2021 (9) TMI 719 - HC - GST

Challenge to vires of several sections of the GST Act including Section 50 and order demanding interest under Section 50 for the period July, 2017 to March, 2018 - validity of garnishee notice under Section 79 - validity of recovery notice - HELD THAT - Interest under Section 50 is payable only on that portion of the tax which is paid by debiting the electronic cash ledger. It is the case of the petitioner that interest of ₹ 1,22,283/- only is payable by it under Section 50 and the rest of the demand is in respect of tax paid by debiting the electronic credit ledger - This interest amount of ₹ 1,22,283/- is mentioned in the petitioner s supplementary affidavit dated September 24, 2019 and has not been disputed in the affidavit in opposition dated December 17, 2019. In view of the retrospective amendment of Section 50 with effect from July 1, 2017 the impugned order dated May 14, 2019 is not sustainable in law and is set aside. Consequentially, the garnishee notice dated May 27, 2019 is also set aside. The respondent no.1 will recalculate the demand in accordance with law and after taking into consideration the aforesaid amendment of Section 50 of GST Act within a period of 4 weeks and the refund the excess amount collected. Respondent shall also consider the claim of the petitioner for interest on excess amount collected in accordance with law - Petition disposed off.

Summary

Issues:
Challenge to vires of sections of GST Act including Section 50, demand of interest, garnishee notice under Section 79, retrospective amendment of Section 50, calculation of interest, refund of excess amount collected.

Analysis:
The petitioner challenged the vires of several sections of the GST Act, including Section 50, and an order demanding interest under Section 50 for a specific period. The petitioner also contested a garnishee notice issued to HDFC Bank for recovery under the said notice. During the pendency of the writ petition, Section 50(1) of the GST Act was amended by the Finance Act, 2021, which clarified that interest is payable only on the tax paid by debiting the electronic cash ledger. The petitioner argued that only a specific amount was payable under Section 50, as mentioned in their supplementary affidavit, and this amount was not disputed in the opposing affidavit.

The court noted the retrospective amendment of Section 50 and held that the impugned order demanding interest was not sustainable in law. Consequently, the garnishee notice was set aside. The court directed the respondent to recalculate the demand in accordance with the law, considering the amendment to Section 50, and refund any excess amount collected. The respondent was also instructed to evaluate the petitioner's claim for interest on the excess amount collected.

As a result, the writ petition challenging the demand and related notices was disposed of. Additionally, various applications related to the case were also disposed of by the court.