Madras HC Remits GST Demand to STO for Recomputation Interest on Belated Payment and Review ITC Claims [Read Order]

The Madras High Court remitted the matter back to the State Tax Officer (STO) and set out specific directions for the recomputation of interest and the review of Input Tax Credit (ITC) claims.

A.S.R. Constructions (petitioner), challenged an order dated 25.02.2025 passed by the State Tax Officer, Bhavani Assessment Circle, Erode. This order confirmed part of the demand proposed in a Show Cause Notice (SCN) in DRC-01 dated 25.11.2024. The SCN originally pointed out four defects.

However, the demand for defect No. 2 was dropped. The petitioner accepted to pay the late fee leviable under Section 47 of the respective GST enactments for defect No. 4. Therefore, before the court only defects 1 and 3 were adjudicated.

The petitioner submitted that the entire tax amount was paid on 19.12.2022 from their electronic credit ledger, which was prior to the issuance of the DRC-01 notice, and argued that the imposition of interest was therefore unjustified.

The bench of Justice C. Saravanan disposed of the Writ Petition with specific observations. This defect pertained to outward supplies captured in GSTR-09. The total tax due was ₹4,14,998.

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The Court directed the respondent (State Tax Officer) to recompute the interest. The calculation must be done after comparing the delay with reference to the payment of tax in the monthly returns (GSTR-3B) filed under Section 39 of the GST enactments. Interest must be computed taking note of the debit entry on 19.12.2022.

The court observed that the confirmed amount in the impugned order was ₹48,835/- towards CGST and ₹48,835/- towards SGST. The court observed the petitioner’s submission that they had secured certificates from the suppliers and sought an opportunity to explain their case afresh.

The Court directed the petitioner to file the necessary certificates to justify their entitlement to the balance amount of Input Tax Credit within a period of thirty (30) days from the date of receipt of the order copy.

The court remitted the matter to the State Tax Officer to redo the exercise concerning defect Nos. 1 and 3. The respondent was directed to proceed to pass final orders on merits after hearing the writ petitioner. The Writ Petition was disposed of

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