Case Law Details
Union of India Vs LC Infra Projects (P.) Ltd. (Karnataka High Court)
Before penalizing the assessee by making him pay interest, the principles of natural justice ought to be complied with before making a demand for interest under sub section (1) of Section 50 of the GST Act. Consequence of demanding interest and non-payment thereof is very drastic.
The impugned demand has been set aside only on the ground of the breach of the principles of natural justice by granting liberty to the respondents to initiate action in accordance with law obviously for recovery of interest.
Therefore, HC concur with the ultimate view taken by the learned Single Judge that before recovery interest payable in accordance with Section 50 of the GST Act, a show Cause Notice is required to be issued to the assessee. Hence, no case for interference is made out. The appeal is accordingly dismissed. Interim applications do not survive.
Further, HC make it clear that as far as the main demand for interest has been set aside, the order of attachment, also will have to be set aside.
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