Neosa Electronics Private Limited vs. Joint Commissioner Of Revenue & Ors
Held
The Court held that the impugned demand notice dated July 11, 2019, relating to interest under Section 50(1) of the GST Act, is not sustainable in law in its current form. This decision was based on the amendment to Section 50(1) of the GST Act by Section 112 of the Finance Act, 2021, which was deemed to have been substituted with effect from July 1, 2017. The amended proviso stipulates that interest on tax payable in respect of supplies declared in a return furnished after the due date, but before the commencement of proceedings under Section 73 or 74, shall be payable only on the portion of tax paid by debiting the electronic cash ledger. The Court set aside the impugned demand notice. However, it clarified that this setting aside would not prevent the respondent from recalculating the demand after considering the effect of the amended Section 50(1).
Facts
The petitioner, Neosa Electronics Pvt. Ltd., filed a writ petition challenging a demand notice dated July 11, 2019, issued by the Joint Commissioner of Revenue & Ors. The demand related to interest under Section 50(1) of the GST Act for the assessment years 2017-18 and 2018-19. The writ petition was filed on July 19, 2019. During the pendency of the writ 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 altered the proviso concerning the calculation of interest on delayed tax payments.
Key Issues
1. Whether the impugned demand notice dated July 11, 2019, for interest under Section 50(1) of the GST Act is sustainable in law, considering the subsequent 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 was made effective retrospectively from July 1, 2017, renders the impugned demand notice unsustainable. They relied on the amended provision to assert that the interest calculation should now be based on the amended legal position. Revenue's Contention: The State did not record any specific arguments against the petitioner's contention regarding the amendment's impact. However, the court's order implies a need for recalculation, suggesting the revenue might have argued for a revised demand rather than outright dismissal.
Sections Cited
Section 50, Section 73, Section 74, Section 112
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2021 p.b. Sl. No.
W.P.A. 13686 of 2019 Neosa Electronics Pvt. Ltd. Vs. Joint Commissioner of Revenue & Ors. (Via Video Conference) Mr. Anil Dugar, Mr. Rajarshi Chatterjee, Mr. Ramesh Kr. Chowdhury. …….for the petitioner. Mr. A. Ray, 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 11th July, 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 19th 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
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 decl
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