M/S Ic Automobiles PVT. LTD. vs. The State Of Bihar

Held

The Court disposed of the petition based on the stand taken by the State in its affidavit dated January 9, 2021. The Court took on record the averments made by the deponent, which included clarifications from the Central Government and the Central Board of Indirect Taxes & Customs (CBIC). The key clarification was that while the amendment to Section 50(1) of the GST Act regarding interest on delayed payment was effective prospectively from September 1, 2020, no recoveries would be made for interest charged on gross liability for past periods by the central and state tax administrations, as decided in the 39th GST Council Meeting. This ensured full relief to taxpayers for the past period. The Court noted that the petitioner was directed to pay interest on delayed payment of tax on net liability (cash ledger debit) as per the amended Section 50(1). The petition was disposed of in these terms, implying that the coercive actions like bank attachment would be addressed in light of this clarification and the petitioner's undertaking to pay interest on net liability.

Facts

M/s IC Automobiles Pvt. Ltd. (the petitioner) filed a writ petition before the Patna High Court challenging an order of assessment dated December 29, 2018, passed by the respondent assessing authority under Section 73(9) read with Section 50 of the Bihar Goods and Services Tax Act, 2017, for the tax periods July 2017 to March 2018 and April 2018 to August 2018. The petitioner also challenged the consequential demand notice and an order of attachment of its bank account dated February 8, 2020. The petitioner sought directions to accept the assessed demand in installments and to revoke the bank account attachment upon receipt of the first installment. The petitioner argued that the bank account attachment was illegal, arbitrary, and violative of natural justice as no prior notice was issued.

Key Issues

1. Whether the order of assessment dated December 29, 2018, and the consequential demand notice for the tax periods July 2017 to March 2018 and April 2018 to August 2018 are contrary to the provisions of law and notifications issued under the Bihar Goods and Services Tax Act, 2017, particularly concerning the charging of interest on delayed payment of GST? 2. Whether the order of attachment of the petitioner's bank account dated February 8, 2020, is illegal, arbitrary, and violative of the principles of natural justice? Petitioner's Arguments: The petitioner contended that the assessment order and demand notice were illegal. They also argued that the bank account attachment was a coercive and extreme action taken without prior notice, thus violating principles of natural justice. The petitioner sought to pay the assessed demand in installments as per Section 80 of the Act. Revenue's Arguments: The revenue's stand, as recorded in the affidavit, was that following Notification No. 63/2020 dated August 25, 2020, and a press release by the Ministry of Finance on August 26, 2020, amendments to Section 50(1) were made effective prospectively from September 1, 2020. It was clarified that no recoveries would be made for interest charged on gross liability for past periods by central and state tax administrations. However, it was prayed that taxpayers be directed to pay interest on delayed payment of tax on net liability (cash ledger debit) as per the amended Section 50(1).