The Gujarat High Court issued the notice to Government over constitutional validity of the proviso to Section 50 of CGST Act, 2017.
The petitioner, Flair WRiting Industries Limited, has challenged the constitutional validity of the proviso to Section 50 of the Central Goods and Services Tax Act, 2017 with regard to the interest on delayed payment of tax.
Mr. Chksi, the counsel on behalf of the petitioner submitted that the proviso to Section 50 (1) of the Act, 2017 allowed the benefit of interest on tax payable in respect of the supplies made during a tax period, declared in the return for the said period and furnished after the due date.
It was pointed out that while the writ applicant is required to furnish return every month as per the first proviso to Section 37 of the CGST Act, he is not permitted to revise its returns after the month of September following the financial year in which the tax amount becomes due.
The petitioner argued that the amendment in the form of proviso is in violation of the decision taken by the GST Council in its 31st meeting held on December 22, 2018, wherein, the Council unanimously decided that interest is not payable for the delayed payment of tax through electronic credit ledger i.e. interest is applicable only on the “net liability”.
The petition said that the Council thought fit to recommend the Government to levy interest only on the net cash liability irrespective of the classification of the taxpayers. Such mandate from the GST council could not have been overlooked or restricted by the Parliament.
The division bench of Justice J.B.Pardiwala and Ilesh J.Vora directed the Notice to be issued to the respondent authorities, returnable on February 11, 2021. The respondents shall be served directly through email.
“In the meantime, Mr. Choksi, the counsel appearing for the writ applicants shall furnish one set of entire paperbook to Mr. Devang Vyas, the learned Addl. Solicitor General of India, so that by the next returnable date, Mr. Vyas can seek appropriate instructions in the matter,” the court said.Subscribe Taxscan AdFree to view the Judgment