2022 (4) TMI 190 - HC - GST

Levy of interest u/s 50 (1) of the CGST Act - no notice for the demand of interest served - violation of principles of natural justice - HELD THAT - It is directed that respondents shall not take any coercive steps against petitioner pursuant to the impugned letter dated 25.03.2022 (Annexure P-7) till the next date of hearing. List the matter immediately after three weeks.

Summary

Issues:
- Interpretation of provisions under the Central Goods and Service Tax Act, 2017 regarding recovery of interest.
- Validity of the letter issued by the Deputy Commissioner demanding the deposit of balance interest.
- Compliance with principles of natural justice in issuing the impugned letter.
- Request for interim protection to stay the operation of the letter.
- Assurance from respondent not to take coercive steps pending the application for interim relief.

Analysis:
The judgment dealt with the issue of the legality of a letter issued by the Deputy Commissioner demanding the petitioner to deposit balance interest under the Central Goods and Service Tax Act, 2017. The petitioner contended that the recovery under the Act can only be made after determining the liability, which necessitates a show-cause notice as per Sections 73 or 74 of the CGST Act. The petitioner argued that the absence of such notice rendered the impugned letter unsustainable. Citing judgments from other High Courts, the petitioner emphasized the requirement for due process in determining liability.

The respondent, on the other hand, argued that a previous letter had been sent to the petitioner demanding interest, which was duly responded to, indicating prior communication on the matter. However, the respondent agreed to grant three weeks for a detailed reply to the writ petition and the application for interim relief. The petitioner sought interim protection to stay the effect of the impugned letter, citing its violation of legal provisions and principles of natural justice.

Considering the submissions from both parties, the Court directed that no coercive steps should be taken against the petitioner based on the impugned letter until the next hearing. This interim relief was granted to ensure fairness and prevent any immediate adverse actions against the petitioner. The Court scheduled the matter for the next hearing after three weeks, allowing time for further arguments and submissions from the parties involved.