2021 (2) TMI 619 - HC - GST

Levy of interest on delayed payment of tax - Section 50 of the CGST Act - petitioner has contended that without any adjudication process under Section 73 or 74 of the CGST Act, such liability has been imposed - HELD THAT - The issue herein relating to levy of interest on delayed payment of tax on gross tax liability has been taken care of by the CBIC and respondent authorities have been instructed to impose the same on net tax liability. Therefore, there is no purpose in keeping the writ petition pending. However, liberty is reserved with the petitioner to approach the Court in case respondents chose to realize the interest on the gross tax liability for the subject period. Petition disposed off.

Summary

Issues: Interest liability on gross tax liability without adjudication under Sections 73 or 74 of the CGST Act.

The judgment concerns the challenge to an interest liability of ?4,81,664 imposed on the petitioner for delayed GST payment without a proper adjudication process under Sections 73 or 74 of the CGST Act. The petitioner argued that the interest was calculated based on the entire tax liability instead of the net tax liability, leading to an unjust imposition. The petitioner highlighted a previous order and analogous cases where the issue of interest on gross tax liability was raised. Reference was made to a circular by the Central Board of Indirect Taxes and Customs (CBIC) instructing the recovery of interest only on the net cash tax liability, not the gross tax liability. The State Tax Authorities had also decided to levy interest on net tax liability post the CBIC circular. The petitioner requested a similar disposal of the current petition in line with the previous cases and the CBIC circular.

The respondent from the Central Goods and Services Tax (CGST) department acknowledged the CBIC circular and confirmed that interest for delayed payment is now being levied on the net tax liability, aligning with the petitioner's arguments. Considering the submissions from both parties, the Court observed that the issue of interest on gross tax liability had been addressed by the CBIC, directing authorities to impose interest on net tax liability. Consequently, the Court disposed of the writ petition, allowing the petitioner the liberty to approach the Court if the respondents attempted to realize interest on the gross tax liability for the relevant period. The judgment thus concluded by disposing of the petition accordingly, based on the current practice of levying interest on net tax liability as per the CBIC circular and respondent authorities' instructions.