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2020 (11) TMI 710 - HC - GSTLevy of interest - belated filing of GST returns - Section 50 of the CGST Act - HELD THAT - On perusal of the reply dated 21.2.2020 to the notice dated 7.2.2020, it is suffice to direct respondent No.1 to consider the reply and all the relevant facts as narrated therein, affording opportunity of hearing to the petitioner. In case, the 1 st respondent is of the opinion that compliance has not been made by the petitioner properly, appropriate reasoned order may be passed affording opportunity to the petitioner, within a period of one month from the date of communication of this order. Till then, adverse order, if any passed against the petitioner, shall not be given effect to. Petition disposed off.
Issues:
1. Retrospective application of proviso to Section 50 of the Central Goods and Services Tax Act, 2017. 2. Legality of summary levy and demand of interest under Section 50 of the CGST Act. 3. Constitutionality of Section 50(1) of the CGST Act regarding the levy of interest on gross tax liability without reducing input tax credit. Analysis: Issue 1: Retrospective application of proviso to Section 50 of the CGST Act The petitioner sought a Writ of Mandamus to declare that the proviso to Section 50 of the CGST Act, inserted by the Finance Act, 2019, applies retrospectively from 01.07.2017. The petitioner challenged a demand notice for interest under the pre-amended Section 50 for the months July and August 2017. The High Court directed the respondent to consider the petitioner's reply to the notice and all relevant facts, providing an opportunity for a hearing. The court emphasized that any adverse order should not be given effect until a reasoned order is passed, affording the petitioner an opportunity to respond within one month. Issue 2: Legality of summary levy and demand of interest under Section 50 of the CGST Act The petitioner contended that the delayed submission of GST returns was due to a technical fault of the department, not the petitioner's inaction. The petitioner argued that demanding interest in such circumstances, especially when the amount was already deposited in the Electronic Cash Ledger, was improper. The High Court directed the respondent to review the petitioner's reply and relevant facts, providing an opportunity for a hearing before passing any adverse order. Issue 3: Constitutionality of Section 50(1) of the CGST Act The petitioner alternatively challenged Section 50(1) of the CGST Act, alleging that it levies interest on gross tax liability without reducing input tax credit, which was deemed illegal, confiscatory, and against the principles of interest levy. The court did not provide a specific ruling on this alternative challenge in the judgment, as the primary relief sought regarding the retrospective application of the proviso to Section 50 was addressed. In conclusion, the High Court disposed of the Writ Petition, directing the respondent to consider the petitioner's reply and relevant facts before taking any adverse action. No costs were awarded, and all pending miscellaneous applications were closed as a result of the judgment.
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