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TMI Blog2020 (11) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax was filed. The second proviso thus stood deleted by Finance Act, 2003, with effect from 01.04.2004. However, while considering the effective date of deletion, the Bench noted the reason for such deletion as being curative and intended to remove existing anomalies. The Bench held that an amendment, be it by way of insertion, substitution or deletion, made specifically to remove an anomaly, should normally be effective retrospectively, back to the date when the anomaly first arose. The Board has extended a waiver of recovery for the past period in line with the decisions of the Council (vi) Notification dated 18.09.2020, that cemented the long line of assurances of the GST Council and the Board in letter and spirit. While promising that the amendment in question will be clarified to be retrospective, the Board has indicated certain difficulties in carrying out the stated amendment at this juncture. I would be loath to speculate on the nature of the difficulties expressed and restrict myself to concluding that the sequence of events that I have set out above make it more than amply clear to me that the present writ petitions are liable to be allowed. Learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 6237, 6239, 6241, 6639, 7118, 7270, 7272, 7318, 7321, 7331, 7338, 7356, 7408, 7504, 7505, 7654, 7670, 7671, 7674, 7675, 7753, 7758, 7759, 7802, 7804, 7838, 7840, 7841, 7848, 7944, 647, 5935, 5958, 6862, 6615, 6645, 6646, 6652, 6781, 7017, 7018, 7020, 5802, 5803, 5810, 5915, 5922, 5923, 6028, 6029, 6031, 6783, 6784, 6790, 6791, 7210, 7233, 7661, 7662, 7945, 8208, 8210, 8212, 8213, 8342, 8397, 8399, 8496, 8499, 8588, 7782, 7783, 8420, 8421, 8424, 15527, 15528, 6933, 15405, 15591, 15622, 15629, 15639, 15721, 4047, 4049, 4489, 4491, 6932, 7781, 15393, 15394, 15612, 15616, 15617, 15618, 8610, 15648, 15652, 15669, 15589, 15591, 15596, 15597, 15612, 15618, 15622, 8420, 8421, 8424, 4047, 6932, 6933, 7781, 7782, 7783, 8195, 15394, 15405, 15527, 15528, 15629, 15639, 15640, 15641, 15648, 15652, 15669, 15705 15848 of 2020 and 18404 of 2019 COMMON ORDER This batch of writ petitions revolves around the interpretation of Section 50 of the Central Goods and Services Tax Act, 2017 (in short Act ), particularly the effective date of application of the proviso inserted vide Section 100 of Finance (No.2) Act of 2019. 2. Section 50 of the Act states that every person who is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the satisfaction of the tax computed under that return, belatedly and either by cash or by reversal of ITC. 5. Reliance is placed on a decision of the Telangana High Court in Megha Engineering and Infrastruacture Ltd. Vs. Commissioner of Central Taxes, Hyderabad inW.P.No.44517 of 2018. Since the effective date of Section 100 was not notified when the decision in Refix Industries (supra) was rendered and has been notified now vide Notification No. 63 of 2020 dated 25.08.2020, as being 01.09.2020, the decision in Refix Industries (supra) is said to be of no benefit to the petitioners. Reliance is also placed on a Clarification issued by the Central Board of Excise and Customs bearing No.20/16/07/2020-GST dated 10.02.2020 to the effect that liability to interest would arise on total amount of tax liability as revealed in the GST return. 6. Learned Senior standing counsel for the revenue would, however, acknowledge that the clarificatory Press Release of the CBIC dated 26.08.2020 has protected the interest of the assessees by stating that no recovery of interest shall be made even for the earlier periods. He would also state that though Circular F.No.CEBC/20/1/8/2019-GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount payable through electronic cash ledger. The Amendment Act, specifically Section 100 thereof, inserted a proviso to Section 50 that reiterated the above position. However, the date of notification of Section 50 was not specified and left to be indicated at a future date. 10. I may at this juncture note that the GST Council is chaired by the Hon ble Union Finance Minister and comprises representatives of the Centre, the States, the Council Secretariat, officials of the Goods and Services Tax Network and Members of the Central Board of Indirect Taxes (CBIC)/Board. Thus, the Centre, State and the Board have come to a common and unanimous conclusion which is reflected in the minutes of the meeting. 11. The 39th GST Council meeting held on 21.06.2019 made recommendations to amend Section 50 vide Section 100 of Finance (No.2) Act, 2019 to provide for charging interest on net cash liability and the Council in its meeting on 14.03.2020 recommended charging of interest on net cash tax liability with effect from 01.07.2017 with a retrospective amendment of the Act from the aforesaid date. On 14.03.2020, the Council issued a press release wherein, under the head Measures for trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Centre, the State of Tamil Nadu and the Board to the effect that the proviso to Section 50 is operative effective 01.07.2017, and no interest is liable to be levied on tax remitted by reversal of available ITC. 15. While this is so, the GST authorities have adopted a contradictory stand by issuing orders, styled as notices, levying interest for allegedly belated remittance of tax by reversal of ITC. No opportunity appears to have been granted in most of the matters calling for explanation from the assessees prior to raising of the impugned demands of interest and coercive recovery action by attachment of bank accounts have been resorted to by the respective Assessing Officers. 16.Though cumbersome and adding to the volume of this already long order, I extract my order in the case of Refix Industry Vs. Assistant Commissioner of CGST in full (order dated 06.01.2020 in W.P.No.23360 23361 of 2019), wherein I had had occasion to deal with this very issue for the sake of completion: The petitioners are registered as assessees under the provisions of the Central Goods and Service Tax Act, 2017 (in short 'CGST Act'). The petitioners have admittedly filed Returns of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . December -17 134 268898 17769 6. January 18 181 1353568 1208199 7. February 18 155 12103153 925145 8. March 18 143 7750 547 Total 2362746 2. Demand notices were issued to the Banks (R3) seeking to recover the arrears of interest from the balances in the accounts of the petitioners. 3. The petitioners objected stating that they had sufficient Input Tax Credit (ITC) available with the Department and thus interest could be demanded, if at all, only on the cash component of the tax remitted belatedly. This amounted to a sum of ₹ 1,21,701/- (in W.P.No.23360 of 2019) and ₹ 1,25,751/-(in W.P.No.23361 of 2019) and the amounts have been remitted on 14.06.2019. According to the petitioners, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her interest on belated payment of tax as contemplated under Section 50 of the CGST Act is automatic or whether the same would have to be determined after considering the explanation offered by the assessee. At paragraph 29, the Hon'ble Judge holds that the liability to pay interest under Section 50 is automatic. However, since the petitioner in that case had raised disputes with regard to the period for which the tax had allegedly not been paid, as well as the quantum of tax remaining unpaid in excess of ITC, all being questions of fact, he was of the view that such matters would have to be resolved after hearing the assessee. He categorically states 'therefore in my considered view though the liability fastened on the assessee to pay interest is an automatic liability, quantification of such liability certainly needs an arithmetical exercise after considering the objections if any, raised by the assessee.' The objections raised in that case are thus factual and relate to disputed questions of fact as noted by me in the earlier portion of this paragraph. 9. However, the objection raised by the petitioners before me is not one of fact but one of law. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case such as the present, where credit is due to an assessee, payment by way of adjustment can still be termed 'belated' or 'delayed'. The use of the word 'delayed' connotes a situation of deprival, where the State has been deprived of the funds representing tax component till such time the Return is filed accompanied by the remittance of tax. The availability of ITC runs counter to this, as it connotes the enrichment of the State, to this extent. Thus, Section 50 which is specifically intended to apply to a state of deprival cannot apply in a situation where the State is possessed of sufficient funds to the credit of the assessee. In my considered view, the proper application of Section 50 is one where interest is levied on a belated cash payment but not on ITC available all the while with the Department to the credit of the assessee. The latter being available with the Department is, in my view, neither belated nor delayed. 13. The argument that ITC is liable to be reversed if it is found to have been erroneously claimed, and that it may be invalidated in some situations, does not militate with my conclusion as aforesaid. The availment and utilization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which, credit lying utilized as on a particular date with the manufacturer lapsed, the Bench categorically holding that available credit is as good as tax paid. By ignoring the available credit and providing to levy interest upon that component of tax which the assessee seeks to remit by adjustment of credit, the Department is enriching itself doubly on the one hand, holding in its coffers the available credit and on the other, seeking the payment of interest upon the same sum. 18. The Supreme Court in the context of Section 43B of the Income Tax Act, 1961 (IT Act) held in the case of Allied Motors (P) Ltd. Vs. Commissioner of Income Tax (1997 (3) SCC 472) that the nature and object of a proviso should be taken into account while deciding the question of whether the proviso was prospective or retrospective. Where a proviso was designed to eliminate unintended and prejudicial consequences which would cause hardship to a party, such a proviso should be seen to be remedial and one that mitigated the prejudice caused from inception. 19. This was reiterated in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd. (319 ITR 306) in the context of the second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Amendment Act provided for the deletion to come into effect from 01.04.1988, the Hon ble Supreme Court held that the deletion would operate with effect from 01.04.1984 itself. The ration of this decision is clearly applicable to the case on hand. 23. Moreover, interest, as held by the Supreme Court in the case of Commissioner of Income Tax Vs. Anjum H Ghaswada , (252 ITR 1), is indented to compensate the revenue for loss of capital. In the present case, there is no loss insofar as the revenue is in possession of the credit which is good as cash as held by the Supreme Court in the case of Eicher Motors (supra) and cannot thus be said to be prejudiced in any way. 24. Useful reference may also be made to a decision of a Division Bench of this Court in Commissioner of Central Excise, Puducherry-I Vs. CESTAT, Chennai 2017 (346 E.L.T. 80). The Bench was answering a substantial question of law on the issue of whether interest may be demanded for differential duty not paid in time, since the assessee had sufficient credit in its current account during the relevant period. One of the reasons on which the revenues appeal was dismissed and the assessee s contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The GST Council, in its 39th meeting, held on 14th March, 2020 recommended interest to be charged on the net cash tax liability w.e.f. 01.07.2017 and accordingly, recommended the amendment of section 50 of the CGST Act retrospectively w.e.f. 01.07.2017. The retrospective amendment in the GST laws would be carried out in due course through suitable legislation. 3. Post issuance of notification 63/2020 - Central Tax dated the 25th August, 2020, there were apprehensions raised by taxpayers that the said notification is issued contrary to the Council s recommendation to charge interest on net cash liability w.e.f. 01.07.2017. Consequently, a press release, dated 26.08.2020 was issued to clarify the position. Further, in order to implement the decision of the Council in its true spirit, and at the same time working within the present legal framework, it has been decided to address the issue through administrative arrangements, as under: a. For the period 01.07.2017 to 31.08.2020, field formations in your jurisdiction may be instructed to recover interest only on the net cash tax liability (i.e. that portion of the tax that has been paid by debiting the electronic cash le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29. The Board has, in my view, extended a waiver of recovery for the past period in line with the decisions of the Council (vi) Notification dated 18.09.2020, that cemented the long line of assurances of the GST Council and the Board in letter and spirit. While promising that the amendment in question will be clarified to be retrospective, the Board has indicated certain difficulties in carrying out the stated amendment at this juncture. I would be loath to speculate on the nature of the difficulties expressed and restrict myself to concluding that the sequence of events that I have set out above make it more than amply clear to me that the present writ petitions are liable to be allowed. 30. In W.P.No.12492 of 2020, learned counsel for the petitioner states that the interest liability relating to belated payment of tax both by cash and reversal of ITC has been coercively recovered. In light of my decision as aforesaid, a direction is issued to the appropriate authority to compute the interest liability for belated remittances of cash and refund the balance of the amount collected from the petitioner within a period of four weeks from date of uploading of this order. 31. With ..... X X X X Extracts X X X X X X X X Extracts X X X X
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