Levy of interest for delayed GST tax discharge where no reply to show cause led to confirmation and dismissal of writ

Levy of interest for delayed discharge of GST tax liability was examined where a show cause notice in prescribed form was issued and no reply was filed; on that basis the demand was confirmed and interest under the applicable GST interest provision was imposed. The failure to respond to the procedural notice resulted in confirmation of liability and interest; the challenge to the demand and levy of interest was found to lack merit. Consequently the writ contesting confirmation of tax demand and interest was held not maintainable and dismissed.

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Issues: Whether the levy and confirmation of interest pursuant to the order dated 16.02.2023 under Section 73 and Section 50(1) of the GST enactments is legally sustainable, as challenged in the writ petition.

Analysis: The impugned order was issued following a show cause notice in Form DRC-01 to which no reply was filed. The demand confirmed comprises interest amounts claimed on account of delay in discharge of tax liability. The challenge in the writ petition contests the levy of interest under Section 50(1) and the confirmation of demand under Section 73. The petition was considered at the admission stage with consent and the factual basis for interestdelay in paymentwas recorded in the order, with no material before the Court to negativate the statutory entitlement to interest.

Conclusion: The challenge to the levy and confirmation of interest is dismissed and the impugned order is upheld; result is against the petitioner and in favour of the Revenue.

Ratio Decidendi: Where a tax liability remains unpaid and no effective reply or defence is shown to the show cause proceedings, interest under Section 50(1) may be lawfully levied and confirmed by an order under Section 73.

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