Demand of Interest on Delayed Payment of Tax Set Aside as Revenue Failed to Provide Reasons for Rejecting Assessee’s Claim

Case Details: Lids Advertisers v. Deputy State Tax Officer - [2024] 163 taxmann.com 587 (Kerala)

Judiciary and Counsel Details

• Murali Purushothaman, J.
• R. Sreejith, K. Krishna, Achyuth Menon & Padmanathan K. V., Advs. for the Petitioner. 
• Thomas Mathew Nellimoottil, Adv., Smt. Jasmin, G.P. & T.C. Krishna, Senior Panel Counsel for the Respondent.

Facts of the Case

The petitioner was registered under the CGST Act, 2017. The GSTR-3B returns for the month of December 2017 to March 2018 were filed as ‘NIL’ due to an inadvertent error. The department issued notice and the petitioner submitted that GSTR-3B returns were erroneously filed as ‘NIL’ due to inadvertent error despite tax being paid within prescribed time. However, the department issued orders demanding interest on alleged delayed payment of tax. It filed writ petition against the demand order and contended that interest should not be demanded.

High Court Held

The Honorable High Court noted that the petitioner had submitted that tax for all the aforesaid months had been paid within the time provided as per Section 39(7) of the Act. However, the department failed to provide reasons for rejecting petitioner’s reply claiming timely payment.

The Court also noted that 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 is not acceptable. Therefore, it was held that the impugned orders were set aside for violation of principles of natural justice and the matter was directed for fresh consideration after giving opportunity to assessee.