2021 (2) TMI 561 - HC - GST

Interest on delayed payment of GST - Section 75(12) read with Section 50(2) of the the Bihar Goods and Services Tax Act, 2017 - HELD THAT - We close the present proceedings taking on record the averments made by the deponent holding 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, 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 interest payable on net liability. Additionally, our attention is invited to the circular issued by the Central Board of Indirect Taxes Customs (CBIC), which reads as Interest on delayed payment of GST CBIC Posted on 26th August 2020 5 34 PM by PIB Delhi Central Board of Indirect Taxes Customs (CBIC) today clarified that the Notification No. 63/2020-Central Tax dated 25th August 2020 relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it has assured that no recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council. Petition disposed off.

Summary

Issues:
1. Quashing of order under Bihar Goods and Services Tax Act, 2017.
2. Jurisdictional facts for passing the impugned order.
3. Application of interest under Section 50 of the Act.
4. Liability of interest when credit balance is sufficient to meet tax liabilities.
5. Liability of interest when tax liabilities are paid in accordance with the Act.
6. Clarifications regarding interest on delayed payment of GST.

Analysis:

1. The petitioner sought relief for quashing the order under the Bihar Goods and Services Tax Act, 2017, citing violation of natural justice principles. The court was requested to declare the impugned order and consequential demand notice as without jurisdiction and unsustainable in the eye of the law. The petitioner's case was compared to a judgment of the Madras High Court, emphasizing that interest under Section 50 would apply only if tax liability is discharged from the cash ledger.

2. The court considered the absence of jurisdictional facts necessary for the exercise of power under Section 50 of the Act, highlighting that the assessing authority could not have passed the impugned order without such facts. The petitioner's argument was supported by the contention that the case falls within the ambit of the Madras High Court judgment, indicating that interest would not be attracted if the credit balance in the electronic credit ledger is sufficient to cover admitted tax liabilities.

3. The issue of interest under Section 50 of the Act was a focal point in the judgment. The court referred to a circular from the Central Board of Indirect Taxes & Customs clarifying that interest on delayed payment of GST would be charged prospectively. The court acknowledged the technical limitations regarding the amendment in Section 50(1) and directed that no recoveries would be made for past periods, ensuring full relief to taxpayers as decided by the GST Council.

4. The court addressed the petitioner's concern regarding the liability of interest when the credit balance in the electronic credit ledger is surplus to meet tax liabilities admitted in filed returns. It was emphasized that no interest would be attracted in such a scenario, aligning with the petitioner's argument for relief from interest payment under specific circumstances.

5. Regarding the payment of tax liabilities in accordance with the Act, the court held that if the petitioner had already furnished returns and paid tax liabilities as per Section 39(7) of the Act, no liability of interest would be attracted under Section 75(12) of the Act. This declaration provided further clarity on the petitioner's obligations in terms of interest liability under the Act.

6. The judgment concluded by disposing of the petition based on the clarifications provided by the State in an affidavit, the circular issued by the CBIC, and the understanding that interest on delayed payment of GST would be charged prospectively. The court's decision reflected the considerations of technical limitations and the relief measures outlined by the GST Council, ensuring a fair and just outcome for the petitioner.