Order Date – 23 November 2023

Parties: Clear Secured Services Private Limited Vs Commissioner

Facts –

• The Petitioner, Clear Secured Services Private Limited,  is a private company limited and is providing manpower supply services.
• A Show cause notice dated 27.05.2021 was issued to the petitioner alleging that although the petitioner had collected the GST but the same was not paid within the time prescribed, but was paid delayed, and thus, the petitioner was liable for payment of penalty of Rs.56,00,952.72/- in terms of the mandate of Section 122(1)(iii) of the GST Act.
• Due to  Covid - 19, the petitioner couldn’t filed a reply and an order came to be passed against the petitioner which was ex-parte. The demand of penalty imposed in the notice was confirmed.

Issue –

• Whether penalty is rightly imposed for for not paying the GST collected within the time prescribed?

Order –

• The Single Bench of Hon’ble High Court observed that there is no material on record or even an allegation against the petitioner that the amount was collected but not paid or evaded, but only allegation is that the amount was not pad within the time prescribed and was paid after a delay.
• In the present case, in terms of the Notification dated 01.06.2021, the Government in exercise of its powers under Section 128 of the Act had issued guidelines waiving the late fee for filing the returns, this factor had to be validly considered while imposing the penalty in terms of mandate of Section 126(2) of the Act.
• In the facts of case, the maximum penalty imposable was Rs.10,000/- or the tax evaded, whichever was more; there being no allegation of tax evasion, the maximum penalty that could have been imposed was Rs.10,000/- which could even be lower than the said amount if the Taxing Authority as well as the Assessing Authority had considered the mandate of Section 126(2) of the Act read with Notification dated 01.06.2021. The said exercise clearly has not been done.
• It was hence held that the petitioner shall pay a penalty of Rs.10,000/-. Accordingly the writ petitions are disposed off.