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Shivani Bhati | Nov 14, 2021 | Views 719126

levy of interest on belated cash remittance is compensatory and mandatory in GST

levy of interest on belated cash remittance is compensatory and mandatory in GST

As far as the levy of interest on belated cash remittance is concerned, it is compensatory and mandatory and the levy is upheld: Madras High Court

Issue

Before the High Court of Madras petitioner filed Writ Petition under Article 226 of the Constitution of India praying to issue Writ of Certiorari calling for the records of the respondent in his proceedings in GST INS – 01/ 102 / 2020-2021/ Survey- 1 / Investigation-II quash the order dated 27.1.2021 passed therein.

Facts in Issue

To challenge order dated 27.01.2021 levying interest under Section 50 of the Central Goods and Services Tax Act, 2017 (in short ‘Act’) relating to both interest on cash remittances as well as remittances by way of adjustment of electronic credit register.

According to petitioner provisions of Section 42 of the Act which provides for a notice to be issued by the Assessing Authority in the case of mismatch of particulars at the end of the assessee, vis-a-vis, particulars/details furnished in the returns of the selling/purchasing dealer.

Judgement

Madras High Court held that the provisions of Section 42 can only be invoked in a situation where the mismatch is on account of the error in the database of the revenue or a mistake that has been occasioned at the end of the revenue. In a case where the claim of ITC by an assessee is erroneous, as in this case, then the question of Section 42 does not arise at all, since it is not the case of mismatch, one of wrongful claim of ITC.

As far as the levy of interest on belated cash remittance is concerned, it is compensatory and mandatory and the levy is upheld to this extent.

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