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additional tax outgo on monthly/quarterly basis on tax does not arise at all because GST was required to
the company, even if GST would have been be paid under RCM which can be claimed
calculated @ 1% on guarantee commission. The immediately against output liability. This itself
word used “delayed” connotes a situation of proves that there was no intention to evade any
deprived where the State has been deprived of the payment of tax.
funds representing tax component till such time, the Further to levy the penalty u/s 122(2)(b) of the Act,
return is filed accompanied by remittance of tax. The the element of fraud or willful mis-statement or
amount of proposed GST liability u/s 9(3) of the Act
suppression of tax to evade tax is a mandatory
will be available as ITC in the same month hence requirement. None of these element can be
section 50 cannot be applied in such situation as held established because there was neither any fraud nor
in the case of M/s. Refex Industries Limited vs. Asstt.
any mis-statement or suppression of facts has been
Commissioner of CGST (2020) 37 GSTJ 448 (Mad.). detected or pointed out in the show cause notice.
Similarly, Kerala High Court in the case of N.V.K. None of the companies in the Country might have
Mohammad Sultan Rawther & Sons vs. Union of
considered such GST liability u/s 9(3) of the Act
India (2019) 34 GSTJ 243 (Ker.) held that “if the under bonafide belief that Notification no.
assessee pays the tax, which according to him is due (13)/2017 dated 28.06.2017 is applicable in case any
based on the information supplies in his return,
guarantee is given by the directors without
then there would be no default on his part to meet consideration for availing loan facility by the
his statutory obligation and it will be difficult to held company. Audited accounts are available on the
that the “tax payable” by him “is not paid” making portal and known to everyone, it means that there
him liable for interest”. That being so, provisions of was neither any suppression of facts nor mis-
section 50 of the Act cannot be invoked in the case of statement in any manner.
the company.
The observations of Bombay High Court in the case
03) Reg : Levy of penalty u/s 74(1) & 122(2)(b) of the of Arun Krishna Chandra Goswami vs. Union of India
Act :- (2023) 46 GSTJ 110 (Bom) are relevant wherein it
It is also being proposed to levy penalty in terms of was held that “as per provisions of section 9(3) of
proviso to section 74 of CGST Act due to non- CGST Act tax was payable by the petitioner under
payment of GST (RCM) on guarantee provided by the RCM which was wrongly paid to the supplier. It was
directors to Financial Institutions was deliberate held that “the petitioner has not attempted to evade
with an intend to evade payment of tax. any tax.
In fact, neither the company had deliberately or The petitioner made a mistake, and instead of
willfully suppressed the fact nor submitted any paying the tax under RCM he paid the tax to Railway,
willful mis-statement in the returns with any which is not disputed hence it was directed that the
intention to evade payment of tax. The proposed GST GST authorities will consider petitioner's case
liability on RCM basis is not covered by the provisions sympathetically regarding interest & penalty and
of section 74 of the Act even if it is considered that unless there are some other reasons, petitioner
tax was paid short by the company (RCM), it cannot should not be saddled with interest and penalty”.
be treated by reason of fraud or any willful mis- Under the circumstances, neither there was
statement or suppression of facts. Such alleged short deliberate intend to evade tax nor there was any
payment can at the most be covered within willful supersession or mis-statement in the returns
provisions of section 73 of the Act in the case of the hence proposed levy of penalty either u/s. 74 of the
company. The submissions in relation to levy of Act or u/s 122(2)(b) of the Act is unwarranted.
proposed interest i.e. “Revenue Neutral” would
equally apply in relation to proposed levy of penalty.
The question of concealment or any intend to evade

If something is not taxable at all then how can it be exempted. 75