Facts of the Case:

In this case, the petitioner entered into a lease agreement with the respondent in respect of a plot of land situated in the MIHAN notified area. Subsequently, on the request of the petitioners, the respondent permitted transfer of the lease in favour of M/s MVH Habitates LLP by executing a fresh lease deed on 29 November 2024, after demanding payment of transfer charges along with GST on the original lease premium. While raising this demand, the respondent also levied interest of ₹3,94,98,383/- on alleged delayed payment of GST amounting to ₹7,26,80,530/-.

The petitioners paid the said amount under protest, contending that the respondent had failed to issue a tax invoice within the prescribed period and had not discharged its statutory obligation to pay GST in time. The tax invoice was issued for the first time only on 11 July 2024, nearly three years after execution of the lease deed. Aggrieved by the recovery of interest, the petitioners approached the High Court seeking refund of the amount collected towards interest.

Issue: Whether the liability to pay GST and interest on delayed payment rests upon the supplier of service or can be shifted to the recipient through contractual clauses.  whether the recipient can be compelled to pay GST or interest without issuance of a tax invoice within the period prescribed under the Act.

Held that:

The Court held that the statutory responsibility to pay GST squarely lies on the supplier of service in terms of Section 39 of the CGST Act read with Rule 61 of the CGST Rules. The Court further held that the respondent was mandatorily required, under Section 31(2) of the CGST Act read with Rules 46 and 47, to issue a tax invoice within thirty days from the date of supply of service, which obligation was admittedly not complied with for more than three years.

In the absence of a tax invoice, the petitioners could not have been expected to pay GST voluntarily. The Court rejected the respondent’s reliance on contractual clauses placing the burden of taxes on the lessee, holding that contractual terms cannot override statutory provisions.

Referring to Section 122 of the CGST Act, the Court emphasized the importance of issuance of a tax invoice and noted that failure to do so itself attracts penalty. The Court further held that interest under Section 50 is payable by the person who is liable to pay tax and who fails to do so within the prescribed period. Since the delay in payment of GST was attributable entirely to the respondent, recovery of interest from the petitioners was held to be illegal and unsustainable in law. Accordingly, the Court allowed the writ petition and directed the respondent to refund the interest amount of ₹3,94,98,383/- to the petitioners within six weeks, failing which interest at 18% per annum would be payable.

Case Name: M/s. Oam Industries India Pvt. Limited, Karria Food & Snacks Pvt. Limited Versus Maharashtra Airport Development Company Limited. dated 23.01.2026

To read the complete judgement 2026 Taxo.online 204