Page 80 - GSTL_26th March 2020_Vol 34_Part 4

590 GST LAW TIMES [ Vol. 34
has been adjusted towards the tax demands for the period August, 2017 to
March, 2018.
5. There is some history to this matter as this very issue appears to have
been raised earlier by a petitioner in W.P. No. 15978 of 2019. A Learned Single
Judge, by order dated 13-6-2019, directed the petitioner therein to remit the ad-
mitted tax, being tax on the cash component of the demand belatedly paid and
the Department to dispose the representation of the petitioner in that case to the
effect that there would be no liability to interest in regard to the ITC available
with the Department.
6. As against the aforesaid order, Writ Appeals were filed before the
Division Bench and by order dated 23-7-2019, the two Hon’ble Judges expressed
divergent views. One Judge dismissed the Writ Appeals, whereas the second
Judge was of the view that the legal issue on the leviability of interest called for a
deeper consideration than had been extended by the Learned Single Judge at the
stage of admission and such summary dismissal required revisiting.
7. The matter was thus referred to a Third Judge, who by his order de-
livered on 19-12-2019, held that Writ Appeals of the Revenue were not warrant-
ed, since the Learned Single Judge had not in the original instance determined
the legal issue in a manner detrimental to the Revenue, but only remitted the
matter back to the Assessing Officer to determine the quantum of liability. The
aforesaid orders are circulated for my benefit by Learned Counsel.
8. The question crystallised by the Third Judge for consideration is as to
whether interest on belated payment of tax as contemplated under Section 50 of
the CGST Act is automatic or whether the same would have to be determined
after considering the explanation offered by the assessee. At paragraph 29, the
Hon’ble Judge holds that the liability to pay interest under Section 50 is auto-
matic. However, since the petitioner in that case had raised disputes with regard
to the period for which the tax had allegedly not been paid, as well as the quan-
tum of tax remaining unpaid in excess of ITC, all being questions of fact, he was
of the view that such matters would have to be resolved after hearing the as-
sessee. He categorically states ‘therefore in my considered view though the liability
fastened on the assessee to pay interest is an automatic liability, quantification of such
liability certainty needs an arithmetical exercise after considering the objections if any,
raised by the assessee.’ The objections raised in that case are thus factual and relate
to disputed questions of fact as noted by me in the earlier portion of this para-
graph.
9. However, the objection raised by the petitioners before me is not one
of fact but one of law. According to the petitioners, Section 50 that provides for
levy of interest on belated payments would apply only to payments of tax by
cash, belatedly, and would not stand triggered in the case of available ITC, since
such ITC represents credit due to an assessee by the Department held as such.
10. In order to decide the purely legal issue raised by the petitioners, it
is necessary to extract Section 50 itself, which I do below :
“Interest on delayed payment of 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 ex-
ceeding eighteen per cent. as may be notified by the Government on the
recommendations of the Council.
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