Case Law Details
M/s. Megha Engineering & Infrastructures Ltd. Vs Commissioner of Central Tax (Telangana High Court)
No input tax credit if GST returns not filed, and Interest mandatorily payable on gross tax liability on delayed payment of GST- In the case of M/s. Megha Engineering & Infrastructures Ltd. (Writ Petition Number 44517 of 2018), the High Court of Telangana has ruled that no input tax credit (ITC) is available unless GST returns are filed and a taxpayer is liable to pay penalty on the entire liability. Accordingly, the court held that interest was payable on the gross amount of the goods and services tax (GST) liability.
Case of the petitioner is that the GST portal is designed in such a manner that unless the entire tax liability is discharged, the system will not accept the return in Form GSTR-3B; that, for example, even if an assessee was entitled to set off to the extent of 95% by utilizing ITC, the return cannot be filed unless the remaining 5% is also paid – There was an delay on the part of the petitioner in filing the return for the period October 2017 to May 2018 and which was due to shortage of ITC available to offset the entire tax liability – total tax liability of the petitioner for the period July 2017 to May 2018 was Rs.1014,02,89,385/- and the ITC available during this period was Rs.968,58,86,133/- and the shortfall to the extent of Rs.45,44,03,252/- was required to be paid by way of cash-however, due to certain restraints they could not make the payment and file return within the due date but the entire liability was discharged in May 2018-Consequently, the dept demanded interest @18% in terms of s.50 of the CGST Act, 2017.
Petitioner replied that interest is to be calculated only on the net tax liability after deducting ITC from the total tax liability and thereafter they paid an amount of Rs.30,92,522/- towards interest on their net tax liability. However, since the department has demanded interest on the total tax liability, the petitioner is before the High Court.
Decision of the Hon’ble High Court
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