Amendment in section 50 is clarificatory and operative retrospectively.

Case covered:

M/s.Refex Industries Limited

Versus

The Assistant Commissioner of CGST & Central Excise

Facts of the case:

PETITIONs filed under Article 226 of The Constitution of India praying for the issuance of Writ of Certiorari calling for the records of the impugned notice to a third person in Form GST DRC – 13 dated 21.05.2019 bearing reference C.No:IV/16/30/2019-Tech-III issued by the 1 st respondent and quash the same.

Observations of the court:

I am supported in my view by a recently inserted proviso to Section 50(1) reading as below:

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger. 

The above proviso, as per which interest shall be levied only on that part of the tax which is paid in cash, has been inserted with effect from 01.08.2019, but clearly seeks to correct an anomaly in the provision as it existed prior to such insertion. It should thus, in my view, be read as clarificatory and operative retrospectively.

Learned counsel for the petitioners also draws my attention to the decision of the Telangana High Court in the case of Megha Engineering and Infrastructures Ltd. V. The Commissioner of Central Tax and others (2019-TIOL893), where the Division Bench interprets Section 50 as canvassed by the Revenue. The amendment brought to Section 50(1), was only at the stage of a press release by the Ministry of Finance at the time when the Division Bench passed its order and the Division Bench thus states that ‘unfortunately, the recommendations of the GST Council are still on paper. Therefore, we cannot interpret Section 50 in light of the proposed amendment’. Today, however, the amendment stands incorporated into the Statute and comes to the aid of the assessee.

In the light of the above discussion, these Writ Petitions are allowed and the impugned notices are set aside. No costs. Connected Miscellaneous Petitions are closed.

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