2021 (1) TMI 703 - HC - GST

Liability of Interest on delayed payment of GST on credit balance of ITC - Scope of Amendment - The present proceedings taking on record the averments made by the deponent part of which are reproduced as under That post issuance of Notification-no-63/2020 dated 25th August 2020 by the central government a press release was issued by Ministry of Finance Govt of India on 26.08.2020 wherein it was clarified that amendment in section 50(1) has been made effective prospectively w.e.f. 01.09-2020 due to certain technical limitations however for present no recoveries for interest charged on gross liability will be recovered for the past period as well by the central and state tax administration. That in the light of aforesaid submissions it is stated that no recovery will be made for interest charged on delayed payment of tax which has been made by the taxpayer debiting the credit ledger. That however in terms of amended section - 50 (1) it is prayed before the Hon ble court that the taxpayer may be directed to pay the interest on delayed payment of tax which has been made by debiting the cash ledger that is on net liability. Petition disposed off

Summary

Issues:
Challenge to order under Bihar Goods and Services Tax Act 2017, Jurisdictional fact for passing order, Liability of interest under section 50 of the act, Recovery of interest on delayed payment of tax, Circular issued by CBIC.

Analysis:
The petitioners sought relief for quashing an order passed by the assessing authority under the Bihar Goods and Services Tax Act 2017. They argued that the order and consequential demand notice were without jurisdiction and unsustainable in the eye of the law due to the absence of necessary jurisdictional facts. They also relied on a judgment of the Madras High Court to support their case that interest under section 50 of the act is attracted only when tax liability is discharged from the cash ledger. The petitioners contended that no interest liability should arise when the credit balance in the electronic credit ledger is sufficient to meet the tax liabilities admitted in the returns. Furthermore, they claimed that if tax liabilities were already paid in accordance with the act, no interest liability should be attracted. The State, in response, clarified that no recoveries for interest charged on gross liability would be made for past periods due to technical limitations. The State also indicated that interest on delayed payment of tax made by debiting the cash ledger, i.e., on net liability, would be required as per the amended section 50(1). The circular issued by CBIC reiterated the prospective nature of the amendment and assured no recoveries for past periods, aligning with the decision of the GST Council. Consequently, the petition was disposed of based on these submissions.