Belated input tax credit and overlapping GST demand; statutory amendment narrowed liability but interest for late GSTR-3B upheld.

Belated availment of input tax credit and alleged duplication of demands arising from overlapping central and state GST inquiries were considered in light of a retrospective statutory amendment inserting provisions that address Section 16(4) violations; that intervention narrows the challenge to the confirmed demand and led to rectification of part of the earlier order. The remaining liability stems from a difference in confirmed credit denial and interest charged for late filing and belated tax payment; interest levied under the GST interest framework is held payable and the writ challenge was dismissed.

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Issues: (i) Whether the challenge to the tax demand confirmed for the tax period 2018-2019, insofar as it concerns alleged belated availment of Input Tax Credit under Section 16(4) and the effect of subsequent statutory amendments, is maintainable; (ii) Whether the levy of interest under Section 50(1) read with Section 75(12) for late filing of GSTR-3B returns is liable to interference.

Issue (i): Whether the surviving demand relating to alleged violation of Section 16(4) stands covered or impacted by the insertion of Sections 16(5) and 16(6) by Finance (No.2) Act, 2024 and rectification of earlier orders, and whether duplication/overlap of demands is prevented.

Analysis: The Court noted that part of the earlier demand for 2018-2019 was rectified by the impugned order dated 17.03.2025 following an application for rectification and that the statutory landscape was altered by the insertion of Sections 16(5) and 16(6) by Finance (No.2) Act, 2024 with retrospective effect. The Court relied on the principles concerning overlapping proceedings and duplication of demands as summarised in the cited precedent, which requires inter-authority communication and protection against show-cause notices duplicating liabilities already covered by an existing notice.

Conclusion: The Court held that the duplication/overlap concern has been addressed and that the surviving demand relating to alleged Section 16(4) violation is governed by the statutory amendments and the rectification effected; this aspect does not merit interference in the writ petition and is not in favour of the petitioner.

Issue (ii): Whether interest charged under Section 50(1) read with Section 75(12) for late filing of GSTR-3B returns is liable to be set aside.

Analysis: The Court observed that interest was levied on account of belated payment of tax and late filing of returns, and that there was no basis in the petition to interfere with the statutory imposition of interest for late filing.

Conclusion: The Court held that there is no scope for interference with the levy of interest; this aspect is decided against the petitioner.

Final Conclusion: The writ petition is dismissed as the petitioner has not established grounds to disturb the surviving demand related to alleged belated availment of Input Tax Credit and the statutory interest charged for late filing of returns; connected petitions are closed.

Ratio Decidendi: Where an earlier demand has been rectified and statutory amendments govern the availability of Input Tax Credit, and where interest is statutorily leviable for late filing, a writ petition will not ordinarily interfere with the surviving tax demand or with the statutory levy of interest absent demonstrable illegality or failure to follow the safeguards against duplication of proceedings.

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