Ms Dhull Earth Movers Co vs. Union Of INDIA And Others

Held

The Court held that the benefit of waiver of interest under Section 128A of the Act of 2017, as clarified by the Circular dated 15.10.2024, is explicitly applicable only in respect of proceedings initiated under Section 73 of the Act of 2017. The Court found that in the present case, no proceedings under Section 73 were initiated. The petitioner was called upon to pay interest on an admitted tax liability that was deposited belatedly, which liability arises under Section 50 of the Act of 2017. The Court reasoned that the distinction drawn by the authorities in not extending the waiver of interest to instances of self-assessed tax has a clear nexus with the object sought to be achieved, as the liability to pay tax arose from self-assessment. Therefore, for any delay in deposit, interest accrues under Section 50. The waiver scheme contemplates waiver of interest only where tax is deposited in cases of dispute and proceedings under Section 73. The Court considered disputed tax and self-assessed tax as distinct, making the classification valid and not violative of Article 14 of the Constitution of India. The Court also noted that Section 75(12) of the Act of 2017 supports this view. Consequently, the stand of the revenue that no waiver of interest can be granted on admitted delay in deposit of self-assessed tax was upheld.

Facts

The petitioner, M/s Dhull Earth Movers Co., challenged an order dated 15.10.2025, which refused to grant waiver of interest on delayed tax deposit. The petitioner also challenged a communication dated 29.05.2024 to the extent it denied this waiver. The petitioner argued that Section 128A of the Central Goods and Services Tax Act, 2017 (the 'Act of 2017'), as clarified by a Circular dated 15.10.2024, should entitle them to waiver of interest since the tax was deposited. The revenue contended that the Circular explicitly states the waiver benefit is only for cases where proceedings were initiated under Section 73 of the Act of 2017, which was not the case here. The petitioner was called upon to pay interest on admitted tax liability deposited belatedly.

Key Issues

1. Whether the petitioner is entitled to the benefit of waiver of interest on delayed deposit of tax under Section 128A of the Act of 2017, as clarified by the Circular dated 15.10.2024, despite no proceedings under Section 73 of the Act of 2017 being initiated. Petitioner's contention: The petitioner argued that once Section 128A of the Act of 2017, as clarified by the Circular dated 15.10.2024, provides for waiver of interest where tax is deposited, they ought not to be saddled with such liability, and the rejection of their claim for waiver is legally incorrect. Revenue's contention: The revenue argued that the Circular dated 15.10.2024 clearly states that the benefit of waiver of interest is available only in cases where proceedings have been initiated under Section 73 of the Act of 2017. Since no such proceedings were initiated in the petitioner's case, the benefit of the Circular cannot be claimed.