2022 (10) TMI 996 - HC - GST

Tax Authorities Ordered to Recalculate Interest Demand Under CGST Act, Bank Account Attachment Continues Pending Review

HC ruled on a tax interest demand under CGST Act. The court directed tax authorities to re-compute the interest amount after hearing the petitioner's ... Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Re-determination of tax demand - Computation of interest - Right to be heard before fixation of interest - Attachment in Form GST DRC-13 - Judicial guidance from M/s. Maansarovar MotorsComputation of interest - Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Right to be heard before fixation of interest - Judicial guidance from M/s. Maansarovar Motors - Whether the demand of interest under Section 50 is correctly computed and requires re-determination after hearing the petitioner in light of precedent. - HELD THAT: - The Court found that the petitioner contends the computation of the interest demand is incorrect and that no reply has been filed to the notice. Rather than deciding the correctness on merits, the Court directed the petitioner to file a reply setting out the proper interest payable and ordered the assessing authority to re-determine the amount after hearing the petitioner. The authority's re-determination is to be carried out in the light of the Court's earlier decision in M/s. Maansarovar Motors, ensuring that the computation and fixation of interest conform to the stated judicial guidance. The re-determination is to be completed within four weeks from the date of the order after affording the petitioner an opportunity to be heard. [Paras 3, 4]The demand is remanded for re-determination by the authority after the petitioner files a reply and after hearing, to be completed within four weeks in light of the cited decision.Attachment in Form GST DRC-13 - Re-determination of tax demand - Whether the bank account attachment effected in Form GST DRC-13 should continue pending re-computation of the demand. - HELD THAT: - The Court noted that, in view of the alleged interest demand, the respondent had attached the petitioner's bank account in Form GST DRC-13. The Court ordered that the attachment shall continue until the re-computation directed earlier is effected, subject to the re-determination process and timeline specified. Thus, the continuation of the attachment was endorsed as an interim measure pending the completion of re-determination. [Paras 5]The bank account attachment in Form GST DRC-13 shall continue until the authority completes the re-computation as directed.Final Conclusion: Writ petitions disposed by directing the petitioner to file a reply and by remanding the interest demand for re-determination by the authority within four weeks in light of the cited decision; the attachment in Form GST DRC-13 to remain in force until such re-computation is effected; no costs. Issues: Challenge to notice of demand of interest under Section 50 of the Central Goods and Services Tax Act, 2017 (CGST Act) for various months between July 2017 and October 2019.Analysis:The petitioner challenged a notice of demand of interest under Section 50 of the CGST Act for specific months. The petitioner did not respond to the notice but claimed that the computation of the demand was incorrect. The court directed the petitioner to file a reply to the notice, specifying the correct interest payable according to them. The authority was instructed to re-determine the amount considering a previous court decision within four weeks after hearing the petitioner.The respondent had attached the petitioner's bank account in Axis Bank Limited, Anna Salai, Chennai, in Form GST DRC-13 due to the alleged demand for interest. The attachment was to continue until the re-computation of the amount was completed as per the court's directive. Both writ petitions were disposed of without costs, and connected miscellaneous petitions were closed.