TaxTMI 
TaxTMI 
2020 (11) TMI 107
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...., 5698, 5702, 5705, 5005, 5951, 5008, 6863, 4790, 4794, 4798, 4803, 4806, 4875, 4879, 7206, 5803, 5916, 6185, 6188, 6886, 12478, 3472, 12492, 12588, 12592, 1227, 12639, 7065, 12656, 12660, 3799, 5914, 6562, 12648, 12653, 12667, 12673, 12686, 12727, 12625, 12627, 12648, 12492, 12653, 12656, 12660, 12661, 12667, 12673, 12686, 3472, 3799, 6875, 6 879, 7065, 12629, 12639, 12710 & 12837 of 2020 and WMP Nos.29900, 28132, 29899 and31205of 2019, 5916, 5920, 7014, 7847, 8025, 5662, 5665, 5666, 5668, 5670, 3864, 4625, 5101, 5102, 5242, 5293, 5294, 5681, 5690, 5692, 5777, 5779, 5782, 5786, 5812, 5907, 5908, 5911, 5912, 5926, 5930, 5931, 5934, 6008, 6021, 6022, 6101, 6103, 6110, 6130, 6136, 6232, 6471, 6474, 6476, 6477, 6478, 6527, 6528, 6575, 6634, 6635, 6638, 6653, 6675, 6792, 6859, 6861, 6865, 6868, 7039, 7040, 7041, 7235, 7392, 7406, 7664, 7806, 8176, 8178, 8180, 8612, 8835, 8836, 9768, 9770, 10695, 10696, 11309, 11465, 11527, 14377, 3152, 3178, 3197, 4313, 4315, 4575, 4622, 5287, 5680, 5771, 6508, 6510, 6576, 6577, 6915, 6917, 6919, 6934, 6937, 6974, 7013, 5775, 5787, 6229, 5295, 5490, 5605, 5607, 5609, 5644, 5649, 5652, 5654, 5657, 5755, 5756, 5762, 5763, 5770, 5813, 5823, 5827, 5960, 59....
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....rs Ltd. Vs. Union of India [(1999) 106 ELT 3] (ii) Pratibha Processors vs. Union of India [(1996) 88 ELT 12] (iii) Refix Industry Vs. Assistant Commissioner of CGST order dated 06.01.2020 in W.P.No.23360 & 23361 of 2019. 4.Per contra, the revenue argues that Section 16(2) entitles a person to take credit of input tax and Section 41(1) provides for a credit entry in the electronic credit ledger, which is provisional in nature. Since Section 41 provides that the entitlement to credit is only with the filing of return on self-assessment basis, this entitlement cannot be availed of till such time a return is filed by an assessee. After a return is filed and the credit is availed by entry in the register, the assessee can proceed to utilize the same against output tax liability. Reference is made to Section 49, which deals with payment of tax, interest, penalty and other amounts to support the aforesaid argument emphasizing that it is only when a credit entry is made in the electronic credit ledger that the entitlement to avail the same arises. This argument does not advance the case of the revenue as all the petitioners before me have filed their returns under the Act. In fact, the ....
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....d by debiting the electronic cash ledger." (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid. (3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council. 8. The issue before me has seen a checkered history. Section 50 was part of the original enactment, w.e.f. 01.07.2017, sans, of course, the proviso thereto that stood inserted vide Section 100 of the Finance (No. 2) Act, 2019. 9. I would first refer to the 31st Goods and Services Tax Council Meeting (GST Council)/Council held on 22.12.2018 that discussed the proposal for amendment of Section 50 so as to provide for payment of interest on net cash liability alone, that interest be charged only on net tax liability of the tax....
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....t 2020 relating to interest on delayed payment of GST has been issued that prospectively due to certain technical limitations. However, it has assured that no recoveries shall be made for the past period as well as by the Central and State tax administration in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the taxpayers as decided by the GST Council. CBIC explanation came in response to an assortment of comments in the social media with respect to Notification dated 25th August 2020 regarding charging of interest on delayed payment of GST on net liability (the tax liability discharge in cash) w.e.f. 1st September 2020. 13. Barring one matter in this batch, all writ petitions challenge action taken by the Central GST Authorities levying interest on tax paid by reversal of ITC. In one matter alone, the challenge is to recovery taken under the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act). Learned Special Government Pleader would adopt the submissions of the Central authorities and state that the position of the State Government is in line with the view expressed by the Centre in press release dated 26.08.2....
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.... November-17 167 534714 44119 5. December -17 134 268898 17769 6. January - 18 181 1353568 1208199 7. February - 18 155 12103153 925145 8. March - 18 143 7750 547 Total 2362746 2. Demand notices were issued to the Banks (R3) seeking to recover the arrears of interest from the balances in the accounts of the petitioners. 3. The petitioners objected stating that they had sufficient Input Tax Credit (ITC) available with the Department and thus interest could be demanded, if at all, only on the cash component of the tax remitted belatedly. This amounted to a sum of Rs. 1,21,701/- (in W.P.No.23360 of 2019) and Rs. 1,25,751/-(in W.P.No.23361 of 2019) and the amounts have been remitted on 14.06.2019. According to the petitioners, the total tax payable, being Rs. 3,94,49,225/- in W.P.No.23360 of 2019 and Rs. 2,74,71,771/- in W.P.No.23361 of 2019, was remitted by way of cash to an extent of Rs. 19,55,634/- (in W.P.No.23360 of 2019) and Rs. 12,19,151/- (in W.P.No.23361 of 2019) and Rs. 3,74,93,591/- (in W.P.No.23360 of 2019) and Rs. 2,62,52,620/- (in W.P.No.23361 of 2....
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....e petitioner in that case had raised disputes with regard to the period for which the tax had allegedly not been paid, as well as the quantum of tax remaining unpaid in excess of ITC, all being questions of fact, he was of the view that such matters would have to be resolved after hearing the assessee. He categorically states 'therefore in my considered view though the liability fastened on the assessee to pay interest is an automatic liability, quantification of such liability certainly needs an arithmetical exercise after considering the objections if any, raised by the assessee.' The objections raised in that case are thus factual and relate to disputed questions of fact as noted by me in the earlier portion of this paragraph. 9. However, the objection raised by the petitioners before me is not one of fact but one of law. According to the petitioners, Section 50 that provides for levy of interest on belated payments would apply only to payments of tax by cash, belatedly, and would not stand triggered in the case of available ITC, since such ITC represents credit due to an assessee by the Department held as such. 10. In order to decide the purel....
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....l such time the Return is filed accompanied by the remittance of tax. The availability of ITC runs counter to this, as it connotes the enrichment of the State, to this extent. Thus, Section 50 which is specifically intended to apply to a state of deprival cannot apply in a situation where the State is possessed of sufficient funds to the credit of the assessee. In my considered view, the proper application of Section 50 is one where interest is levied on a belated cash payment but not on ITC available all the while with the Department to the credit of the assessee. The latter being available with the Department is, in my view, neither belated nor delayed. 13. The argument that ITC is liable to be reversed if it is found to have been erroneously claimed, and that it may be invalidated in some situations, does not militate with my conclusion as aforesaid. The availment and utilization of ITC are two separate events. Both are subject to the satisfaction of statutory conditions and it is always possible for an Officer to reverse the claim (of availment or utilization) if they are found untenable or not in line with the statutory prescription. Credit will be valid till such tim....
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....to remit by adjustment of credit, the Department is enriching itself doubly - on the one hand, holding in its coffers the available credit and on the other, seeking the payment of interest upon the same sum. 18. The Supreme Court in the context of Section 43B of the Income Tax Act, 1961 (IT Act) held in the case of Allied Motors (P) Ltd. Vs. Commissioner of Income Tax (1997 (3) SCC 472) that the nature and object of a proviso should be taken into account while deciding the question of whether the proviso was prospective or retrospective. Where a proviso was designed to eliminate unintended and prejudicial consequences which would cause hardship to a party, such a proviso should be seen to be remedial and one that mitigated the prejudice caused from inception. 19. This was reiterated in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd.(319 ITR 306) in the context of the second proviso to Section 43B of the IT Act. The Supreme Court in this case was dealing with the effective date of operation of the omission of the second proviso to Section 43B of the Income Tax Act, 1961 (in short 'IT Act'). Section 43B deals with the grant of deduction of statutory payments to ....
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....held by the Supreme Court in the case of Commissioner of Income Tax Vs. Anjum H Ghaswada, (252 ITR 1), is indented to compensate the revenue for loss of capital. In the present case, there is no loss insofar as the revenue is in possession of the credit 'which is good as cash' as held by the Supreme Court in the case of Eicher Motors (supra) and cannot thus be said to be prejudiced in any way. 24. Useful reference may also be made to a decision of a Division Bench of this Court in Commissioner of Central Excise, Puducherry-I Vs. CESTAT, Chennai 2017 (346 E.L.T. 80). The Bench was answering a substantial question of law on the issue of whether interest may be demanded for differential duty not paid in time, since the assessee had sufficient credit in its current account during the relevant period. One of the reasons on which the revenues' appeal was dismissed and the assessee's contention that no demand for interest would arise in a case where sufficient credit is available to the assessee, is set out in para 6 of the short decision. The Bench notes that there was sufficient credit available with the Department as on 30.06.2006 and the principal demand raised arose only from t....
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....amendment in the GST laws would be carried out in due course through suitable legislation. 3. Post issuance of notification 63/2020 - Central Tax dated the 25th August, 2020, there were apprehensions raised by taxpayers that the said notification is issued contrary to the Council's recommendation to charge interest on net cash liability w.e.f. 01.07.2017. Consequently, a press release, dated 26.08.2020 was issued to clarify the position. Further, in order to implement the decision of the Council in its true spirit, and at the same time working within the present legal framework, it has been decided to address the issue through administrative arrangements, as under: a. For the period 01.07.2017 to 31.08.2020, field formations in your jurisdiction may be instructed to recover interest only on the net cash tax liability (i.e. that portion of the tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger); and b. wherever SCNs have been issued on gross tax payable, the same may be kept in Call Book till the retrospective amendment in section 50 of the CGST Act is carried out. 4. Difficulty, if any, in the implemen....