under the scheme of the said Act.

The respondents have purported to straight away adjudicate upon the petitioner’s liability and have proceeded further, and did not stop there.

The respondents have directly proceeded to recover the aforesaid amount by invoking the provisions of Section 75(12) of the said Act.

Explanation to Section 75(12) of the said Act: The expression “self-assessed tax” would only include the tax payable in respect of details of outward supplies furnished under Section 37, but not included in the return furnished under Section 39 of the said Act. Once a self-assessed tax is included in the return furnished under Section 39, the same cannot be treated to be a “self-assessed tax”, which may be recovered by invoking the provisions of Section 75(12) of the said Act.

Contention of the Department:

It is within the rights of the GST Department to call upon the petitioner to make payment of the admitted amount, which is payable as self-assessed tax.

As per the provisions of Section 75(12) of the said Act, where any amount of self-assessed tax in accordance with a return furnished under Section 39 remains unpaid, either wholly or in part, or the amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of Section 79 of the said Act and no separate adjudication order is necessary.

The same cannot tantamount to failure of justice since there is no necessity to give any opportunity of hearing, especially when there is an admission made by the registered taxpayer.

High Court

It may be noted that having regard to the explanation provided under Section 75(12) of the said Act, the expression “self-assessed tax” shall include tax payable in respect of the details of outward supplies furnished under Section 37 of the said Act which are not included in the return furnished under Section 39 of the said Act. Admittedly, in this case, it would transpire that the self-assessed tax of the petitioner under Section 37 of the said Act has been included in the returns under Section 39 of the said Act. It is not the case of the respondents that the self-assessed tax furnished under Section 37 of the said Act has not been included in the returns under Section 39 of the said Act. In my view, once the self-assessed tax as per Section 37 is included in the return furnished under Section 39 of the said Act, Section 75(12) of the said Act can no longer be invoked, as is clear from the above explanation. Further, a bare perusal of the notice issued in ASMT 10 dated 20th September, 2024, would in no uncertain terms disclose that the returns filed by the petitioner in Form GSTR1 had been included in Form GSTR-3B. It would also transpire from the order impugned that the respondents have proceeded to determine late fees and interest by proceeding to demand the same from the date of filing of the return under Section 39 of the said Act in Form GSTR-3B. Having regard thereto, I am of the view that the respondents could not have invoked the provisions of Section 75(12) of the said Act, nor could the respondents claim that the demands made by the respondents are based on an admission made by the petitioner. Further, having regard to the provisions of the said Act as provided in Section 61(3) of the said Act, in case the explanation furnished by the petitioner is found unacceptable there is no option but to initiate appropriate action under the provisions of Section 65 or 66 or 67 or 73 or 74 of the said Act and not Section 75(12) of the said Act.

In view thereof, the aforesaid determination made by the respondents cannot be sustained. The same is set aside. However, at the same time, having regard to the admission made by the petitioner in response to the ASMT 10, I am of the view the aforesaid order passed by the respondents on 20th December, 2024 can be treated as a show cause and having regard thereto, the petitioner shall be at liberty to respond to the said show cause within a period of three weeks from date.