The Kerala High Court has set aside the interest on delayed payment of tax for violating principles of natural justice, noting that no reasons were stated for not accepting the petitioner’s reply.
The petitioner was an assessee under the CGST/SGST Acts, 2017. According to the petitioner, GSTR-3B returns for the months of December 2017, January to March 2018 and April 2018 to March 2019 were filed as ‘NIL’ due to an inadvertent error on the part of the petitioner’s accountant.
The petitioner submitted that tax for all the aforesaid months has been paid within the time provided as per Section 39(7) of the Act as evidenced by series of payment receipts and series of challans. However, the deputy state tax officer orders had raised huge demands including interest on the alleged delay in payment of tax for the period 2017-18 and 2018- 19 respectively.
The pursuant to the direction of this Court dated 24.5.2024, the Government Pleader on instructions submitted that the contentions of the petitioner as regards interest on belated payment of tax was taken into consideration and rejected.
The interest on delayed payment of tax was addressed, mentioning that the taxpayer was granted an opportunity for a hearing on August 4, 2023, at 11:00 AM in the office of the State Tax Officer, thiruvalla. However, the taxpayer appeared on August 12, 2023, and manually filed a reply, stating that the amounts were already remitted to the electronic cash ledger and the tax was paid via DRC 03, utilizing the existing amounts in the electronic cash ledger. Consequently, the proposal to demand interest on delayed payment of tax was requested to be dropped. But the reply filed by the taxpayer was not acceptable.
No reasons are stated for not accepting the reply of the petitioner. When a show cause notice is issued and a reply is submitted, the authority issuing the show cause notice shall record the reason as to why the reply was not acceptable. The interest on delayed payment of tax were set aside being passed in violation of the principles of natural justice.
The Single Bench, comprising Justice Murali Purushothaman, directed the Deputy State Tax Officer to revisit the matter regarding interest on delayed payment of tax. The petitioner is instructed to appear before the Deputy State Tax Officer on June 18, 2024, at 11 a.m. Subsequently, the Deputy State Tax Officer was mandated to issue fresh orders within one month from the said date.
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