2022 (1) TMI 951 - HC - GST

Interpretation of Statute - Section 50 of The Central Goods and Services Tax Act, 2017 - Levy of interest - to be levied on gross returned income or on net cash amount? - HELD THAT - In view of the amendment carried out, the proviso to Section 50 was substituted by Finance Act, 2021 with retrospective effect from 01.07.2017, the grievance of the petitioners has been redressed. However, the details of interest to be paid by the petitioners are required to be worked out by the concerned authorities as per the amended provision. In that view of the matter and having regard to the amendments carried out by the Finance Act, 2021, all the writ petitions are allowed - Decided in favor of petitioner.

Summary

Issues:
Interpretation of Section 50 of the Central Goods and Services Tax Act, 2017 regarding interest on delayed payment of tax.

Analysis:
The High Court of Telangana, comprising Honourable Sri Justice Ujjal Bhuyan and Honourable Smt. Justice P. Madhavi Devi, delivered a common order to dispose of a batch of writ petitions. The primary grievance raised by the petitioners in these writ petitions pertained to the levy of interest on the gross returned income rather than on the net cash amount. The central controversy revolved around the interpretation of Section 50 of the Central Goods and Services Tax Act, 2017 (referred to as the "CGST Act"). Section 50 of the CGST Act deals with interest on delayed payment of tax. The court noted that the proviso to Section 50 was substituted by the Finance Act, 2021 with retrospective effect from 01.07.2017. Prior to the substitution, the proviso outlined the calculation of interest on tax payable in respect of supplies made during a tax period. Post-substitution, the proviso now specifies that interest shall be payable on the portion of tax debited from the electronic cash ledger.

The court acknowledged that the amendment to the proviso addressed the grievance raised by the petitioners. However, the precise calculation of interest to be paid by the petitioners needed to be determined by the relevant authorities in accordance with the amended provision. Consequently, the court allowed all the writ petitions and directed the respondents to issue notices and hear the petitioners before quantifying the interest to be paid based on the amended provision of Section 50 of the CGST Act. The court made no order regarding costs and directed that pending miscellaneous applications, if any, shall stand closed.