Tax Authorities Must Recalculate GST Interest Demand Under Section 50, Allowing Taxpayer Representation and Partial Payment Relief

HC ruled on a tax dispute involving retrospective amendments to Section 50 of the Central GST Act. The court directed tax authorities to recalculate the interest demand based on amended provisions. The petitioner was allowed to submit a representation for redetermination of the tax liability, with payment required to lift bank account attachment, while preserving authorities' right to enforce any remaining balance.

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Issues:
The issues involved in the judgment are the retrospective amendment to Section 50 of the Central Goods and Service Tax Act, 2017 and the redetermination of the demand raised against the petitioner based on the amended provisions.

Retrospective Amendment to Section 50:
The petitioner filed a writ petition aggrieved by a Notice dated 13.08.2019, demanding the deposit of interest amounting to Rs. 22,94,722 within three days. The Notice was issued pursuant to an original notice dated 11.09.2018, indicating the grounds and calculation for the demand under Section 50 of the Act. During the pendency of the petition, changes were made to Section 50 by the Finance Act, 2019 and Finance Act, 2021, giving retrospective effect from 01.07.2017. The petitioner argued that due to the retrospective amendment, the demand needs to be redetermined by the respondents.

Redetermination of Demand:
The petitioner's counsel submitted that the demand raised by the respondents in 2018 and 2019 needs to be recalculated in light of the amended provisions of Section 50. The respondents' counsel acknowledged that the changes in Section 50 would impact the demand against the petitioner and agreed that redetermination is necessary. Consequently, the petition was disposed of, allowing the petitioner to approach the respondents with a representation indicating the payable amount based on the amended provisions for redetermination.

Resolution and Payment:
Upon the petitioner's representation, the respondents are directed to recalculate the interest payable by the petitioner as per the amended provisions and take necessary steps in accordance with the law. The petitioner is required to make the payment indicated in the representation to lift the attachment of their bank account by the respondents. However, the payment remains subject to final determination by the respondents, who are authorized to enforce any remaining balance demand as per the law.

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