Orissa HC sets aside Interest Demand on Short-Paid GST: Remands Case citing Amended S.50 & GST Council Decision [Read Order]
The Orissa High Court abstained from engaging in detailed discussion behind its decision and limited the discussion to the prevalent law and binding precedent
The Orissa High Court recently set aside an interest demand raised against a taxpayer for alleged short payment of Goods and Services Tax (GST) for the financial year 2017-18, remanding the case for fresh consideration in light of the amendments made to Section 50 of the Central GST Act, 2017 and decisions taken by the GST Council.
The petitioner Jitendra Nath Khandual, had approached the High Court assailing an order dated 30 January 2025 passed by the Superintendent of GST & Central Excise, Kendrapara Range.
The impugned order had raised a demand for interest on GST short-paid or unpaid for the period from July 2017 to March 2018 under Section 74 of the Central Goods and Services Tax Act, 2017.
The primary contention of the petitioner was that the basis for the interest demand had been fundamentally altered by subsequent legal developments, including a key decision of the GST Council in its 31st meeting held on 22.12.2018 and the retrospective amendment to Section 50 of the CGST Act, brought into effect by Section 112 of the Finance Act, 2021.
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Ramesh Chandra Jena appeared for the petitioner and submitted that the impugned order-in-original, which sought to levy interest on short-paid GST could not stand valid in light of the aforementioned changes in law. He further placed reliance on the decision of the Orissa High Court in Utkal Automobile Private Limited v. Union of India & Others, (W.P.(C) No.10277 of 2020).
Avinash Kedia, appearing for the revenue conceded that the present demand order stood untenable in light of the judgment in Utkal Automobile (supra) and that the same legal principles would apply here as well.
A Division Bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman acceded to the petitioner's reliance on the retrospective amendment to Section 50 and the decision of the GST Council. Consequently, the Bench set aside the order dated 30 January 2025 and remanded the matter to the Superintendent of GST & Central Excise, Kendrapara Range, for reconsideration strictly in accordance with law and the directions in the Utkal Automobile judgment.
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