2022 (12) TMI 1496 - HC - GST

Taxpayer Wins Challenge Against Interest Levy, Exempted from Payment Under WBGST Act Section 50(3) Interpretation

M/s. LARSEN & TOUBRO LIMITED Versus STATE OF WEST BENGAL & ORS

HC ruled in favor of petitioner challenging interest payment under WBGST Act, 2017. The court determined that since Input Tax Credit was not utilized and ... Interest u/s 50 of the WBGST Act, 2017 - interest levied on the ground that the petitioner has wrongly claimed ITC under the WBGST Act, 2017 and in the same communication it has been recorded that petitioner has made payment voluntarily in DRC 3 for the said amount as per provisions of Section 73(5) of the WBGST Act, 2017 - HELD THAT:- In the present case admittedly it has not been utilized and it has been reversed and as such petitioner is not liable to pay interest in view of the amended provisions of Section 50 sub-section (3) of the said Act substituted by Finance Act, 2022 with retrospective effect from 1st July, 2017. Considering the facts and circumstances of this case and legal position and submission of the parties and particularly taking into consideration the substituted provisions of Section 50(3) of the WBGST/CGST Act, 2017, the petitioner is not liable to pay interest as per impugned communication dated 2nd May, 2018 and as per the view taken by this Court, all legal consequences will follow. Petition disposed off. Issues: Challenge to interest payment under WBGST Act, 2017Analysis:The petitioner challenged a communication asking for interest payment under Section 50 of the WBGST Act, 2017, due to alleged wrongful Input Tax Credit (ITC) claim. The petitioner argued that interest is only applicable if ITC is wrongly claimed and utilized. In this case, the ITC was not utilized and was reversed, making the petitioner not liable for interest. The petitioner relied on the amended provisions of Section 50(3) of the Act, retroactively effective from 1st July, 2017.The court considered the facts, legal provisions, and submissions of both parties. The court noted that the ITC in question was not utilized and had been reversed. In light of the amended Section 50(3) of the WBGST/CGST Act, 2017, the court held that the petitioner is not liable to pay interest as per the impugned communication dated 2nd May, 2018. The court's decision was based on the legal position and the specific circumstances of the case, emphasizing that all legal consequences will follow as per the court's view.Conclusively, the court disposed of the writ petition, WPA 2654 of 2020, in favor of the petitioner, ruling that the petitioner is not obligated to pay the interest demanded under the WBGST Act, 2017, based on the specific circumstances and the amended provisions of Section 50(3) of the Act.