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Issues: Whether, in respect of GST on the lease premium and the consequential interest for delayed payment, the respondent could lawfully shift the burden of interest on to the petitioners despite not issuing the tax invoice within the prescribed time and despite the statutory scheme placing the obligation to pay tax and interest on the supplier.
Analysis: The statutory scheme under the Central Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Rules, 2017 places the obligation to issue a tax invoice on the registered supplier and requires payment of GST within the prescribed return cycle. The Court noted that the respondent issued the demand for GST and interest only much later and had not complied with the invoice requirement within the time contemplated by the Rules. In that setting, the contractual clauses relied upon by the respondent could not override the statutory mechanism. The Court also noted that the Act itself treats supply without invoice as a penal breach and that interest liability attaches to the person who is liable to pay tax but fails to pay it within the prescribed time.
Conclusion: The respondent was liable to pay the GST interest and could not transfer that burden to the petitioners. The recovery of interest from the petitioners was held illegal and unsustainable, and refund was directed.
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