GST interest disputes require adjudication before recovery when liability or quantification is contested

Interest under Section 50 of the Jharkhand GST Act, 2017 cannot be quantified and recovered unilaterally when the assessee disputes both liability and computation. Although interest may arise in law on alleged irregular input tax credit availment, the Revenue must decide the objection through the statutory adjudicatory process under Sections 73 or 74 before making recovery or adjusting refund. A demand raised without that procedure is unsustainable, and the consequential appellate rejection also fails.

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Issues: Whether interest under Section 50 of the Jharkhand Goods and Services Tax Act, 2017 could be levied and recovered without initiating adjudication proceedings under Sections 73 or 74 where the assessee disputed the liability and quantification of interest.

Analysis: The dispute concerned not merely the arithmetic calculation of interest, but the very leviability and quantification of interest arising from alleged irregular availment of input tax credit. The Court followed the principle that although interest under Section 50 may arise automatically in law, the Revenue cannot unilaterally determine or recover the quantified liability when the assessee raises a dispute. In such a situation, the objection of the assessee must be considered and the liability must be determined through the statutory adjudicatory mechanism under Sections 73 or 74. Since the impugned demand and consequential adjustment of refund were made without following that procedure, the action was unsustainable.

Conclusion: The demand of interest and the consequential adjustment and appellate rejection were unsustainable, and the matter had to be remitted to the Revenue for fresh action in accordance with law after following the prescribed procedure.

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