Interest on Net Tax Liability is levied as a result of an amendment to Section 50 of the CGST Act 2017 and is applicable as of July 1, 2017: Chhattisgarh High Court 

Interest on Net Tax Liability is levied as a result of an amendment to Section 50 of the CGST Act 2017 and is applicable as of July 1, 2017: Chhattisgarh High Court 

The Chhattisgarh High Court ruled that the interest on Net Tax Liability which is levied as a result of an amendment to Section 50 of the CGST Act 2017 is applicable as of July 1, 2017.

Background 

The petitioner has filed the writ petition assailing the order by which the appeal preferred by the petitioner under Section 50(1) of the Central Goods and Services Tax Act, 2017 has been rejected on the count that the petitioner has not paid the amount of tax, interest, fine, fee and penalty arising from the impugned order, which is in violation of Section 107 (6) of the Act, 2017. The petitioner has also filed the writ petition assailing the order by which the petitioner has been directed to pay interest and demand was directed to be issued within 7 days.

Arguments 

Senior Advocate Rajeev Shrivastava, appearing for the petitioner, submitted that there was no clear understanding of law, therefore, the petitioner approached different authorities of the State from whom he got registration under the GST Act and asked whether the entire entry under 2309 is exempted from GST or not.

He further submitted that the taxing authority/the Assistant Commissioner, Chhattisgarh State Tax, ignoring the fact that the products manufactured by the petitioner is non-taxable, has sought explanation from the petitioner with regard to difference in GST liability reflecting in GSTR 3B.

The State contended that there is certain specific provision which has been provided for furnishing information by the taxpayers.

It has been further contended that the provisions prescribed under the Goods and Services Tax Act provide for three kinds of return i.e. GSTR 1 is to be filed stating there the details of outward supplies in compliance of Section 37, thereafter, GSTR 2 is to be filed stating therein the details of inward supplies in compliance of Section 38 and return in the prescribed form of GSTR-3 is to be filed in compliance of Section 39. 

Decision 

The single judge bench of Justice Narendra Kumar Vyas noted that during pendency of the writ petition, the Government of India vide its Gazette notification has amended Section 50 of the Central Goods and Service Tax Act, 2017 and proviso has been inserted which has been made effective w.e.f. July, 2017. 

It was further noted that Section 107 (6) of the Act, 2017 provides that no appeal shall be filed under sub-section (1) unless the appellant has paid the tax as provided in Section (a) & (b) of the said section.

He court said that the amendment which has been made effective from 01.07.2017 clearly provides that the interest on tax payable in respect of supplies made during the tax paid and declared in the return for the said period furnished after the due date in accordance with the provisions of Section 39 of the Act, 2017 except where such return is furnished after commencement of any proceedings under Section 73 or 74 of the Act, 2017 shall be levied on that portion of tax i.e. paid by debiting the electronic cash ledger, as such, the amendments are having retrospectively applicability effect.

The bench disposed of the writ petition with a direction to the appellate authority to examine whether in the given facts and circumstances of the case the petitioner can be extended benefits of amendment made in Section 50 of the Income Tax Act or not.

It was made clear by the court that it has only examined the retrospectively applicability of amendment in Section 50 of the Act, 2017 and whether the petitioner can take its advantage or not to over come the rider of Section 107(6) which is a condition precedent for maintaining the Appeal under GST Act 2017, it will be decided by the appellate authority in accordance with law after giving opportunity of hearing to the petitioner.

The court set aside the impugned order and remitted the matter back to the appellate authority to decide the appeal of the petitioner afresh after examining the effect of the amendment in Section 50 of the Act, 2017 within four months from the date of receipt of copy of order passed by the Court.

Case title: Abis Export India Private Limited through its Director Dr. Anjum Alvi v/s State of Chhattisgarh

Citation: WPT No. 100 of 2019

Click here to read the Order/Judgment 

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