Penalty cannot be levied for late credit of Payment by Bank to GSTN Account 

Bhole Baba Milk Food Industries Limited Vs Union Of India And 2 Others (Allahabad High Court)

In a recent case involving Bhole Baba Milk Food Industries Limited vs. Union of India, the Allahabad High Court addressed the issue of levying penalties for delayed credit of payments to GSTN accounts. The petitioner sought relief from penalties and interest charged for alleged non-filing of returns due to delayed bank transactions.

The petitioner initiated a payment of Rs. 2,08,30,721/- for April 2023 on 19.05.2023, within the prescribed time. However, discrepancies arose regarding the actual credit time to the GSTN account. The bank claimed the payment was credited later, while the GSTN stated otherwise.

The court emphasized that the petitioner initiated the payment within the stipulated timeframe, absolving them of failure in timely tax payment. The imposition of penalties under Sections 47 and 50 of the U.P. GST Act, 2017 hinges on the taxpayer’s failure to file returns or pay due taxes on time.

Considering the delay attributable to the bank, the court deemed the penalty unwarranted. It urged the GSTN and the bank to establish a mechanism for real-time credit and debit entries to prevent future disputes.

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