GST Interest Liability on RCM cannot be avoided on ground that it is revenue neutral: HC

The Delhi High Court, in the matter of GRAPES DIGITAL PVT. LTD. Vs. PRINCIPAL COMMISSIONER, order that GST Interest Liability on RCM cannot be avoided on ground that it is revenue neutral.

Relevant Text is as follows:

Admittedly, the petitioner was liable to pay GST on input supplies on RCM. The liability to pay GST on inputs is not disputed. In fact, the petitioner had discharged its liability to pay GST on inputs on RCM basis and had paid a sum of ₹24,68,39,430/- in respect of input services for the period September, 2017 to March, 2018. Part of the GST payable for the month of September, 2017 was paid on 20.02.2018 which was after a delay of 124 days. The GST on inputs for part of the month of September, 2017 and October, 2017 to March, 2018 was paid on 24.08.2018. In terms of Section 50 of the CGST Act, the petitioner was liable to pay interest on such delayed payment. The contention that the petitioner would be entitled to refund of ITC paid on RCM for discharging its liability and therefore no interest is payable is, plainly, unmerited. The levy of GST is a statutory exaction and so is interest payable on such tax. If the same is not discharged within the period of time as prescribed, in terms of Section 50 of the CGST Act, an assesse is required to pay interest at the rate of not exceeding 18% as may be notified by the Central Government or recommended by the GST Council. The interest on delayed payment of tax being a statutory levy cannot be avoided on the ground that the petitioner at a subsequent stage is entitled to a refund of the ITC. The assumption that since the transaction of imports and exports is revenue neutral, the same would absolve the petitioner from payment of GST or any interest thereon is contrary to law. It is not open for the assessee to plead that since the supply imported was required to be exported, the petitioner was absolved from the statutory levy under the IGST Act. Refund of unutilized ITC or GST is available only in terms of the relevant statutory provisions. A claim for refund of tax collected in accordance with law is a statutory right and is circumscribed by the statutory provisions. There is little scope for imputing principles of equity in matters of tax, which are covered by the statutory provisions.

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