Finex Merchants Private Limited vs. State Of West Bengal And Ors.
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The petitioner, Finex Merchants Pvt Ltd, challenged an adjudication order dated September 4, 2019, concerning interest liability under Section 50(1) of the GST Act, 2017, for the assessment year 2017-18. The petitioner argued that an amendment to Section 50(1) of the GST Act, made effective retrospectively from July 1, 2017, by the Finance Act, 2021, rendered the impugned order unsustainable. The amendment altered the basis for calculating interest on delayed tax payments. The petitioner also stated that they had paid Rs. 30,58,973/- as pre-deposit and sought its refund due to the retrospective change in law. The State of West Bengal and its authorities were the respondents.
Held
The Court held that the impugned adjudication order dated September 4, 2019, and the subsequent order of the appellate authority dated September 2, 2020, concerning interest under Section 50(1) of the GST Act, 2017, were not sustainable in law. This decision was based on the retrospective amendment to Section 50(1) of the GST Act, 2017, by Section 112 of the Finance Act, 2021, which was deemed to have been substituted with effect from July 1, 2017. The amended provision clarifies that interest is payable on the portion of tax paid by debiting the electronic cash ledger, provided the return is filed before the commencement of proceedings under Section 73 or 74. The Court reasoned that this retrospective change in law fundamentally altered the basis of the interest demand. Consequently, the Court set aside the impugned orders. The Court further directed the concerned respondent to verify the petitioner's claim for a refund of Rs. 30,58,973/- paid as pre-deposit and, upon verification of its correctness, to refund the amount within four weeks from the communication of the order, taking into account the aforesaid amendment.
Key Issues
1. Whether the impugned adjudication order dated September 4, 2019, relating to interest under Section 50(1) of the GST Act, 2017, is sustainable in light of the retrospective amendment to Section 50(1) by the Finance Act, 2021 (Section 112)? Petitioner's arguments: The petitioner contended that the retrospective amendment to Section 50(1) of the GST Act, 2017, which changed the calculation of interest on delayed tax payments, made the original adjudication order unsustainable. They relied on the amended provision which states that interest is payable only on the portion of tax paid by debiting the electronic cash ledger, provided the return is furnished before proceedings under Section 73 or 74 are commenced. The petitioner further argued that since the order was being set aside due to a retrospective change in law, they are entitled to a refund of the pre-deposit of Rs. 30,58,973/-. Revenue/State's arguments: The judgment does not record any specific arguments made by the State of West Bengal and Ors. in response to the petitioner's contentions regarding the sustainability of the adjudication order or the refund of pre-deposit.
Sections Cited
Section 50, Section 73, Section 74
AI-generated summary — verify with the full judgment below
09-02-2022 Item No.3 Subrata IN THE HIGH COURT AT CALCUTTA Constitutional Writ Juri iction Appellate Side WPA No.7589 of 2020 Finex Merchants Pvt Ltd -vs- State of West Bengal & Ors. Mr. Suryaneel Das …for the petitioner Md. T.M. Siddiqui Mr. D. Ghosh …for the State In this writ petition, petitioner has challenged the impugned adjudication order dated September 4, 2019 by contending that in view of amendment to section 50 sub- section (1) of the GST Act, 2017 and the order of the appellate authority dated September 2, 2020 in connection with interest under section 50 sub-section (1) of the GST Act relating to the assessment year 2017-18, the aforesaid impugned order of adjudication relating to interest is not sustainable in law. Section 50 sub-section (1) of the GST Act, 2017 which has been amended by the Finance Act, 2021 under section 112 of the Finance Act 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:- 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 now due to the aforesaid amendment, the impugned demand arising
2 out of the impugned adjudication order dated September 4, 2019 is not sustainable and accordingly the impugned order of the appellate authority dated September 2, 2020 in connection with the demand relating to interest is set aside. Petitioner further submits that it had paid Rs.30,58,973/- as pre-deposit. Since the adjudication order is being set aside due to the retrospective change in law, petitioner is entitled to get refund of the same, and accordingly respondent concerned shall verify the refundable amount as claimed by the petitioner which, according to the petitioner, is 30,58,973/-; and on verification, if it is found that claim of the petitioner is correct, in that event respondent concerned shall refund the same, within a period of four weeks from the date of communication of this order by taking into consideration the aforesaid amendment. With the above observation and direction, this writ petition being WPA No.7589 of 2020 stands disposed of. [Md. Nizamuddin, J]
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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.