Court clarifies interest recovery on CGST refund, dismisses petition, issues compliance directives

The Court disposed of the writ petition challenging the rejection of a refund application and seeking a declaration on liability to pay interest under Section 50 of the CGST Act. The Court referenced an Administrative Instruction clarifying interest recovery on net cash tax liability, resolving the petitioner's grievance. The Court directed compliance with the Instruction, leading to the dismissal of the petition and issuance of orders for publication on the website and email forwarding to counsel.

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Issues:
1. Challenge to rejection of refund application
2. Liability to pay interest under Section 50 of the CGST Act

Analysis:
1. The petition challenged the rejection of a refund application and sought a direction for the refund of the forfeited amount. The petitioner also sought a declaration regarding the liability to pay interest under Section 50 of the Central Goods and Services Tax Act, 2017 (CGST Act). The Court had issued notice in the petition on July 30, 2020. The petitioner submitted an Administrative Instruction dated September 18, 2020, issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, regarding the recovery of interest on net cash tax liability. The instruction clarified that interest should be charged on the net cash tax liability for the period from July 1, 2017, to August 31, 2020. It also mentioned that show cause notices issued on gross tax payable should be kept in Call Book until a retrospective amendment is made in Section 50 of the CGST Act.

2. The Administrative Instruction dated September 18, 2020, clarified that interest should only be recovered on the net cash tax liability for the specified period. Following this instruction, the Court noted that the grievance of the petitioner regarding the liability to pay interest under Section 50 of the CGST Act no longer existed. Consequently, the Court disposed of the writ petition in accordance with the Administrative Instruction issued by the Ministry of Finance through the Central Board of Indirect Taxes and Customs. The Court directed the order to be uploaded on the website and forwarded to the counsel via email.

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