Kic Metaliks Limited vs. Joint Commissioner, Large Tax Payers Unit & Ors
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The petitioner, KIC Metaliks Limited, challenged an order dated July 15, 2019, concerning interest levied under Section 50(1) of the GST Act for the period April 2018 to March 2019. 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 retrospective effect from July 1, 2017. The amendment introduced a proviso clarifying the basis for interest calculation on delayed tax payments.
Held
The Court held that the impugned order, which related to interest under Section 50(1) of the GST Act for the period April 2018 to March 2019, was not sustainable in law due to the retrospective amendment of Section 50(1) by the Finance Act, 2021. The Court reasoned that the amended provision, effective from July 1, 2017, altered the basis for calculating interest on delayed tax payments. The proviso to the amended Section 50(1) clarifies that interest is payable on the portion of tax paid by debiting the electronic cash ledger, subject to certain conditions. The ratio decidendi is that any order concerning interest under Section 50(1) must now be assessed in light of this retrospective amendment. The Court set aside the impugned order. However, it permitted the respondent to recalculate the demand, taking into consideration the aforesaid amendment of Section 50(1) of the GST Act.
Key Issues
1. Whether the impugned order levying interest under Section 50(1) of the GST Act is sustainable in law, in light of the retrospective amendment to Section 50(1) by the Finance Act, 2021? Petitioner's contention: The petitioner argued that the amendment to Section 50(1) of the GST Act, which has retrospective effect from July 1, 2017, renders the impugned order unsustainable. They relied on the amended proviso which states that interest is payable only on the portion of tax paid by debiting the electronic cash ledger, provided the return is filed after the due date but before the commencement of proceedings under Section 73 or 74. Revenue's contention: The judgment records no specific argument from the revenue or state.
Sections Cited
Section 50(1), Section 73, Section 74
AI-generated summary — verify with the full judgment below
2022 ks sl. No.94 W.P.A. 14389 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. N. Chatterjee …….for the State. Both the parties are present. In this matter, the petitioner has challenged the impugned order dated 15th July, 2019 in connection with interest under Section 50 Sub-Section (1) of the GST Act relating to the period April, 2018 to March, 2019 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.14389 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.