It allows the bank to seek alternate remedy from appellate forum concerned.
A division bench of the Andhra Pradesh (AP) High Court comprising Justices U. Durga Prasad Rao and B. Krishna Mohan refused to entertain a Writ Petition (WP) filed by the State Bank of India (SBI) against an obligation to pay ₹ 215.11 crore towards under-declared GST to the Government of AP on an exempted turnover and directed it to seek an alternate remedy from the appellate forum concerned.
The SBI had filed the WP challenging an order of assessment issued by the Deputy Commissioner of State Tax (Audit, No.1 Division, Vijayawada), wherein the bank was held liable to pay GST to the tune of ₹ 215,10,75,375.
The bank had primarily contended that it was not liable to pay any tax since it was not rendering any service while levying penal interest on defaulters.
The Commercial Taxes Department (CTD) had on the other hand relied on the agreements it entered into with various borrowers and determined that the levy of penal interest was actually an act of forbearance and a service for which the bank was charging amounts and hence was liable to pay GST.
Y.N. Vivekananda, government pleader for commercial taxes, argued that SBI is liable to pay the State tax but it could file an appeal by paying 10% of the tax assessed.
Further, the CTD said it found many discrepancies in claiming of Input Tax Credit (ITC) through the relevant GSTR forms and monthly returns. Among other things, the bank might have claimed ITC on certain items that fall under the negative list. The CTD told the court that it could not scrutinize such things as the bank did not provide invoices and other records for verification.
