The Madras High Court ruled that levy of interest under Goods and Service Tax (GST) on belated cash remittance as it is compensatory and mandatory.
The petitioner, M/s.F1 Auto Components P ltd has assailed the order levying interest under Section 50 of the Central Goods and Services Tax Act, 2017 relating to both interest on cash remittances as well as remittances by way of adjustment of electronic credit register.
Mr. P. V. Sudakar, the counsel for the petitioner relied on the provisions of Section 42 of the Act which provides for a notice to be issued by the Assessing Authority in the case of mismatch of particulars at the end of the assessee, vis-a-vis, particulars/details furnished in the returns of the selling/purchasing dealer.
The single-judge bench of Justice Anitha Sumanth held that in this case, the provisions of Section 42 of the Central Goods and Services Tax Act, 2017 are not relevant, insofar as the impugned order itself records that the assessee has, on receipt of intimation of the wrongful claim of input tax credit (ITC), accepted the error in the claim and has reversed ITC, both attributable to CGST and SGST through voluntary payment of tax in Form GST DRC-03.
The court held that the levy of interest on belated cash remittance is concerned, it is compensatory and mandatory and the levy is upheld to this extent.
As far as the second limb of the levy in respect of remittances by way of adjustment of electronic credit register, the court noted that it was covered by a decision in the case of Maansarovar Motors Private Limited V. The Assistant Commissioner, Poonamallee Division, Chennai, and therefore the levy to this extent was set aside.
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