Kic Mrtaliks Limited vs. Joint Commissioner, Large Tax Payers Unit & Ors
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The petitioner, KIC Metaliks Limited, challenged an order dated July 5, 2019, concerning interest levied under Section 50(1) of the GST Act for the period November 2017 to February 2018. The writ petition was filed on July 29, 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 effect from July 1, 2017. The amendment introduced a proviso clarifying the calculation of interest on delayed payment of tax, specifically concerning the portion paid through the electronic cash ledger.
Held
The Court held that the impugned order relating to interest under Section 50(1) of the GST Act for the period November 2017 to February 2018 is not sustainable in law due to the retrospective amendment of Section 50(1) by the Finance Act, 2021. The Court reasoned that the amendment, effective from July 1, 2017, clarifies the method of calculating interest on delayed tax payments, specifically stating that interest is payable on the portion of tax paid by debiting the electronic cash ledger, provided the return is filed after the due date but before proceedings under Section 73 or 74 commence. The Court found this amended legal position to be decisive. Consequently, the impugned order was set aside. However, the Court clarified that setting aside the demand notice 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 order levying interest under Section 50(1) of the GST Act for the period November 2017 to February 2018 is sustainable in law, considering the subsequent 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 is deemed to have retrospective effect from July 1, 2017, renders the impugned order unsustainable. They contended that the amended provision clarifies the basis for calculating interest on delayed tax payments, specifically mentioning the portion paid via the electronic cash ledger, and therefore, the original order based on the pre-amendment understanding is no longer valid. The revenue (Joint Commissioner, Large Tax Payers Unit & Ors.) did not record any specific arguments against the petitioner's contention regarding the amendment's impact.
Sections Cited
Section 50, Section 73, Section 74, Section 112
AI-generated summary — verify with the full judgment below
2022 ks sl. No.93 W.P.A. 14386 of 2019 KIC Metaliks Limited Vs. Joint Commissioner, Large Tax Payers Unit & Ors. Mr. Anil Dugar, Mr. Rajarshi Chatterjee, Mr. Piyal Gupta …….for the petitioner. Mr. A. Ray, Mr. T.M. Siddiqui, Mr. D. Ghosh. …….for the State. Both the parties are present. In this matter, the petitioner has challenged the impugned order dated 5th July, 2019 in connection with interest under Section 50 Sub-Section (1) of the GST Act relating to the period November, 2017 to February, 2018 and this writ petition was filed on 29th July, 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 to have been substituted with effect from the 1st day of July, 2017, namely:-
2 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 order relating to interest in question is not sustainable in law and is set aside. Accordingly, the writ petition being W.P.A. No.14386 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.