2021 (7) TMI 600 - HC - GST

Levy of interest under Section 50 of the Central Goods and Services Tax Act, 2017 - interest on cash remittances - interest on remittances by way of adjustment of electronic credit register - HELD THAT - In this case, the provisions of Section 42 are not relevant, insofar as the impugned order itself records that the assessee has, on receipt of intimation of the wrongful claim of input tax credit (ITC), accepted the error in claim and has reversed ITC, both attributable to CGST and SGST through voluntary payment of tax in Form GST DRC-03 - The provisions of Section 42 can only be invoked in a situation where the mismatch is on account of the error in the database of the revenue or a mistake that has been occasioned at the end of the revenue. In a case where the claim of ITC by an assessee is erroneous, as in this case, then the question of Section 42 does not arise at all, since it is not the case of mismatch, one of wrongful claim of ITC. Levy of interest on belated cash remittance - HELD THAT - It is compensatory and mandatory and the levy is upheld to this extent. Petition disposed off.

Summary

Issues: Challenge to order levying interest under Section 50 of the Central Goods and Services Tax Act, 2017.

Analysis:
1. The judgment involved a challenge to an order dated 27.01.2021 that levied interest under Section 50 of the Central Goods and Services Tax Act, 2017, concerning interest on cash remittances and remittances by way of adjustment of electronic credit register.

2. The court noted that the levy of interest on remittances by way of adjustment of electronic credit register was covered by a previous decision in the case of Maansarovar Motors Private Limited v. The Assistant Commissioner, Poonamallee Division, Chennai. Both counsels agreed that this levy should be set aside based on the earlier decision, and the court accordingly set it aside.

3. Regarding the levy of interest on cash remittance, the petitioner relied on Section 42 of the Act, which deals with issuing notices in case of mismatch of particulars. However, the court found that in this case, the assessee had acknowledged the error in claiming input tax credit and had voluntarily reversed it through payment of tax, rendering Section 42 irrelevant.

4. The court clarified that Section 42 is applicable when there is a mismatch due to errors in the revenue database or mistakes by the revenue, not in cases of wrongful claims by the assessee. Therefore, in situations like the present case where the claim of input tax credit was erroneous, Section 42 does not come into play.

5. The court upheld the levy of interest on belated cash remittance, deeming it compensatory and mandatory. Consequently, the impugned order was modified to set aside the levy on remittances by way of adjustment of electronic credit register but uphold the levy on belated cash remittance. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.