Amendment to S. 50 of Central GST Act on Interest on Late Payment of Tax has Retrospective Effect: Chhattisgarh HC [Read Order]

The Chhattisgarh High Court has held that the amendment to section 50 of the Central GST Act, 2017 regarding the imposition of the interest on late payment of tax has a retrospective effect.

The petitioner, M/s Abis Export India Ltd., is involved in the production of pet food. The said commodity is taxable commodity under the Act, 2017, but due to non-availability of clear instructions or notification with regard to taxation on animal and pet food, which falls in the index under Chapter 23 HSN 2309. The animal feed and pet food were sold by the petitioner's company to different distributors without charging GST and the return was filed. However, with the passage of time, when the provisions of GST emerged out of fuming condition and the fact got established that all animal feed is exempted from tax except pet food. The petitioner's company approached the authority showing the difference in its GSTR 1 & GSTR 3B and sought directions from the authorities about the mechanism to rectify its return, but on account of the non-availability of the mechanism, the return could not be rectified. The petitioner was held liable for payment of interest of Rs. 72,69,975 after examining the GSTR 3B which is return as provided under Section 39 of the GST Act.

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.

Justice Narendra Kumar Vyas observed 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 the 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, as such, in view of the amendment made by the Central Government, the writ petition is disposed of 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 the amendment made in Section 50 of the Income Tax Act or not.”

Concluding the order, the High Court added that “It is made clear that this Court has only examined the retrospective applicability of amendment in Section 50 of the Act, 2017 and whether the petitioner can take advantage or not overcome 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 an opportunity of hearing to the petitioner. The impugned order dated 11.09.2018 (Annexure P/1) is set aside and the matter is remitted 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 this Court.”

To Read the full text of the Order CLICK HERE

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