Belated payment of GST to levy additional Interest: Madras High Court
Facts and Issue of the case
The point that arises for consideration in the present Writ Petition is whether the petitioner is entitled to stall the recovery of interest payable on delayed payment of tax under Section 50 of CGST Act, 2017. Earlier the petitioner was issued with a notice dated 04.03.2020 bearing reference OC No.97 of 2020, whereby a sum of Rs.6,58,233/- was demanded from the petitioner as interest payable under Section 50(1) of CGST Act, 2017 r/w Notification No.13/2017-Central Tax, dated 28.06.2017. The petitioner was directed to pay the aforesaid amount by 10.03.2020. The petitioner appears to have replied for the same by reply dated 09.03.2020 and thereafter, proceeded to file W.P.No.12667 of 2020 to quash the aforesaid demand notice dated 04.03.2020.
The petitioner’s Writ Petition along with a batch of Writ Petitions came to be disposed by a common order dated 29.09.2020 by a learned Single Judge of this Court. The Writ Petition was disposed by directing the respondents to issue appropriate order to recompute the amount of interest liability for delayed payment of cash and refund the balance of amount. The petitioner has now approached this Court once again and has challenged the impugned communication asking the petitioner to pay a sum of Rs.7,48,190/- being the delayed payment of tax by cash for the period between July 2017 to October 2020.
The learned counsel for the respondent submits that in the light of the stay obtained by the petitioner, the respondents are unable to recover the amount. The learned counsel for the respondent also placed reliance on the order passed by a learned Single Judge in W.P.No.1914 and 17524 of 2021 vide order dated 25.08.2021.
Observation of the court
The point to be considered is whether the recovery under the proposed notice pursuant to the order passed by this Court on an earlier occasion will come within the purview of Section 50 of CGST Act, 2017 r/w 142(A) of CGST Rules, 2017 as inserted vide notification No.60/2018 Central Taxes, dated 30.10.2018 w.e.f., 30.10.2018.
The petitioner appears to have paid the tax for the month of July, 2017 to December 2019 belatedly. Therefore, the petitioner was earlier called upon to pay interest under section 50 of the respective GST Enactments under Notice on 04.03.2020. Proviso to section 50 (1) on the strength of which the present writ petition has been filed was inserted vide Finance Act (No. 2) Act, 2019. It is not relevant to the facts of the present case.
The proviso to Section 50(1) came into force with effect from 1.9.2020 in terms of Notification No. 63/2020-Central Tax Dated 25.08.2020. The Central Board of Indirect Taxes and Customs has also clarified on 26.8.2020 that no recovery of interest shall be made for the past in the light of the decision taken by the GST Council in its 39th meeting on delayed payment of GST.
A reading of the above proviso makes it clear that it is applicable to the cases where returns were filed after the due date under Section 39 of the respective GST enactments. Even there interest levied is to be paid from the electronic cash ledger. This proviso is not applicable to the facts of the case as the case of the petitioner does not fall under the circumstances specified therein .
The Court had earlier considered the issue relating to recovery of interest on account of reversal of input tax credit. The batch was disposed by the Court by its common order along with W.P.No. 12667 of 2020 filed by the Petitioner by oversight as the interest liability of the petitioner was not on account of reversal of ITC. There is also no indication interest liability arose any reversal of input tax credit on the petitioner.
On the other hand, interest has been demanded on the net tax liability of the petitioner on account of belated payment of tax during the aforesaid period under Section 50(1) of the CGST Act, 2017. Since tax was paid by the petitioner belatedly, petitioner is liable to interest during the period default. There was no excuse for not paying the tax in time from its electronic cash register. Nothing precluded the petitioner from discharging the tax liability from its electronic credit.
If there is a belated payment of tax declared in the returns filed, interest has to follow. The petitioner has to pay the interest on the belated payment of tax and as has been demanded. Even where there is a failure to file returns or circumstances specified under Sections 73 and 74 of CGST Act, 2017, in interest has to be paid.
The Court found no merits in the present writ petition. Therefore, the writ petition was dismissed. Consequently, connected miscellaneous petitions are closed.Srinivasa-Stampings-Vs-Superintendent-of-GST-and-Central-Excise-Hosur-Madras-High-Court