In a recent ruling, the Madras High Court disposed of the writ petition concerning the pre-deposit requirement for interest liability linked to a 100% penalty imposed, despite the discharge of Goods and Services Tax ( GST ) liability. The court imposed the pre-deposit condition due to the expiration of the time limit for filing an appeal.
The proceedings were initiated against the petitioner through a show cause notice dated 27.02.2023. Prior to this notice, the petitioner had duly settled the GST liability on three occasions – on 31.03.2019, 03.04.2019, and 23.04.2019, utilising the electronic credit ledger. The impugned order was issued in these facts and circumstances.
The counsel representing the petitioner argued that the petitioner is entitled to the proviso to Section 50(1) of the Central Goods and Services Tax Act, 2017, and hence should not be held liable for interest.
Furthermore, it was contended that since the tax liability was discharged before the issuance of the show cause notice, the petitioner should also be exempted from penalties. The petitioner sought permission to appeal to the appellate authority as per statutory provisions.
Mr. Ramesh Kutty, senior standing counsel of respondent, contended that although the petitioner had collected taxes for outward supply of goods/services, there was a failure to remit tax. He further argued that since the liability was settled after the commencement of proceedings, the petitioner could not avail the benefit of the proviso to Section 50(1).
The court noted that the impugned order acknowledged that the petitioner had discharged GST liability on the mentioned dates, leaving the challenge limited to interest and penalty. Notably, the order imposed a 100% penalty.
Considering the petitioner’s compliance with GST liability in 2019 and the imposition of a significant penalty, a Single bench of Justice Senthilkumar Ramamoorthy deemed it just and appropriate to grant permission for a statutory appeal. However, since the time limit for filing such an appeal had expired, the petitioner was required to fulfil certain conditions.
The petitioner expressed the petitioner’s willingness to remit a sum of Rs.2.5 lakhs as a condition for being allowed to file a statutory appeal.
Consequently, a Single bench of Justice Senthilkumar Ramamoorthy the matter was disposed of by permitting the petitioner to file a statutory appeal before the appellate authority, subject to the condition that the petitioner remits the specified sum within three weeks from the date of receiving a copy of the court order. Should the petitioner meet this condition, the appellate authority was directed to receive and consider the appeal on its merits without considering the question of limitation.
No costs were awarded, and connected miscellaneous petitions were closed accordingly.
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