No interest to be paid on amount paid through credit ledger in respect of returns filed after due date: HC

Case Details: Utkal Automobiles (P.) Ltd. v. Union of India - [2022] 142 taxmann.com 116 (Orissa)

Judiciary and Counsel Details

• • Jaswant Singh & M.S. Raman, JJ.
  • Ms Rudra Prasad Kar, Sriman Arpit Mohanty & Bhabani Prasad Mohanty, Advs. for the Petitioner.
  • Radheshyam Chimanka, Sr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner had filed monthly returns belatedly and calculated interest on its own on net GST liability after adjusting input tax credit (ITC) available in electronic credit ledger as per section 50 of GST Act. The department issued demand letter levying interest on gross GST liability before adjusting ITC. It filed writ petition against the same.

High Court Held

The Honorable High Court noted that the interest should be levied on portion of tax paid by debiting electronic cash ledger and not by electronic credit ledger as per the proviso to sub-section (1) of Section 50 of the CGST Act, 2017, with retrospective effect from 01.07.2017 by virtue of the Finance Act, 2021. Therefore, the impugned demand letter was to be set aside and matter remanded back to department for reconsideration after taking into account amendments made by Finance Act, 2021.