Ms Bgr Mining And Infra Limited Through Its Authorized Signatory Nellore Vijaya Sai Reddy vs. The State Of Jharkhand Through The Secretary Cum Commissioner State Tax Department

Held

The Court considered the submissions of both parties regarding the levy of interest under Section 50 of the GST Act on gross tax liability. It took note of the CBIC circular dated September 18, 2020, and the Respondent-State's supplementary counter affidavit. The State categorically stated that following the CBIC's administrative instructions, State authorities were imposing interest on net tax liability. Given this categorical stand of the respondent State, the Court found no purpose in keeping the writ petitions pending for a decision on the challenge to the appellate order on the grounds urged. The Court held that the writ petitions were disposed of on this basis. However, liberty was reserved with the petitioner to approach the Court again if the respondent State chose to realize interest on the gross tax liability for the period covered by the appellate order. The ratio decidendi is that in the absence of any contrary action by the State authorities and in light of their stated adherence to administrative instructions for levying interest on net tax liability, the challenge to the appellate order upholding gross tax liability interest becomes moot for the present, subject to future action by the State.

Facts

The petitioner, M/s. BGR Mining & Infra Limited, challenged multiple appellate orders passed by the Joint Commissioner of State Tax (Appeal), Dhanbad Division. These orders, dated March 20, 2020, pertained to various periods from April 2018 to January 2019 and upheld adjudication orders levying interest under Section 50 of the Goods and Services Tax Act, 2017, on the petitioner's gross tax liability. The total interest imposed amounted to Rs. 1,10,02,192/-. The petitioner contended that they had already discharged their interest liability on the net tax liability, i.e., tax paid through the electronic cash ledger. The petitioner relied on a communication from the Central Board of Indirect Taxes and Customs (CBIC) dated September 18, 2020, which instructed field formations to recover interest only on the net cash tax liability for the period July 1, 2017, to August 31, 2020.

Key Issues

1. Whether the levy of interest under Section 50 of the Goods and Services Tax Act, 2017, on the gross tax liability, as upheld by the appellate authority, is sustainable in light of the subsequent administrative instructions issued by the CBIC? Petitioner's arguments: The petitioner argued that the insistence on recovering interest on gross tax liability by the assessing officers was unfair and improper, especially in view of the CBIC's administrative instructions dated September 18, 2020. They contended that these instructions directed the recovery of interest only on the net cash tax liability for the period from July 1, 2017, to August 31, 2020. The petitioner also cited decisions from the Bombay High Court and Madras High Court that disposed of similar petitions based on the CBIC's stand. They further argued that no amendment to Section 50 of the JGST Act had been incorporated to reflect a change, and any amendment would likely be clarificatory, as interest should only be imposable on net tax liability. Revenue/State's arguments: The Respondent-State, through a supplementary counter affidavit, stated that in line with the CBIC's administrative instructions, the State authorities were also imposing interest on net tax liability. They submitted that the writ petitions could be disposed of based on this categorical statement.