2022 (8) TMI 368 - HC - GST

Gross GST liability before adjusting input tax credit available in the credit ledger - Section 50 of the Central Goods and Services Tax Act, 2017 - HELD THAT - This Court is inclined to allow this writ petition by setting aside the Demand Information Notice DIN-20200262WJ00005DF3DE in Communication bearing C.No. GST/01/INTEREST/BBSRIX/2020/64, dated 18th February, 2020 (Annexure-3) and remand the matter to the Superintendent, GST Central Excise, Bhubaneswar-IX Range for reconsideration of the matter taking into consideration the amendment carried out by virtue of the Finance Act, 2021. The writ petition disposed off.

Summary

Issues:
Challenge to jurisdiction of Assessing Authority in levying interest under Section 50 of CGST Act on gross GST liability before adjusting input tax credit.

Analysis:
The petitioner challenged the jurisdiction of the Assessing Authority in levying interest under Section 50 of the Central Goods and Services Tax Act, 2017 (CGST Act) on the gross GST liability before adjusting input tax credit available in the credit ledger. The petitioner approached the High Court seeking various reliefs through a writ petition invoking extraordinary jurisdiction under Article 226/227 of the Constitution of India. The petitioner contended that it had filed statutory returns for specific periods, calculating and paying interest on its own by adjusting the input tax credit available in its credit ledger. Despite this, the Assessing Authority issued a Demand Information Notice calling for payment of interest for certain tax periods. The petitioner argued that the proviso to Section 50(1) of the CGST Act, inserted with effect from 01.08.2019, clarified that interest should be levied only on the portion of tax paid by debiting the electronic cash ledger. The petitioner also highlighted the substitution of the said proviso by the Finance Act, 2021, with retrospective effect from 01.07.2017, removing ambiguity in the provision.

The petitioner's counsel referred to a previous judgment of the High Court where a similar issue was considered. In that case, the court observed that the levy of interest, as per the impugned order, had been rendered unsustainable in law due to the amendment brought about by the Finance Act, 2021. The court set aside the demand notice and remanded the matter for fresh consideration in light of the amendment. The Senior Standing Counsel for Central GST did not object to this position. Considering the conceded position and the legal developments, the High Court allowed the writ petition, setting aside the Demand Information Notice dated 18th February, 2020, and remanding the matter to the Assessing Authority for reconsideration in accordance with the amendment introduced by the Finance Act, 2021. The High Court disposed of the writ petition accordingly, directing the issuance of an urgent certified copy as per rules.