M/S Incnut Digital Private Limited vs. The Commissioner Of Central Tax

Held

The Court held that the issue raised in the writ petition was covered by a common order dated December 22, 2021, passed in W.P.No.44517 of 2019 (Megha Engineering and Infrastructures Ltd. v. Commissioner of Central Tax) and batch. The relevant portion of that order stated that the basic grievance of the petitioners related to the levy of interest on gross returned income and not on the net cash amount, centering around the interpretation of Section 50 of the CGST Act. The Court noted that Section 50(1) was amended by the Finance Act, 2021, with retrospective effect from July 1, 2017. The amended proviso clarified that interest on tax payable in respect of supplies declared in the return furnished after the due date shall be payable on the portion of the tax paid by debiting the electronic cash ledger. Consequently, all writ petitions in the batch were allowed with a direction that respondents shall issue notice and hear the petitioners before quantifying the interest as per the amended provision. The present writ petition was disposed of in terms of this common order, with no order as to costs. The grievance of the petitioner was considered redressed due to the amendment, but the details of interest were to be worked out by the authorities as per the amended provision.

Facts

M/s IncNut Digital Private Limited (the petitioner) filed a writ petition challenging a Demand Notice dated July 23, 2019, issued by the Superintendent of Central Tax (Respondent No. 3), and a consequential Order dated August 5, 2019, issued by the Assistant Commissioner of Central Tax (Respondent No. 2). The petitioner argued that these actions were illegal, arbitrary, violative of natural justice, and contrary to Sections 73 and 50(1) of the Central Goods and Service Tax Act, 2017. The demand notice and consequential order were related to the levy of interest on delayed payment of tax. The petition also sought a stay on the demand notice and all consequential proceedings, including a garnishee order issued to HDFC Bank Limited (Respondent No. 4).

Key Issues

1. Whether the Demand Notice dated July 23, 2019, and the consequential Order dated August 5, 2019, issued by the revenue authorities are illegal, arbitrary, violative of the principles of natural justice, and contrary to Section 73 and Section 50(1) of the Central Goods and Service Tax Act, 2017? Petitioner's Contention: The petitioner contended that the demand notice and consequential order were illegal and arbitrary, violating natural justice principles and specific provisions of the CGST Act. They argued that the levy of interest was contrary to Section 50(1) of the CGST Act. Revenue's Contention: The revenue authorities issued the demand notice and consequential order. The judgment does not explicitly record specific arguments made by the revenue beyond their role in issuing the impugned notices and orders. However, the court's decision implies that the revenue's actions were subject to the interpretation and amendment of Section 50 of the CGST Act.