The Allahabad High Court in the case of BHOLE BABA MILK FOOD INDUSTRIES LIMITED VERSUS UNION OF INDIA AND 2 OTHERS vide Writ Tax No. – 1431 of 2023 dated 16.04.2024, has held that the levy of late fee (Section 47) and interest (Section 50) under U.P. GST Act, 2017 may arise only in the event of “failure” on the part of an assessee to file a return and/ or payment of due tax within time. Further, the Court stated that GSTN and the Bank shall device a better mechanism to ensure prompt credit and debit entries to arise in real time as may not create any doubts or disputes in future.

Facts of the Case:-  In this case, Petitioner had generated corporate e-payment Challan No. 23050900386618 on 19.05.2023 for Rs. 2,08,30,721/-, for filing the monthly return for the month of April, 2023. However, the challan was was approved by the Authorizer/ bank on 25.05.2023 at 13:01:00 IST. On the other hand, GSTN has stated that the said amount was not remitted by the Bank on 25.05.2023 at 13:00 P.M., but it was credited later.

The Petitioner submitted that they have made the deposit of Rs. 107710.51 and penalty of Rs. 100 for alleged non-filing of monthly return for the month of April, 2023.

The Petitioner filed the petition seeking permission to file GSTR 3B Return for the month April, 2023 treating to be within time, refund of amount illegally debited from the Electronic Cash Ledger towards interest and penalty. 

Held that – The Court noted from the facts of the case that, it is clear that the petitioner had initiated the payment of tax for the month of April, 2023 within time, in the manner prescribed. The amount was debited from its account, within prescribed time. To that extent, “failure” may never be attributed to the petitioner- in timely payment of the tax amount.

The levy of late fee and interest under Section 47 and Section 50 of the CGST Act, 2017 respectively, may arise only in the event of “failure” on the part of an assessee to file a return and/ or payment of due tax within time.  The delay may be attributed exclusively to the respondent-bank after such payment was made by the petitioner within time, on that statement itself the levy of penalty remains unwarranted. The Errors  have been committed by the bank/ or GSTN not involving the petitioner.

Directed the department to adjust the amount of penalty and interest deposited by the petitioner under protest against the tax liability for the month of April, 2024 onwards without incurring any liability as to interest on that amount.