Whether the Petitioner is liable to pay interest on the belated cash remittance?

Case Title

F1 Auto Components P ltd vs State Tax officer

Court

Madras High Court

Honorable Judges

Justice Anita Sumanth

Citation

2021 (7) GSTPanacea 34 HC Madras

W.P. No.6631 of 2021 and WMP No.7188 of 2021

Judgement Date

09-July-2021

Council for Petitioner

Mr.P.V.Sudakar

Council for Respondent

Mr.TNC.Kaushik

In favour of

Petitioner

Section

Section 42 and 50 of the CGST Act,2017

The Madras High Court, bench of Justice Anita Sumanth, has held that the levy of interest on belated cash remittance is concerned, it is compensatory and mandatory and the levy is upheld to this extent.

FACTS OF THE CASE

This Petition has been filed by M/s F1 Components Pvt. Ltd. (“the Petitioner”), being aggrieved by the order passed by the Revenue Department (“the Respondent”), dated January 27, 2021 (“the Impugned Order”), levying interest under Section 50 of the CGST Act relating to interest on cash remittances as well as remittances by way of adjustment of electronic credit register.. The Petitioner has relied on the provisions of Section 42 of the CGST Act which provides for a notice to be issued by the Assessing Authority (“A.A.”) in the case of mismatch of particulars at the end of the Petitioner, vis-à-vis particulars furnished in the returns of the selling/purchasing dealer.

COURT HELD

The Hon’ble High Court of Madras in W.P. No.6631 of 2021 And WMP No.7188 of 2021, dated July 09, 2021, held as under: Referred to the decision of the Hon’ble Madras High Court in the case of M/s. Maansarovar Motors Private Limited [WP.No.4468 of 2020, dated September 29, 2020] wherein, the Court set aside the orders for levying interest on ITC as applied on delayed payment in line with GST Council’s recommendation of levying interest on net cash liability only with effect from July 1, 2017 and it was held that the proviso to Section 50 of the CGST Act is retrospective in operation notwithstanding the notification bringing it into effect from September 1, 2020. Analysed the provisions of Section 42 of the CGST Act, and noted that, the same is not applicable as the Petitioner has accepted the error in claim on receipt of intimation of wrongful claim of ITC by the Respondent and has accordingly reversed ITC through voluntary payment of tax in Form GST DRC-03. Whereas, such provisions can only be invoked, in case the mismatch is on account of the error in the database of the Respondent or a mistake that has been occasioned at the end of the Respondent. But in the present case, the Petitioner’s claim for ITC is erroneous, and it is not the case of mismatch. Modified and set aside the Impugned Order to the extent that interest on remittances by way of adjustment of electronic credit register is not leviable. Held that, the levy of interest on belated cash remittance is compensatory and mandatory.


ANALYSIS OF THE JUDGEMENT

From the above case we analyse that No interest on reversal of wrongful availment of credit.

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F1 Auto Components P ltd

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