Interest Amount Governs ₹20 Lakh Limit in Interest-Only Revenue Appeal: GSTAT Ernakulam

Surya Business Combines Vs Commissioner of CGST & Ce Kochi (GSTAT Ernakulam)

Summary: The Commissioner of CGST & CE Kochi appealed against an order restricting the interest payable by Surya Business Combines, a partnership firm supplying telephone sets. A show cause notice dated 28 March 2023 had sought interest of ₹10,01,390 for late filing of GST returns and consequent late payment of tax. The adjudicating authority confirmed that interest under Section 50 of the CGST and KGST Acts, 2017, along with a penalty of ₹10,000 under Section 125.

On the taxpayer’s appeal, the Joint Commissioner (Appeals) reduced the confirmed interest to ₹2,65,676, comprising ₹1,32,838 each of CGST and SGST interest. Applying Section 50(1) and Rule 88B, the appellate authority confined interest to tax paid by debiting the electronic cash ledger and dropped the remaining ₹7,35,714. The Revenue argued before the Tribunal that interest was chargeable on the full amount of tax short-paid, including the portion discharged through the electronic credit ledger. No one appeared for the respondent taxpayer.

The Tribunal considered CBIC Circular No. 207/1/2024-GST dated 26 June 2024, which fixes a ₹20 lakh monetary limit for departmental appeals before GSTAT. For a dispute concerning interest alone, the circular directs that the interest in dispute be used to apply the limit. The Tribunal identified ₹7,35,714 as the disputed amount and found that the appeal did not fall within a stated exclusion. It dismissed the Revenue’s appeal on monetary-limit grounds under the National Litigation Policy. The order does not decide the Revenue’s substantive challenge to the calculation of interest.