High Court Permits GST Appeal with Rs. 2.5 Lakh Deposit, Directs Merits-Based Review Under Section 50(1)

The HC allowed the petitioner to file a statutory appeal challenging GST interest and penalty liability under Section 50(1) of CGST Act, 2017. The petitioner agreed to remit Rs. 2.5 lakhs as a condition for appeal. The court directed the appellate authority to consider the appeal on merits without limitation constraints, after the petitioner pays the specified amount within three weeks.

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Issues involved: Challenge to interest and penalty liability u/s Section 50(1) of the Central Goods and Services Tax Act, 2017.

The petitioner challenged an order dated 27.09.2023 related to interest and penalty liability, which was issued after proceedings initiated by a show cause notice dated 27.02.2023. The petitioner had already discharged the GST liability on specific dates in 2019 through the electronic credit ledger. The impugned order was issued based on these circumstances.

The petitioner claimed entitlement to the proviso to Section 50(1) of the CGST Act, stating that as the tax liability was discharged before the show cause notice, they should not be liable to pay interest or penalty. The petitioner sought permission to appeal to the appellate authority.

The respondent argued that the petitioner collected taxes but failed to remit them, only discharging the liability after the proceedings began, thus not meeting the requirements of the proviso to Section 50(1).

The impugned order indicated that the petitioner had indeed discharged the GST liability on specific dates in 2019, with the challenge limited to interest and penalty. Despite 100% penalty imposition, it was deemed just to allow the petitioner to file a statutory appeal, even though the time limit had expired, subject to certain terms.

The petitioner agreed to remit Rs. 2.5 lakhs as a condition for being allowed to present a statutory appeal. Consequently, the court disposed of the case by permitting the petitioner to file the appeal upon remittance of the specified amount within three weeks, directing the appellate authority to consider the appeal on merits without considering the question of limitation.

This summary provides a detailed overview of the judgment, highlighting the key arguments and decisions made by the court regarding the challenge to interest and penalty liability under Section 50(1) of the CGST Act, 2017.

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