2024 (2) TMI 120 - HC - GST

Interest on delayed tax payment only applies to cash payments, not electronic credit ledger amounts under Section 50(1)

A.C. Banerjee & Sons. Versus State of West Bengal & Ors.

The Calcutta HC set aside a notice dated 17.11.2022 and appellate order dated 20.04.2023 regarding interest on delayed output tax payment. The court held ... Interest for delay in payment of Output Tax - return was not declared within the prescribed time - claim of less ITC wrongly however remaining amount was lying in ECRL - HELD THAT:- Provision inserted in sub-Section 50(1) of the WBGST Act, 2017 clearly provides that the interest would be levied only on that part of the tax which is paid in cash, the assessing authority should not have been acted arbitrary in exercise of power to issue Notice. It would be appropriate to set aside the notice dated 17.11.2022 as well as impugned order dated 20.04.2023 passed by 1st Appellate Authority and remand the matter to the Assistant Commissioner of Revenue (WBGST), Commercial Taxes, WB, Siliguri Circle for reconsideration of the matter afresh taking into consideration of amendment carried out by virtue of the Finance Act, 2021 and also issue raised by the petitioners with regard to bona fide and inadvertent mistake committed by the petitioners’ accountant and subsequently rectified after detection and brought to knowledge of the Authority in accordance with law. Application disposed off. Issues involved:The judgment involves assailing an order passed by the 1st Appellate Authority under Section 107 of the West Bengal Goods and Services Tax, 2017, seeking directions to recall, cancel, or rescind an order regarding discrepancies found during scrutiny of returns. The petitioners challenge the rejection of their appeal by the Appellate Authority and the demand for interest under Section 50(1) of the WBGST/CGST Act, 2017.Details of the Judgment:Issue 1: Clerical Error in Filing ReturnsThe petitioners' accountant made an inadvertent error while filing the return for November 2017, resulting in incorrect reduction of total GST Output Tax and Input Tax. The mistake was rectified by filing GSTR 3B for April 2018, correcting the values.Issue 2: Discrepancies Found During ScrutinyDespite rectifying the error and informing the authorities, discrepancies were found during scrutiny under Section 61 of the CGST Act, 2017. The authorities alleged short tax payment on outward supply, leading to a demand for interest, which the petitioners contested.Issue 3: Appeal and Rejection by Appellate AuthorityThe petitioners appealed the order demanding interest, but the Appellate Authority rejected the appeal, overlooking the petitioners' explanations and the availability of more Input Tax Credit in the electronic ledger account with the Government.Issue 4: Legal Arguments and PrecedentsThe petitioners argued that interest should not be charged on amounts adjusted through the electronic ledger account, citing amendments to Section 50 of the CGST Act and referring to legal judgments supporting their contention.Judgment and ConclusionThe Court noted the bonafide mistake made by the petitioners and the availability of more Input Tax Credit. It highlighted the provision in Section 50(1) of the WBGST Act, 2017, stating that interest should be levied only on the tax paid in cash. The Court set aside the demand notice and the Appellate Authority's order, remanding the matter for reconsideration in light of the legal amendments and the petitioners' arguments. The judgment was disposed of with no order as to costs.