Court dismisses petition challenging interest under Bihar Goods and Services Tax Act 2017

The court dismissed the petition seeking to quash an order under the Bihar Goods and Services Tax Act 2017, stating that interest under section 50 of the act is applicable even if the tax liability is discharged from the electronic credit ledger. The State clarified that recoveries for interest on gross liability for past periods would not be made due to technical limitations, but interest on delayed payment of tax on net liability would be required as per the amended section 50(1). The circular issued by CBIC supported this interpretation, leading to the dismissal of the petition.

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Issues:
Challenge to order under Bihar Goods and Services Tax Act 2017, Jurisdictional fact for passing order, Liability of interest under section 50 of the act, Recovery of interest on delayed payment of tax, Circular issued by CBIC.

Analysis:
The petitioners sought relief for quashing an order passed by the assessing authority under the Bihar Goods and Services Tax Act 2017. They argued that the order and consequential demand notice were without jurisdiction and unsustainable in the eye of the law due to the absence of necessary jurisdictional facts. They also relied on a judgment of the Madras High Court to support their case that interest under section 50 of the act is attracted only when tax liability is discharged from the cash ledger. The petitioners contended that no interest liability should arise when the credit balance in the electronic credit ledger is sufficient to meet the tax liabilities admitted in the returns. Furthermore, they claimed that if tax liabilities were already paid in accordance with the act, no interest liability should be attracted. The State, in response, clarified that no recoveries for interest charged on gross liability would be made for past periods due to technical limitations. The State also indicated that interest on delayed payment of tax made by debiting the cash ledger, i.e., on net liability, would be required as per the amended section 50(1). The circular issued by CBIC reiterated the prospective nature of the amendment and assured no recoveries for past periods, aligning with the decision of the GST Council. Consequently, the petition was disposed of based on these submissions.

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