Interest cannot be recovered on belated filing of GSTR-3B return without following any adjudicating proceeding under Section 73 or 74 of the CGST Act.
Facts: In this case, the Petitioner filed a writ petition before the Jharkhand High Court against the levy of interest imposed on the Assessee by the Assistant Commissioner (CGST and Central Excise) under Section 50(1) of CGST Act for delay in furnishing GSTR-3B return for a given period. The petitioner assessee contended that since the liability of interest had been disputed by the Assessee, the same could not have been levied without following any adjudication proceeding under Section 73 or 74 of the CGST Act.
The Revenue submitted that the interest payable on such delayed payment of tax could have been recovered under the CGST Act. Also, the department contended that, if the GSTR-3B return had been filed belatedly by the Assessee and the tax dues had not been paid by it within the prescribed time, interest and late fee was by default a confirmed demand within the meaning of Section 50 and Section 47 of the CGST Act respectively, which did not require any adjudication process under Section 73 or 74 of the CGST Act.
Section 50(1) of the CGST Act, 2017 provides that every person who is liable to pay tax under CGST Act or the rules made thereunder but who fails to pay the tax or any part thereof to the Government within the prescribed period, shall pay interest on his own at such rate, not exceeding eighteen per cent., as may be notified. Section 47 provides that any registered person who fails to furnish the specified returns by the prescribed due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.
Issue: Whether the interest could be levied on belated filing of GSTR-3B return without following any adjudicating proceeding under Section 73 or 74 of the CGST Act.
Held: The High Court observed that the Petitioner had disputed the liability towards interest levied by the revenue authorities, and despite the same the revenue department had raised a demand for payment of interest due to delay in furnishing the GSTR-3B return without initiating any adjudication proceedings under Section 73 or 74 of the CGST Act. The High Court thus observed that the case of the Assessee was covered by the ration rendered by the Coordinate Bench in the case of Mahadeo Construction Company (2020).
The Hon’ble High Court has held that the recovery of interest under CGST Act, 2017 for delay in filing the GSTR-3B return cannot be initiated without following any adjudication proceedings under the Act in the event the interest liability is disputed by the assessee.