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GST – Meaning of term “preceding financial year” appearing in Section 10(1) of the CGST Act - whether provisions of GST Act is retrospective in operation and the word ‘preceding financial year’ includes the turnover declared during the VAT regime - Petitioner opted for payment of tax under Composition Scheme under Section 10(1) of CGST Act - Department accepted the taxes paid/returns filed, till the date of issuance of SCN – Rejection of petitioner claim of payment of tax under the composition scheme on the ground that the turnover of petitioner for the “previous year” under the VAT regime was above the threshold limit - Demand of 28% GST from the date of initial registration in terms of Section 74 and Section 10(5) of the CGST Act – Petitioner contention that the word “preceding financial year” has no relevance for the taxes paid for the financial year 2017-2018 – HELD – It may be true that the petitioner had paid GST under a composite scheme as per the option exercised in the web portal, for nearly four quarters, but, the option exercised by the petitioner was self-declaratory, which requires verification. Therefore, the argument of the Revenue that it took some time for the authorities to examine the options exercised by all the taxpayers in the State cannot be brushed aside - Merely because the petitioner has exercised an option and that it took time for the authorities to verify the genuinity or otherwise of the option exercised, cannot estop the respondents from directing the petitioner to pay tax as regulated under the provisions of the GST Act, if the option exercised was found to be incorrect - the argument that the turnover in the financial year starting from 1.7.2017 has only to be taken into consideration ignoring the previous turn over in the VAT regime, is incorrect - when the legislature at more than one place used the word ‘preceding financial year’, it would only mean that as on 1.7.2017, the turnover of the previous year under the VAT regime has to be reckoned with for the purpose of extending benefit under GST regime, provided the self-declarations made are correct - Section 10(1) of the Act would not carry any meaning if such an interpretation, as sought by the petitioner, is given, namely, the turn over in the VAT regime has to be excluded while computing the tax liability - no illegality in taking into consideration the previous year’s turn over under VAT regime for the purpose of extending benefits under the composite scheme or for collecting taxes and penalty - the writ petition is dismissed - The dispute in so far as interpretation of the word ‘previous financial year’ arose only for the financial year 2017-2018, as the GST regime commenced from 1.7.2017. If the intention of the legislature was that the turn over of the financial year under GST regime is only to be taken into consideration, then there would have been a clarification of the word ‘preceding financial year’. Section 10(1) of the Act would not carry any meaning if such an interpretation, as sought by the petitioner, is given, namely, the turn over in the VAT regime has to be excluded while computing the tax liability. If such a narrow interpretation to Section 10(1) is given, as observed earlier, many of the businessmen would not only escape payment of GST for the year 2017-2018, though the self-declaration made is incorrect or false, but also end up paying minimum GST though their turn over is on a higher side. It is to be noted here that word ‘preceding financial year’ is appearing at more than one place in Section 10 itself, hence, it cannot be said that there was any error in usage of the word “preceding” in Section 10. The legislature was conscious enough, when the word ‘preceding’ was used before the word ‘financial year’ in Section 10(1) and also in the second proviso to Section 10(1)(c), while extending benefits under a scheme. The legislature in its wisdom observed that such a benefit can be extended to those whose turn over in the previous financial year does not exceed Rs.50 lakhs. Therefore, the word ‘preceding’ appearing before the word ‘financial year’ cannot be ignored and if done, would doing mockery of the words ‘financial year does not exceed Rs.50 lakhs’. Therefore, to fix a parameter for extending the benefits under the scheme and for payment of less tax in case of manufacturers and for those engaged in making supplies, the legislature thought it fit to take into account the turn over of the previous financial year. In so far as the financial year 2017-2018 under GST regime is concerned, the preceding financial year would be 2016-2017 under the VAT regime. The collection of tax under the GST Act, 2017 is not in addition to the provisions of VAT, but, this is being introduced as a substitute to VAT Act to deal with both goods and services, so as to maintain uniformity across the length and breadth of the country. This has been introduced to meet the requirements under the recommendations of the GST council, in which all the States and Union territories are the stakeholders
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