Petitioner not liable for GST interest under Section 50 during period when GSTIN was wrongfully cancelled without fault

Kerala HC ruled that petitioner was not liable for interest under Section 50 of CGST/SGST Act, 2017 for delayed GST return filing from July-December 2017. The court found petitioner's GSTIN was cancelled without fault on 24.08.2017, preventing tax payment and return filing. Despite immediate notification to authorities, restoration occurred only after court intervention on 21.12.2017. The court held it inequitable to impose interest when petitioner couldn't remit tax without valid GSTIN. However, interest liability would apply for delays beyond 20 days from 26.12.2017. Impugned order set aside with liberty to authorities to impose fines for post-restoration delays.

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Issues:
The issues involved in the judgment are the cancellation and restoration of GSTIN, delay in filing returns and payment of tax, and imposition of interest under Section 50 of the CGST/SGST Act, 2017.

Cancellation and Restoration of GSTIN:
The petitioner's GSTIN was cancelled on 24.08.2017 without notice, leading to inability to file returns for July 2017. The petitioner sought reactivation, which was done after a court order on 26.12.2017. The court held that the petitioner cannot be held liable for delay during the period without a valid GSTIN.

Delay in Filing Returns and Payment of Tax:
Due to the cancellation, the petitioner couldn't file returns for July to December 2017 until the GSTIN was restored. After restoration, the petitioner filed returns with minimal delays. The court found it inequitable to impose interest for this period as the delay was due to the cancellation of GSTIN.

Imposition of Interest under Section 50:
The respondent argued that the petitioner, after collecting tax, delayed payment to the government, justifying interest under Section 50. However, the court noted that the delay was a result of the cancellation of GSTIN and subsequent restoration. The court ruled that interest could only be imposed for delays after 26.12.2017, giving the petitioner time to comply.

Conclusion:
The court set aside the impugned order and allowed authorities to impose fines for delayed payments after 20th day from 26.12.2017 for the period up to December 2017. For subsequent months, interest could be levied if there are delays. The petitioner was instructed to remit any interest upon receiving a fresh notice for delays post-restoration of GSTIN.

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