Finex Merchants Private Limited vs. State Of West Bengal And Ors.
Original PDF →Facts
The petitioner, Finex Merchants Pvt Ltd, challenged an adjudication order dated June 24, 2019, and an appellate authority order dated March 6, 2020, concerning interest levied 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, effective retrospectively from July 1, 2017, rendered the demand for interest unsustainable. The petitioner had paid Rs. 1,35,14,156/- on May 30, 2019, against the demand raised in the adjudication order. The State of West Bengal and its authorities were the respondents.
Held
The Court held that the impugned adjudication order and the appellate order demanding interest under Section 50(1) of the GST Act, 2017, were not sustainable in law due to the retrospective amendment to Section 50(1) by the Finance Act, 2021. The Court noted that the amendment, effective from July 1, 2017, changed the basis for calculating interest. The ratio decidendi is that any demand for interest under Section 50(1) must be in accordance with the law as it stands after the retrospective amendment. Consequently, the Court set aside the impugned orders. The Court further directed the concerned respondent to verify the refund claim of Rs. 1,35,14,156/- made by the petitioner, and if found correct, refund the amount within four weeks from the communication of the order, considering the retrospective amendment.
Key Issues
1. Whether the impugned adjudication order and the subsequent appellate order demanding interest under Section 50(1) of the GST Act, 2017, are sustainable in light of the retrospective amendment to Section 50(1) by the Finance Act, 2021. Petitioner's arguments: The petitioner contended that the retrospective amendment to Section 50(1) of the GST Act, 2017, which substituted the proviso and was deemed effective from July 1, 2017, fundamentally altered the basis for levying interest. They argued that the amended provision, which states interest is payable on the portion of tax paid by debiting the electronic cash ledger, makes the original demand unsustainable. They relied on the amended Section 50(1) and the fact that the amendment was retrospective. Revenue's arguments: The judgment records no specific arguments from the State/Revenue.
Sections Cited
Section 50(1), Section 73, Section 74
AI-generated summary — verify with the full judgment below
09-02-2022 Item No.4 Subrata IN THE HIGH COURT AT CALCUTTA Constitutional Writ Juri iction Appellate Side WPA No.7592 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 June 24, 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 March 6, 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 May 14, 2019 is not sustainable and accordingly the impugned order of the appellate authority dated March 6, 2020 in connection with the demand relating to interest is set aside. Petitioner further submits that it had paid Rs.1,35,14,156/- on May 30, 2019, against the demand raised in the adjudication order dated May 14, 2019. 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 1,35,14,156/-; 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.7592 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.