Page 222 - GSTL_2nd July 2020 _Vol 38_Part 1

140 GST LAW TIMES [ Vol. 38
Commercial Taxes and, with their consent, the Writ Petition is dis-
posed of at the stage of admission.
The proceedings under challenge in this Writ Petition is the order
passed by the second respondent on 20-8-2018, for the tax period
March, 2018, directing the petitioner to pay tax and penal interest
without issuing an assessment order under Section 61 of the An-
dhra Pradesh Goods and Services Tax Act, 2017 (“the APGST Act”
for brevity), and without issuing a show cause notice, as illegal, ar-
bitrary and without jurisdiction. By the order, impugned in the Writ
Petition, dated 20-8-2018 the Assistant Commissioner directed
payment of penalty at 15% along with interest under Section 50
read with Section 79(5) of the APGST Act and Rule 143 of the
APGST Rules, failing which recovery proceedings would be initiat-
ed under Section 79 of the said Act.
While fairly admitting that the petitioner is liable to pay tax and pe-
nal interest, Sri P. Balaji Varma, Learned Counsel for the petitioner,
would, however, question the validity of the assessment order in so
far as the petitioner was called upon to pay penalty at 15%, con-
tending that any proceedings for recovery of penalty must be pre-
ceded by a show cause notice which, admittedly, was not issued in
the present case.
Section 74(5) of the APGST Act stipulates that a person, chargeable
with tax, may, before service of notice under sub-section (1), pay the
amount of tax along with interest payable under Section 50 and a
penalty equivalent to 15% of such tax on the basis of his own ascer-
tainment of such tax or the tax as ascertained by the proper officer,
and inform the proper officer in writing of such payment. Section
74(1) of the APGST Act stipulates that, where it appears to the
proper officer that any tax has not been paid or short paid or erro-
neously refunded or where input tax credit has been wrongly
availed or utilised by reason of fraud, or any wilful-misstatement or
suppression of facts to evade tax, he shall serve notice on the person
chargeable with tax which has not been so paid or which has been
short paid or to whom refund has erroneously been made, or who
has wrongly availed or utilised input tax credit requiring him to
show cause as to why he should not pay the amount specified in the
notice along with interest payable thereon under Section 50, and a
penalty equivalent to the tax specified in the notice.
While a show cause notice is required to be issued under Section
74(1) of the APGST Act for recovery of penalty equivalent to the tax
specified in the notice, Section 74(5) of the said Act enables the
dealer to pay 15% penalty on his own accord before receipt of a no-
tice under Section 74(1) of the Act. Section 74(5) of the APGST Act
enables the dealer to avoid payment of penalty beyond 15%, if pen-
alty at 15% is paid before receipt of a show cause notice. That does
not mean that, even without a show cause notice being issued, the
dealer is obligated to pay penalty at 15% under Section 74(5) of the
Act. Section 74(5) of the Act merely enables the petitioner to pay
penalty at 15% on his own accord, in which event the assessing au-
thority cannot thereafter issue a notice seeking recovery of the bal-
ance 85% penalty (i.e. penalty equivalent to the tax specified in the
notice). Whether penalty at 15% should be paid or not is for the as-
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