GST interest demands need prior adjudication before recovery, and unilateral recovery without statutory procedure is unsustainable.

Interest for delayed filing of GST returns cannot be demanded and recovered unilaterally where the taxpayer disputes the levy or quantification, because the GST scheme requires notice, hearing, and determination under the prescribed adjudicatory procedure. Although interest may accrue as a matter of liability on delayed payment, enforcement must follow statutory adjudication before recovery action is taken. Applying its earlier coordinate bench rulings, the Jharkhand HC held that a demand raised without prior adjudication was unsustainable, and the impugned demand, appellate order, and summary demand were set aside, with liberty to proceed afresh in accordance with law.

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Issues: Whether interest for delayed filing of returns could be demanded and recovered under the GST regime without first undertaking adjudication under the prescribed statutory procedure.

Analysis: The demand for interest arose from delayed filing of returns and was raised without a prior adjudication order. The statutory scheme under the GST law contemplates issuance of notice, opportunity of hearing, and determination of the amount payable under the prescribed procedure. Although interest may arise on delayed payment as a matter of liability, its quantification and enforcement cannot be made unilaterally where the taxpayer disputes the levy or the amount. The Court followed its earlier coordinate bench decisions holding that a demand under the relevant recovery provisions cannot be sustained in the absence of adjudication.

Conclusion: The impugned demand, appellate order, and summary demand were unsustainable and were set aside, with liberty to the department to proceed in accordance with law by initiating adjudication if so advised.

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