No Excuse For Not Paying GST In Time From Its Electronic Cash Register: Madras High Court Upholds Interest Demand

The petitioner was issued with a notice by which a sum of Rs. 6,58,233/- was demanded from the petitioner as interest payable under Section 50(1) of the CGST Act, 2017 read with Notification dated 28.06.2017. The petitioner was directed to pay the amount by 10.03.2020. The petitioner has challenged the demand notice.

The writ petition was disposed of by a single judge's bench. The court directed the department to issue an appropriate order to recompute the amount of interest liability for delayed payment of cash and refund the balance of the amount.

The petitioner has now approached the Court once again and has challenged the communication, asking the petitioner to pay a sum of Rs. 7,48,190 as the delayed payment of tax by cash for the period between July 2017 and October 2020.

The department contended that, in light of the stay obtained by the petitioner, the department was unable to recover the amount.

The question was whether the recovery under the proposed notice pursuant to an earlier order of the Court would fall under the purview of Section 50 of the CGST Act, 2017 read with Rule 142(A) of the CGST Rules, 2017 as inserted by notification No.60/2018-Central Taxes, dated 30.10.2018 w.e.f., 30.10.2018.

Under existing law, the CGST Rules, 2017, prescribe the procedure for recovering dues.

As per Section 50 (1) of the CGST Act, 2017, every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the government within the period prescribed, shall, for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate as may be notified by the government on the recommendations of the Council.

The Central Board of Indirect Taxes and Customs has also clarified on 26.8.2020 that no recovery of interest shall be made for the past in the light of the decision taken by the GST Council in its 39th meeting on delayed payment of GST.

The court noted that interest has been demanded on the net tax liability of the petitioner on account of belated payment of tax during the aforesaid period under Section 50(1) of the CGST Act, 2017.

"Since tax was paid by the petitioner belatedly, the petitioner is liable to interest during the period of default." There was no excuse for not paying the tax in time from its electronic cash register. Nothing precluded the petitioner from discharging the tax liability from its electronic credit," the court said.

Case Title: M/s.Srinivasa Stampings Versus The Superintendent of GST and Central Excise

Case No: WP.No.7129 of 2021 and WMP.Nos.7645 & 7647 of 2021

Dated: 08.04.2022

Counsel For Petitioner: No Appearance

Counsel For Respondent: Junior Standing Counsel R.Gunalan

Citation: 2022 LiveLaw (Mad) 202

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