Kannan Paint & Radhas Hardware v. Deputy Commissioner of State Tax, SGST Department, Kerala; Union of India; Central Board of Indirect Taxes and Customs; Goods and Services Tax Network

## IN THE HIGH COURT OF KERALA AT ERNAKULAM ## PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 17[TH] DAY OF NOVEMBER 2023 / 26TH KARTHIKA, 1945 ## WP(C) NO. 21570 OF 2022 ## PETITIONER/S: KANNAN PAINT & RADHAS HARDWARE NO. XXVI/32A, 32B, 32C, K.P. ROAD, PUNALUR 691 331. BY ADVS. G.HARIKUMAR (GOPINATHAN NAIR) AKHIL SURESH ANU BALAKRISHNAN NAMBIAR ## RESPONDENT/S: - 1 THE DEPUTY COMMISSIONER OF STATE TAX SGST DEPARTMENT, SPECIAL CIRCLE KERALA, KOTTARAKARA 691 506. - 2 UNION OF INDIA, REPRESENTED BY REVENUE SECRETARY, NORTH BLOCK, NEW DELHI 110 001. - 3 CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NEW DELHI 110 001. - 4 GOODS AND SERVICE TAX NETWORK, WORLDMARK 1, EAST WING, 4TH FLOOR, AEROCITY, NEW DELHI, DELHI 110 037. BY ADVS. SUNIL.J M.S.AMAL DHARSAN ## **W.P.(C) No.21570/2022** **-2-** ## OTHER PRESENT: ## RESHMITA RAMACHANDRAN-GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **W.P.(C) No.21570/2022** **-3-** ## J U D G M E N T The present writ petition under Article 226 of the Constitution of India has been filed for the following reliefs: “(a) To issue a writ of mandamus or any other appropriate writ, direction or order commanding the Respondents to transfer the amount paid a GST Cess in their GSTR-3B filings towards Cess dues under the Kerala Flood Cess. (b) To allow the Petitioner to file Exhibit P-9 KFC-A form manually with the 1st Respondent. (c) To declare that the petitioner is not liable to pay interest on the Cess dues already paid as GST Cess. (d) To issue such other writ, order or direction which this Hon'ble Court deems fit and necessary in the circumstances of the case.” 2. The petitioner is a registered dealer under the GST Act 2017. In June 2019, the Kerala Government imposed ‘Kerala Flood Cess (KFC)’ at the rate of 1% of the tax liability under the GST Act and Rules made thereunder. This 1% KFC was applicable from 01.08.2019 up to July 2021. **W.P.(C) No.21570/2022** **-4-** 2.1 The petitioner, while filing his GSTR-3B, remitted the KFC along with its GSTR-3B returns in the Central Government Cess Pool from 01.08.2019 to July 2021. The petitioner could come to know about the posting of the KFC in the wrong head through a notice issued by the respondents in Ext.P1, which mentions that the petitioner was issued notice on 19.03.2021 for making the deposit of KFC and filing the return in KFC-A to remit the flood cess for the period from August 2019 to July 2021. On scrutiny, it could be learned that the petitioner had paid the cess under the incorrect head through GSTR-3B. The petitioner was requested to file the KFC-A returns and remit the cess dues in the correct head. 2.2 The petitioner did not respond to the said notice, and thereafter, the petitioner was issued a second notice dated 02.06.2022. The petitioner represented against the notice dated 02.06.2022 in Exts.P3 and P4. The said representation/reply was considered, and _vide_ notice dated **W.P.(C) No.21570/2022** **-5-** 16.06.2022 (Ext.P5), the Deputy Commissioner of State Tax, Special Circle, SGST Department, Kottarakkara, the petitioner was informed that cess provided in the GSTR-3B is as per the GST Act, the payment head and utilisation heads are different and the same cannot be adjusted to the flood cess due by transfer, as requested by the petitioner. The flood cess payment should be made in the flood cess account. Therefore, the option available to the petitioner is to upload the monthly flood cess returns and file an appropriate application for refunding the cess amount remitted in the incorrect head through GSTR-3B returns. 2.3 Instead of acting on the suggestion as per the Ext.P5 notice, the petitioner has filed the present writ. This Court _vide_ order dated 19.07.2022 has, as an interim measure, directed the 1[st] respondent to refund the amount of flood cess paid by the petitioner for the period from August 2019 to July 2021 under GSTR-3B on proper application. The petitioner ## **W.P.(C) No.21570/2022** **-6-** should, immediately after the refund is effected, make payment of the said amount towards the Kerala Flood Cess in Form KFC-A. The question as to whether the petitioner will be liable for any interest, late fee, and penalty will be decided in the writ petition. After receipt of this Order, the petitioner remitted the Kerala Flood Cess by filing KFC-A on 04.08.2022. The petitioner has also remitted the interest due on the said KFC. 3. Learned Counsel for the petitioner submits that without payment of interest, it would not have been possible for the petitioner to upload KFC-A and the payment of KFC would not have been successful. Therefore, the petitioner had paid the interest under protest subject to the final decision in the writ petition. 3.1 Learned Counsel for the petitioner further submits that it is not in dispute that the petitioner had paid the KFC on time, but in the wrong account and in pursuance of the order ## **W.P.(C) No.21570/2022** **-7-** passed by this Court, the 3[rd] respondent has refunded the KFC paid by the petitioner to the petitioner. The petitioner had then deposited the KFC on 04.08.2022 along with interest. 3.2 Furthermore, the learned Counsel for the petitioner submits that considering the provisions of Section 77 of the CGST Act and the judgment in the case of _Shree Nanak Ferro Alloys Pvt. Ltd. v. The Union of India_[1] , the petitioner was not liable to pay the interest. However, as the petitioner could not have filed Form KFC-A without payment of interest, he had to pay the interest. It is submitted that the petitioner is, therefore, entitled to a refund of the interest paid by him. 4. Ms Rasmitha Ramachandran learned Government Pleader, however, submits that the petitioner did not respond to the notice issued in March 2021 and he responded only to the notice issued to him on 02.06.2022 (Ext.P1). Had the > 1 W.P.(T) No.2246/2019 of High Court of Jharkhand at Ranchi **W.P.(C) No.21570/2022** **-8-** petitioner responded to the earlier notice dated 19.03.2021, the petitioner could have avoided the payment of interest, at least from 19.03.2021 till the date of payment. She, therefore, submits that the petitioner cannot make use of his own wrong, first in depositing the KFC in the wrong account and then not responding to the notice and thereafter claiming the refund of the interest. He, therefore, submits that the writ petition and the applications filed by the petitioner are liable to be rejected. 5. I have considered the submissions. 5.1 The case is of the initial period of the GST regime. There were genuine difficulties faced by the assessees/dealers and even tax experts in understanding the GST regime. The petitioner has committed a _bona fide_ mistake of depositing the KFC in the wrong account along with its GSTR-3B instead of filing a KFC-A return for payment of the KFC. The petitioner has been refunded the said cess by the 3[rd] respondent on **W.P.(C) No.21570/2022** **-9-** direction issued by this Court. However, the fact remains that the State was denied KFC from 1[st] August 2019 to 04.08.2022. From the facts as directed above, it appears that the petitioner has not been vigilant in responding to the notices issued to the petitioner, inasmuch as the notice of March 2021 remains unanswered by him. Considering this fact, I find that the petitioner should pay the interest from 01.04.2021 to 31.07.2022 and is entitled to get a refund for the remaining period of interest paid by the petitioner. 5.2 In view thereof, the present writ petition is disposed of with a direction to the 1[st] respondent to refund the interest portion to the petitioner after adjusting interest for the period from 01.04.2021 to 31.07.2022. Such a refund of interest should be effected within a period of three weeks from today. The petitioner should not be saddled with any penalty or late fee in respect of the payment of Kerala Flood Cess for this period on the wrong head along with its GSTR-3B. **W.P.(C) No.21570/2022** **-10-** The present writ petition is disposed of. Sd/DINESH KUMAR SINGH JUDGE jjj **W.P.(C) No.21570/2022** **-11-** ## APPENDIX OF WP(C) 21570/2022 PETITIONER EXHIBITS - Exhibit P1 A TRUE COPY OF THE NOTICE DATED 02.06.2022. Exhibit P2 A TRUE COPY OF THE FILINGS DONE IN THE GSTR-3B FORM FOR THE PERIOD FROM AUGUST 2019 TO JULY 2021. - Exhibit P3 A TRUE COPY OF THE LETTER SENT BY PETITIONER TO 1ST RESPONDENT DATED 06.06.2022. - Exhibit P4 A TRUE COPY OF EMAIL COMMUNICATION SENT BY PETITIONER TO 1ST RESPONDENT DATED 07.06.2022. - Exhibit P5 A TRUE COPY OF THE NOTICE DATED 16.06.2022. - Exhibit P6 A COPY OF THE SCREENSHOTS OF PAYMENT ATTEMPT MADE BY THE PETITIONER IN THE KERALA FLOOD CESS PORTAL. - Exhibit P7 A TRUE COPY OF THE JUDGMENT IN SAJI S.V COMMISSIONER OF SGST, THIRUVANANTHAPURAM. - Exhibit P8 A TRUE COPY OF THE CIRCULARS/ INSTRUCTIONS NO. 01/2021 DATED 17.03.2021. - Exhibit P9 A TRUE COPY OF THE FORM KFC-A PREPARED MANUALLY FOR THE ENTIRE PERIOD FROM AUGUST 2019 TO JULY 2021. Exhibit P10 A TRUE COPY OF THE MONTHLY RETURNS FILED UNDER FORM NO. KFC-A ALONG WITH PAYMENT SLIPS