In the cases of W.A.No.2127 of 2019 and W.A.No.2151 of 2019, two writ petitioners challenged notices issued under Section 79(1)(c) of the CGST Act to Indian Overseas Banks, directing them to pay sums to the government from the petitioners’ accounts. Both cases involved bank attachment proceedings due to alleged delays in GST payments.
In W.P.No.15978 of 2019, the petitioner, a business entity, cited difficulties in timely filing GST returns and remitting dues due to market recession. The petitioner argued that they paid taxes after receiving amounts from purchasers but were later demanded a significant sum as interest for belated tax payment, which they contested. Despite their calculations showing a lower interest amount, their bank account was attached.
Similarly, in W.P.No.15624 of 2019, another petitioner contended that they regularly filed GSTR-1 but couldn’t utilize input tax credit (ITC) until full tax payment, contrary to law allowing partial payments. Despite having ITC credit, they were asked to pay interest on the entire tax liability, resulting in a bank attachment.
Both petitioners were engaged in manufacturing and faced delays in GST compliance. The Revenue claimed interest under Section 50 of the CGST Act automatically accrued upon delayed payment, requiring no separate proceedings. They cited a Telengana High Court order supporting this stance.
The petitioners argued that the bank attachment proceedings violated natural justice principles and were initiated without determining the interest liability. They contested the automatic imposition of interest, claiming discrepancies in calculations and unfairness in attaching their bank accounts without proper adjudication.
The cases raised significant issues regarding GST compliance, interest calculation, and procedural fairness. The court’s decision would likely clarify the process for imposing interest on delayed GST payments and the validity of bank attachment proceedings in such cases.
The cases in question involve challenges to notices issued under Section 79(1)(c) of the Central Goods and Services Tax (CGST) Act, 2017, directing Indian Overseas Banks to pay sums owed to the government by the petitioners, effectively initiating bank attachment proceedings.
In W.P.No.15978 of 2019, the petitioner, a business entity, faced demands for interest due to delayed GST payments from July 2017 to March 2018. Despite timely filing of returns and payments for certain months, a communication from the Superintendent of Central Excise demanded interest, leading to a dispute over the amount owed. The petitioner argued that interest should only be calculated on the cash component of unpaid taxes, not the entire liability, and sought to resolve the matter without bank attachment.
Similarly, in W.P.No.15624 of 2019, the petitioner, another business entity, contested demands for interest on delayed tax payments from July 2017 to November 2018. They argued that despite having input tax credit (ITC), they were unable to utilize it to offset taxes until full payment was made. The petitioner disputed the calculation of interest, claiming it should only apply to the cash component of unpaid taxes, not the total liability.
Both petitioners contended that the bank attachment proceedings violated principles of natural justice and were initiated without a proper determination of interest liability.
The Revenue’s position was that interest under Section 50 of the CGST Act is automatic once there’s a delayed tax payment, without requiring separate proceedings to determine liability. They cited a Telangana High Court ruling supporting this stance.
The Writ Court disposed of W.P.No.15624 of 2019 by directing the petitioner to pay the admitted liability within a specified time frame, upon which the bank attachment would be set aside. If payment wasn’t made, the petition would be dismissed. The Revenue was instructed to review the petitioner’s contentions and pass a lawful order accordingly. A similar disposition was made for W.P.No.15978 of 2019.
In summary, the cases revolve around disputes over interest calculations on delayed GST payments, with petitioners arguing for a more nuanced approach to determining liability and contesting the automatic imposition of interest. The courts directed resolution through payment of admitted liabilities and review by the Revenue, emphasizing adherence to legal procedures and principles of justice.
Download PDF:
For Reference Visit:
Read Another Case Law:
GST Case Law:
