Interest on Delayed GST Payments Waived After Retrospective Amendment to Section 50(1) of GST Act

The HC set aside the adjudication order dated June 24, 2019, and appellate authority order dated March 6, 2020, regarding interest under GST Act section 50(1) for 2017-18. The court ruled the demand was unsustainable due to the retrospective amendment introduced by Finance Act, 2021, which modified provisions for interest on delayed tax payments. The petitioner had paid 1,35,14,156 against the demand. The court directed the respondent to verify and refund this amount within four weeks if found correct, in accordance with the amended section 50(1) of the GST Act.

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Issues:
Challenge to impugned adjudication order dated June 24, 2019 based on amendment to section 50 sub-section (1) of the GST Act, 2017 and order of appellate authority dated March 6, 2020 regarding interest under section 50 sub-section (1) for assessment year 2017-18. Refund claim of &8377; 1,35,14,156/- paid against the demand raised in the adjudication order.

The petitioner challenged the impugned adjudication order dated June 24, 2019, arguing that it is not sustainable in law due to the amendment to section 50 sub-section (1) of the GST Act, 2017 and the order of the appellate authority dated March 6, 2020 concerning interest under the same section for the assessment year 2017-18. The amendment introduced by the Finance Act, 2021 substituted the proviso in section 50 sub-section (1) of the Central Goods and Services Tax Act, altering the provisions related to interest on tax payable for supplies made during a tax period and declared in the return after the due date. Consequently, the impugned demand arising from the adjudication order dated May 14, 2019 is deemed unsustainable in light of the retrospective change in the law. The impugned order of the appellate authority dated March 6, 2020, regarding the demand for interest, is set aside based on the current legal position post-amendment.

The petitioner asserted that it had paid &8377; 1,35,14,156/- on May 30, 2019, against the demand raised in the adjudication order dated May 14, 2019. As the adjudication order is being set aside due to the retrospective change in law, the petitioner claimed entitlement to a refund of the amount paid. The court directed the concerned respondent to verify the refundable amount claimed by the petitioner, amounting to &8377; 1,35,14,156/-, and if found correct, to refund the same within four weeks from the date of communication of the order. This refund process is to be conducted considering the aforementioned amendment to section 50 sub-section (1) of the GST Act, 2017. Consequently, the writ petition, WPA No.7592 of 2020, is disposed of with the above observations and directions.

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