GST penalty and interest computation must reflect admitted payments, with excess tax adjusted before any fresh demand.

Penalty under Section 73 of the Tamil Nadu GST Act was not sustained because the admitted tax liability and payment-accounting dispute did not, on the stated facts, justify penalty; the assessee was allowed to make a proper representation. Interest under Section 50(1) had to be recalculated by first adjusting excess amounts already paid against outstanding dues, and only the balance, if any, could be demanded. The matter was therefore remitted for fresh consideration limited to proper computation of interest after adjustment of excess payment, with the penalty component rejected on the facts.

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Issues: (i) whether the penalty levied under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 was justified; (ii) whether the excess amount already paid by the assessee had to be adjusted while determining the interest liability under Section 50(1) of the Tamil Nadu Goods and Services Tax Act, 2017.

Issue (i): whether the penalty levied under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 was justified.

Analysis: The liability to pay tax was admitted, but the facts did not justify imposition of penalty. The dispute related to the correctness of the demand and the manner in which the payments already made were accounted for. In such circumstances, the penalty component required reconsideration.

Conclusion: The penalty under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 was not sustained on the facts and the assessee was permitted to make a proper representation.

Issue (ii): whether the excess amount already paid by the assessee had to be adjusted while determining the interest liability under Section 50(1) of the Tamil Nadu Goods and Services Tax Act, 2017.

Analysis: Interest was payable on delayed payment of admitted tax, but the correctness of the calculation was doubtful. The excess amount stated to have been paid was required to be adjusted against the outstanding dues before raising any further demand. Fresh determination of the exact interest payable was therefore necessary.

Conclusion: The excess payment had to be adjusted and the respondent was directed to rework the interest liability and demand only the balance, if any.

Final Conclusion: The matter was sent back for fresh consideration limited to proper computation of interest after adjustment of excess payment, while the penalty component was not accepted as made out on the facts.

Ratio Decidendi: Where tax has been admitted but the computation of interest is doubtful, excess payments must be adjusted before any fresh demand is raised, and penalty cannot be sustained without justification on the facts.

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