Facts of the Case:

In this case, the petitioner challenged an order confirming a demand towards interest on delayed payment of GST for the tax period 2017–18. Initially, the petitioner had discharged GST at the concessional rate of 5%, but upon issuance of an intimation in Form GST DRC-01A, , the department pointed out that GST was actually payable at 18%. The petitioner subsequently paid the differential tax through multiple DRC-03 payments between November 2020 and January 2022. 

Thereafter, a show cause notice in Form GST DRC-01 was issued, culminating in the impugned order demanding interest under Section 50. The petitioner contended that having voluntarily discharged the differential tax after departmental intimation, invocation of Section 74 was unwarranted and had deprived it of the benefit of the amnesty scheme under Section 128A. It was further argued that where proceedings under Sections 73 or 74 were not maintainable, interest also could not be recovered. The department, however, maintained that the liability arose from delayed payment of self-assessed tax and that the reference to Section 74 in the summary forms did not invalidate the proceedings.

Issue:

Whether interest under Section 50 of the CGST Act could be recovered on delayed payment of GST even after the taxpayer had voluntarily discharged the differential tax pursuant to departmental intimation, and whether the invocation of Section 74 was legally sustainable merely because the summary forms referred to Section 74, particularly when the petitioner claimed entitlement to amnesty under Section 128A. The Court also examined the interplay between Sections 50, 73, 74, 75(12), and 79 concerning recovery of unpaid tax and interest.

Held That:

The Court held that interest on delayed payment of tax is a statutory consequence under Section 50 and becomes payable irrespective of whether the differential tax is subsequently paid voluntarily after departmental detection. It observed that Sections 73 and 74 constitute a complete code for determination of tax, interest and penalty, while Section 75(12) independently authorises recovery of self-assessed tax and unpaid interest under Section 79, notwithstanding anything contained in Sections 73, 74 or 74A. The Court rejected the contention that interest could not be demanded merely because the petitioner had later discharged the tax liability, noting that the petitioner itself had acknowledged its obligation to pay interest by seeking instalments.

It further held that the threshold for invoking Section 74 under the GST regime is comparatively broader, as explained in the Court’s contemporaneous common judgment on the issue of extended limitation, and therefore the mere reference to Section 74 in the summary notices did not invalidate the proceedings.

Nevertheless, considering the petitioner’s nature of business and in the interest of fairness, the Court remanded the matter to the adjudicating authority for fresh consideration of the petitioner’s reply and directed the authority to pass a reasoned order within three months.

Case Name: Tvl. Noyyal Common Effluent Treatment Company Limited, Represented by its Managing Director Versus The Assistant Commissioner (ST), Tirupur Central-1 Circle, Tirupur-II. dated 08.06.2026