2019 (8) TMI 857 - HC - GST

Demand of Interest - Section 50 of the CGST Act - alleged delay in filing returns under CGST Act - objections of the Assessee not decided - principles of natural justice - HELD THAT - Even though only a direction has been given by the learned Single Judge to consider the objections of the Assessee dated 10.5.2019 and 29.3.2019 and pass orders in accordance with law, once the admitted interest liability is paid by the Bank, the Assessing Authority, without deciding the objections of the Assessee and re-computing the interest liability, has unnecessarily filed the present intra-court Appeals. The Assessing Authority was bound to decide the aforesaid objections of the Assessee, to determine the correct liability of interest to be paid by the Assessee and without doing so, the garnishee proceedings could not have been initiated - appeal dismissed - decided against Revenue. Interest on delayed payment of tax - Section 50 of CGST Act - Assessee had filed the Returns belatedly as they could not make the payment of GST on time - HELD THAT - Section 50 speaks about the liability to pay interest on one contingency viz., to pay tax or any part thereof within the prescribed period, whereas in the present case, it is admitted by the Assessee in his reply dated 10.5.2019 that he has not paid tax, despite which the learned Single Judge has given the directions in the order impugned before us. When once admission is made that Returns have not been filed in time, the interest for the delay in filing the Returns automatically arises and there cannot be any explanation for the same - the appellant has raised an arguable point which requires deeper consideration of the scope of Section 50 of the Central Goods and Services Tax Act, 2017 and consequently, the summary dismissal of the Writ Appeal at the admission stage itself by my learned Brother and the view taken by the learned Single Judge require to be revisited. The matter is, therefore, referred to the Hon'ble the Chief Justice under Clause 36 of the Letters Patent, on the issue as to whether under Section 50 of the CGST Act, the interest on delayed filing of the Returns arises automatically or on assessment and after considering the explanation offered by the Assessee and whether at all that explanation has to be considered by the Assessing Officer and then pass further orders.

Summary

Issues:
1. Interpretation of Section 50 of the CGST Act regarding interest on delayed payment of tax.
2. Validity of garnishee proceedings initiated by the Assessing Authority.
3. Jurisdiction of the court to set aside garnishee directions and direct payment by the Bank.
4. Assessment of interest liability based on objections raised by the Assessee.
5. Applicability of interest liability without assessment in case of delayed filing of returns.

Analysis:
1. The High Court addressed the interpretation of Section 50 of the CGST Act, emphasizing that an Assessee failing to pay tax within the prescribed period is liable to pay interest, even without assessment. The court held that the liability to pay interest arises automatically upon delayed payment, as admitted by the Assessee, as per the provisions of the Act.

2. The court examined the validity of garnishee proceedings initiated by the Assessing Authority against the Bank. It was noted that the Assessing Authority failed to decide the Assessee's objections regarding interest liability before initiating the proceedings. The court upheld the decision of the Single Judge to set aside the garnishee directions until the correct interest liability was determined.

3. The court discussed the jurisdiction to set aside garnishee directions and direct payment by the Bank. The judgment directed the Bank to pay the admitted interest liability directly to the Assistant Commissioner of GST and Central Excise. The court emphasized the importance of proper assessment before initiating such actions.

4. The court analyzed the assessment of interest liability based on objections raised by the Assessee. It was highlighted that the Assessing Authority must address the Assessee's objections and re-calculate the interest liability accordingly. Failure to do so would render the garnishee proceedings invalid.

5. The court further deliberated on the applicability of interest liability without assessment in cases of delayed filing of returns. Referring to a previous judgment, the court affirmed that the liability to pay interest arises automatically upon delayed filing, and the Assessee cannot escape this obligation. The court emphasized the need for a detailed consideration of Section 50 of the CGST Act in such cases.

In conclusion, the High Court dismissed the Revenue's appeals, emphasizing the importance of proper assessment and determination of interest liability before initiating enforcement actions. The court highlighted the automatic nature of interest liability in cases of delayed payment or filing, underscoring the Assessee's obligation to pay interest as per the provisions of the CGST Act.