Madras HC in the case of M/s. Maansarovar Motors Private Limited

Case Covered:

M/s. Maansarovar Motors Private Limited

Versus

The Assistant Commissioner

Facts of the Case:

This batch of writ petitions revolves around the interpretation of Section 50 of the Central Goods and Services Tax Act, 2017 (in short ‘Act’), particularly the effective date of application of the proviso inserted vide Section 100 of Finance (No.2) Act of 2019.

Section 50 of the Act states that every person who is liable to pay tax in terms of the Act shall remit the tax either in cash or by way of adjustment of credit available in the Input Tax Credit (ITC) register. In cases of delay in such remittance, interest is liable to be paid for the period of delay. While the levy of interest on remittances of tax in cash is not in
the question, the authorities have proceeded to levy interest on remittances of tax by adjustment of available ITC and this is the subject matter of the challenge before me.

Observations of the Court:

The Board has, in my view, extended a waiver of recovery for the past period in line with the decisions of the Council (vi) Notification dated 18.09.2020, which cemented the long line of assurances of the GST Council and the Board in letter and spirit. While promising that the amendment in question will be clarified to be retrospective, the Board has indicated certain difficulties in carrying out the stated amendment at this juncture. I would be loath to speculate on the nature of the difficulties expressed and restrict myself to concluding that the sequence of events that I have set out above make it more than amply clear to me that the present writ petitions are liable to be allowed.

The decision of the Court:

With the insertion of the proviso to be taken to be retrospective for the detailed reasons set out above, these writ petitions are allowed. Consequently, the attachments will also stand lifted forthwith. The Assessing Officers are at liberty to raise fresh demands relating to interest on delayed remittances of tax by cash, in accordance with the law. Connected miscellaneous petitions are closed. No costs.

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