Esmario Export Enterprises PVT. LTD. vs. The Commissioner Of Central Tax
Held
The Court held that the grievance of the petitioners has been redressed due to the amendment carried out by the Finance Act, 2021, which substituted the proviso to Section 50 of the CGST Act with retrospective effect from July 1, 2017. The amended proviso clarifies that interest is payable on that portion of the tax which is paid by debiting the electronic cash ledger. Consequently, all writ petitions were allowed. The respondents were directed to issue notice and hear the petitioners before quantifying the interest payable as per the amended provision of Section 50 of the CGST Act. The ratio decidendi is that legislative amendments, especially those with retrospective effect, are intended to clarify and rectify previous ambiguities or incorrect applications of law, and such amendments should be applied to resolve pending disputes.
Facts
A batch of writ petitions was filed before the High Court challenging the levy of interest on the gross returned income, rather than on the net cash amount paid. The petitioners' primary grievance concerned the interpretation of Section 50 of the Central Goods and Services Tax Act, 2017 (CGST Act), which deals with interest on delayed payment of tax. The initial sub-section (1) of Section 50 did not specify the basis for interest calculation. The controversy arose from the application of this provision before and after an amendment.
Key Issues
1. Whether the interest on delayed payment of tax under Section 50 of the CGST Act, prior to the amendment by the Finance Act, 2021, should be levied on the gross returned income or on the net cash amount paid. Petitioner's contention: The petitioners argued that interest should be levied only on the portion of tax paid in cash, not on the entire tax liability declared in the return, especially when the return is filed after the due date but before any proceedings under Section 73 or 74 are initiated. They relied on the proviso to Section 50 as it existed before the amendment. Revenue's contention: The judgment does not record any specific arguments made by the revenue or state in opposition to the petitioners' claims.
Sections Cited
Section 50, Section 39, Section 73, Section 74
AI-generated summary — verify with the full judgment below
HONOURABLE SRI JUSTICE UJJAL BHUYAN AND HONOURABLE SMT. JUSTICE P. MADHAVI DEVI
W.P.Nos.18236, 18817, 17357, 20866, 23315, 27645,
28902 & 28904 OF 2019, 4631, 4643 & 4687 OF 2020
COMMON ORDER : (Per Hon’ble Sri Justice Ujjal Bhuyan)
This order will dispose of the present bunch of writ petitions.
We have heard learned counsel for the parties.
In this batch of writ petitions, the basic grievance of the petitioners relates to levy of interest on the gross returned income and not on the net cash amount.
Basic controversy centres around interpretation of Section 50 of the Central Goods and Services Tax Act, 2017 (briefly ‘the CGST Act’ hereinafter).
It may be mentioned that Section 50 of the CGST Act deals with interest on delayed payment of tax. Sub-section (1) thereof as it initially stood, reads as under: “Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceed
The judgment continues below.
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