Interest to be charged in case of tax not paid before due date and not for late filing of GSTR-3B: Jharkhand HC

GST implementation has resulted in a lot of litigation and disputes. Though various amendments have been done in the last 4 years, there are many which are yet to be decided. The one which is affecting the masses is with regard to the Charging of  interest for late filing of GSTR-3B. The question arises whether interest to be charged in case of tax not paid before due date and not for late filing of GSTR-3B?

Common sense says that interest can be charged in case of tax unpaid or failure to pay tax before the due date and not for late filing of GSTR-3B. The justification can be there that the Late fee is prescribed for late filing of GSTR-3B

Here is an interesting case on the issue before Jharkhand HC as under:

Narsingh Ispat Ltd.

[2022] 136 taxmann.com 403 (Jharkhand)

Let us have a short overview of the case:

GST : Summary of order passed without issuing show cause notice is in violation of principles of natural justice and therefore, writ petition is maintainable

The issue was with regard to Interest on GST.

The first issue was whether liability of interest can be raised without initiating adjudication process where assessee is raising dispute towards liability of interest?

It was held as under:

Department failed to follow procedure prescribed under Section 73 before issuing a summary of order.

Summary of order issued without following principles of natural justice.

Interest can only be charged on tax unpaid or failure to pay before due date and not for late filing of GSTR-3B.

Late fee is prescribed for late filing of GSTR-3B and the same is already paid by the assessee.

Petition disposed without going into merits as impugned order has been passed in violation of principles of natural justice.

 Impugned summary of order quashed.

Department at liberty to issue proper show-cause notice with opportunity to assessee to file response before passing adjudicating order. The order mentions that it is open to assessee to raise question of leviability of interest on delayed filing of GSTR-3B.

With this the Writ petition allowed with regard to Section 73 of Central Goods and Services Tax Act, 2017/Jharkhand Goods and Services Tax Act, 2017

On the issue of maintainability of the Writ petition, Proper officer issued a statement in DRC-01A intimating tax ascertained as payable along with interest failing which show-cause notice (SCN) shall be issued.

The court observed that the Assessee filed a reply, after which instead of issuing SCN, summary of order was issued indicating the amount of interest payable.

The question was whether writ petition is maintainable in such a situation?

The court held as under:

Proper officer failed to issue any SCN when the demand of interest was under dispute.

Summary order passed is in violation of principles of natural justice and procedure prescribed under Section 73(1) as it was passed without issuing SCN.

 Writ petition is maintainable U/s  73 of Central Goods and Services Tax Act, 2017/Jharkhand Goods and Services Tax Act, 2017