The Hon’ble HC, Jharkhand in the matter of Godavari Commodities Ltd. v. The Union of India [W.P.(T) No.1786 of 2019 decided on December 3, 2019] has held that the intimation letter for payment of interest is to be treated as a show cause notice and directed adjudicating authority to give the Petitioner an opportunity of being heard.
Godavari Commodities Ltd. (“the Petitioner”) is aggrieved by the letter of intimation for payment of interest on delayed payment of GST, dated February 6, 2019, issued by the Superintendent of CGST (“the Respondent”).
By the said letter, the Petitioner was asked to make the payment of the aforesaid amount in the Government account and submit the payment details within three days of the receipt of the letter. Admittedly, pursuant to the issuance of this demand, the bank account of the Petitioner was freezed and upon the payment of the aforesaid amount, the account was defreezed.
Whether such letter of intimation is legal?
The Hon’ble HC, Jharkhand in W.P.(T) No.1786 of 2019 decided on December 3, 2019 held as under:
Section 50(1) of the CGST Act
“50. Interest on delayed payment on tax. –
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.”
Section 73(1) of the CGST Act
“73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts. –
(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.”
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