Sakuma Exports Limited vs. Joint Commissioner Of Revenue, State Tax Authority & Ors
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The petitioner, Sakuma Exports Limited, challenged demand notices dated June 4, 2019, and June 17, 2019, issued by the Senior Joint Commissioner of Revenue, State Tax Authority, concerning interest under Section 50(1) of the GST Act for the assessment years 2017-18 and 2018-19. The writ petition was filed on June 21, 2019. During the pendency of the petition, Section 50(1) of the GST Act was amended by Section 112 of the Finance Act, 2021, with retrospective effect from July 1, 2017. The amendment introduced a proviso regarding the calculation of interest on tax payable for supplies declared in returns furnished after the due date, provided the return is not filed after the commencement of proceedings under Section 73 or 74.
Held
The Court held that the impugned demand notices dated June 4, 2019, and June 17, 2019, relating to interest under Section 50(1) of the GST Act, are not sustainable in law. The Court's reasoning was based on the retrospective amendment to Section 50(1) of the GST Act by Section 112 of the Finance Act, 2021, which is deemed to have been substituted with effect from July 1, 2017. This amendment introduced a proviso that modifies the manner of calculating interest on tax payable for supplies made during a tax period and declared in a return furnished after the due date, provided such return is not filed after the commencement of proceedings under Section 73 or 74. The ratio decidendi is that any demand for interest under Section 50(1) must now be computed in accordance with the amended provision. Consequently, the Court set aside the impugned demand notices. However, the Court clarified that setting aside the demand notices does not preclude the respondents from recalculating the demand after considering the effect of the amended Section 50(1).
Key Issues
1. Whether the impugned demand notices for interest under Section 50(1) of the GST Act are sustainable in law, considering the retrospective amendment to Section 50(1) by the Finance Act, 2021? The petitioner argued that the amendment to Section 50(1) of the GST Act, which was made retrospective from July 1, 2017, by Section 112 of the Finance Act, 2021, renders the impugned demand notices unsustainable. The petitioner contended that the amended provision alters the basis for calculating interest on delayed tax payments, and therefore, the original demand based on the unamended provision is no longer valid. The State, represented by the Senior Joint Commissioner of Revenue, argued that while the amendment is retrospective, the respondent authorities should be permitted to recalculate the demand in light of the amended provision, implying that the original demand might be flawed but the liability for interest could still exist under the revised calculation.
Sections Cited
Section 50, Section 73, Section 74, Section 112
AI-generated summary — verify with the full judgment below
2023. State Tax Authority, Large Tax Payers Unit & Ors. Mr. R. Chatterjee. …….for the petitioner. Mr. A. Ray, Mr. T. M. Siddiqui, Mr. S. Mukherjee, Mr. D. Ghosh. ………for the State. Both the parties are present. In this matter, the petitioner has challenged the impugned demand notice dated 4th June, 2019 and 17th June, 2019 in connection with interest under Section 50 Sub-Section (1) of the GST Act relating to the Assessment Year 2017-18 and 2018-19 and this writ petition was filed on 21st June, 2019. The petitioner submits that during the pendency of this writ petition, Section 50 Sub-Section (1) of the GST Act has been amended by the Finance Act, 2021 under Section 112 of the Finance Act which is quoted hereunder: - “112. In Section 50 of the Central Goods and Services Tax Act, in sub-section (1), for the proviso, the following proviso shall be substituted and shall be deemed
2 to have been substituted with effect from the 1st day of July, 2017, namely:- Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of Section 39, except where such return is furnished after commencement of any proceedings under Section 73 or Section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.” In view of this legal position as stands today and in view of this amendment, the impugned notice of demand relating to interest in question is not sustainable in law and is set aside. Accordingly, the writ petition being W.P.A. No.11308 of 2019 is disposed of. However, setting aside of the impugned demand notice will not prevent the respondent to recalculate the demand after taking into consideration the aforesaid amendment of Section 50 Sub-Section (1) of the GST Act. (Md. Nizamuddin, J.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.