Interest not to be levied when delay in remitting tax is caused due to technical issues on GST Portal

[CA Bimal Jain]

The Hon’ble Kerala High Court in the case of M/S. HILTON GARDEN INN, UNIT OF MPG HOTELS AND INFRASTRUCTURE VENTURES PVT. LTD., VERSUS THE COMMISSIONER OF KERALA GOODS AND SERVICE TAX THIRUVANANTHAPURAM, SUPERINTENDENT, CENTRAL GST AND CENTRAL EXCISE, THIRUVANANTHAPURAM - 2023 (12) TMI 69 - KERALA HIGH COURT allowed the writ petition thereby holding that, it is highly inequitable to impose interest when no default has been made by the Assessee in remitting the tax as the tax could not have been remitted without valid GSTIN.

Facts:

M/s. Hilton Garden Inn (“the Petitioner”) became a registered dealer under the provisions of Central Goods and Services Tax Act, 2017 (“the CGST Act”) w.e.f. July 1, 2017. The Petitioner had several business verticals for which the Petitioner filed separate GST registration which were granted to the Petitioner on different dates. However, the same GSTIN was issued to the Petitioner and Muthoot Skychef (“the Company”). The Company filed for another GST registration and was allotted a new GST registration.  The Petitioner thereafter, remitted the GST amount to the Revenue Department (“the Respondent”), however, the said amount due to a technical problem in GST network did not reflect in the cash ledger appearing in the return module, and thus the Petitioner could not complete the e-filing of the return GSTR-3B. The Petitioner also sent the mail to help desk from which response was received stating that the amount remitted would be reflected in the Cash Ledger. Later, the Petitioner GST registration was canceled.

The Petitioner, in response to the cancellation of GST registration filed an application before the Respondent to reactivate the GSTIN of the Petitioner. The Respondent, directed the Petitioner to approach tax authorities to address the grievances, and the Respondent authorities would assist the Petitioner in resolving the issues raised.

The Petitioner could not file the return for the month of July 2017, therefore Petitioner approached the Hon’ble Kerala High Court passed an interim order directing the Respondent to restore the Petitioner's registration or provide alternative GST Registration. 

After passing of interim order, the Petitioner filed the return with delay. No penalty was imposed on the Petitioner for delay in filing return, however, interest was levied for remitting the tax with delay after filing return vide order dated June 12, 2023 (“the Impugned Order”)

Aggrieved, the Petitioner filed a writ petition contending that the demand of interest for alleged delay in remitting the tax for the period of July, 2017 to March, 2018 is wholly unjustified and liable to be set aside.

Issue:

Whether Interest is to be levied when delay is caused due to technical issues on GST Portal?

Held:

The Hon’ble Kerala High Court in the case of M/S. HILTON GARDEN INN, UNIT OF MPG HOTELS AND INFRASTRUCTURE VENTURES PVT. LTD., VERSUS THE COMMISSIONER OF KERALA GOODS AND SERVICE TAX THIRUVANANTHAPURAM, SUPERINTENDENT, CENTRAL GST AND CENTRAL EXCISE, THIRUVANANTHAPURAM - 2023 (12) TMI 69 - KERALA HIGH COURT held as under:

• Opined that, the Petitioner could not pay the tax or file the return without valid GSTIN, therefore, it is highly inequitable to impose interest when no default has been made in remitting the tax as the tax could not have been remitted without valid GSTIN.
• Held that, the Impugned Order is set aside and liberty was granted to impose penalty for delay in payment of GST after 20^th day from December 26, 2017, i.e. from the date the access of portal was granted to Petitioner, for the period upto December 2017. Thereafter for subsequent months, the Petitioner is liable to pay interest for any delay.

(Author can be reached at [email protected])