1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:
“a) to issue writ of or in the nature of a mandamus or any other appropriate writ, order or direction holding the Form GST DRC-01 issued to the petitioner as without authority of law and liable to be quashed.                                                                                                            b) To issue writ of or in the nature of a mandamus or any other appropriate writ,    order or direction holding the interest on delayed payment of tax to be charged on gross liability is ultra vires and de hors to section 50 of the CGST Act, CGST Act and / or ultra vires to the constitution of India.                                                                                                                b) To issue writ of or in the nature of a mandamus or any other appropriate writ, order or direction holding the interest on delayed payment of tax to be charged on gross liability is ultra vires and de hors to section 50 of the CGST Act, CGST Act and / or ultra vires to the constitution of India.                                                                                                                    b) To issue writ of or in the nature of a mandamus or any other appropriate writ, order or direction holding the interest on delayed payment of tax to be charged on gross liability is ultra vires and de hors to section 50 of the CGST Act, CGST Act and / or ultra vires to the constitution of India.                                                                                                                b) To issue writ of or in the nature of a mandamus or any other appropriate writ, order or direction holding the interest on delayed payment of tax to be charged on gross liability is ultra vires and de hors to section 50 of the CGST Act, CGST Act and / or ultra vires to the constitution of India. 

c) Pending admission, hearing and till final disposal of this petition, Your Lordships
may be pleased to direct the respondent.
1. From resorting to any coercive measure against the petitioner.
2. To stay the proceedings of Form GST DRC-01.                                                                     d) To issue order/s, direction/s, writ/s or any other relief/s as this Honourable Court
deems fit and proper in the facts and circumstances of the case and in the interest of
justice.
e) To award costs of and incidental to this application be paid by the respondent.”                   2. A Coordinate Bench of this Court passed the following order dated 5th December 2019 at the time of issuance of the notice:
“1. The learned advocate for the petitioner has tendered draft amendment. The amendment is allowed in terms of the draft. The same shall be carried out forthwith.
2. Mr. Avinash Poddar, learned advocate for the petitioner, invited the attention of the court to the impugned show cause notice dated 19.07.2019 issued in Form .

GST DRC-01 under Rule142(1) of the Central Goods and Service Tax Rules, 2017 (hereinafter referred to as “the Rules”) to point out that the notice has been issued in relation to section 50 of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as “the Act”). Reference was made to rule 142 of the Rules to point out that the same no where contemplates issuance of notice thereunder in respect of section 50 of the Act. It was submitted that therefore, the im pugneds   how cause notice has been issued without any authority of law.                                                                                                                          3. Having regard to the submissions advanced by the learned advocate for the petitioner, issue Notice, returnable on 26.12.2019. By way of ad-interim relief, further proceedings pursuant to the impugned notice dated 19.07.2019 (Annexure D to the petition) are hereby stayed. Direct service is permitted.” 3 We have heard Dr. Avinash Poddar, the learned counsel appearing for the writ applicant, Mr. Utkarsh Sharma, the learned Standing Counsel appearing for the Union of India and Mr. Trupesh Kathiriya, the learned A.G.P. appearing for the State respondent.                                                                                                              4 Two questions fall for the consideration of this Court: [i] Whether interest under Section 50 of the Central Goods and Service Tax Act, 2017 (for  short, “the CGST Act, 2017”) is to be levied on the net tax liability or on the gross tax liability? [ii] Whether issuance of DRC-01 under Section 50 of the CGST Act, 2017 is legal and proper?                                              5. The following amendment has been proposed in Section 50 of the CGST Act, 2017 vide clause 103 of the Finance Bill, 2021. “103. In section 50 of the Central Goods and Services Tax Act, in sub-section (1), for the proviso, the following proviso shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017, namely: “Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under Section 73 or Section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.”        6. Thus, from the above, it is clear that the interest under Section 50 of the CGST Act, 2017 can only be levied on the net tax liability and not on the gross tax liability. In such circumstances, the demand raised by the respondent is not in accordance with law

7. So far as the second question is concerned, it appears that the respondent No.3 has issued Form GST DRC-01 under Section 50 of the CGST Act, 2017.Section 50 of the CGST Act, 2017reads thus: “50. Interest on delayed payment of tax.                                                      (1) 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, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council. Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.                                                      (2) The interest under sub section shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.                                  (3) A taxable person who makes an undue or excess claim of input tax credit under sub section(10) of section 42 or undue or excess reduction in output tax liability under sub -section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty -four per cent., as may ben otified by the Government on the recommendations of the Council.”                        8.Rule 142(1)(a) of the Central Goods and Service Tax Rules, 2017 (for short, “the CGST Rules, 2017”) reads thus: “142. Notice and order for demand of amounts payable under the Act.(1) The proper officer shall serve, along with the (a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01.”                                                                                                                          9. Thus, the plain reading of the aforesaid rules indicates that Form GST DRC 01 can be served by the proper officer along with the notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section129 or section 130 and that too, electronically as a summary of notice.   10. We do not find reference of any notice under Section 50 so far as Rule 142(1) (a) of the CGST Rules is concerned. In such circumstances, DRC 01 could not have been issued for   of recovery of the amount towards interest on delayed

11. The aforesaid leads us to consider the question that if the amount towards interest on delayed payment of tax is to be recovered, then what is the Form in which the notice is to be issued?                                                                                                                                        12. In the aforesaid context, we may refer to Section 75(12) of the Act. It reads thus:

Download Pdf:

Rajkamal Builders Infrastructure

For Reference Visit:

Gujarat High Court