GST: Interest on Net GST Liability only as per Madras High Court

Published on 11 Mar 2020 / In GST

GST Interest on Net GST Liability only as per Madras High Court

 The Hon’ble Madras HC in its recent decision in the case of Refex Industries Limited vs. The Assistant Commissioner of CGST & Central Excise has held that interest u/s 50 of CGST Act can be levied only on belated ‘cash’ component of tax and not on ‘ITC’ component.

 The Hon’ble HC, inter alia, relied on the newly inserted proviso to Section 50(1) of the CGST Act to opine that this recently inserted proviso, as per which interest shall be levied only on the ‘cash’ part of the tax, clearly seeks to correct an anomaly in the provision as it existed prior to such insertion, hence should thus, be read as clarificatory and operative retrospectively.

 Earlier in M/s Commercial Steel Engineering Corporation V/S State of Bihar, the Patna High Court held that - that interest cannot be recovered on wrongly reflected transitional credit in an electronic ledger unless such credit is put to use so as to become recoverable.

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