Controversial judgment of Madras High Court on interest

- Sales Tax : Soham Mashruwala

There was a lot of controversy regarding interest under the GST law. Article 50 was also retroactively amended by the government. Many times due to technical glitches the supplier is not able to fill the form and there is delay. In that case, if the supplier has a tax credit or if there is an amount deposited in the cash ledger, there would be a dispute about whether interest would be charged. Rule 88-B was also framed by the government to remove this dilemma. Madras High Court India Yamaha Motor Pvt. without any discussion on rule 88-B whether the form is filed late and the amount is deposited in the credit ledger with the supplier whether interest is payable and if the amount is outstanding in the electronic cash ledger. Ltd. (WP No. 19044 of 2019 dated 29-8-2022) in the case of which strange judgment is discussed in today's article.

The facts of the case

Which form was filled wrong by the applicant and was contacting the GST portal to correct the amount. Due to this there was delay in filling time sheets from July 2017 to October 2017.

All the amounts to be paid by the petitioner were deposited in the electronic cash ledger for the purpose of depositing in the Government treasury. Aggrieved by the demand for interest under Section 50 by the account, the petitioner filed a writ petition before the Madras High Court.

Petitioner's contention

The contention of the petitioner was that when the amount is deposited in the electronic cash ledger and electronic credit ledger, interest does not have to be paid. In support of this, the provision of section 50 was relied upon and it was also strongly submitted that these two ledgers are considered to be the same and there is no discrimination in this.

Argument of account

The account relied on the Supreme Court's Bharti Airtel case and upheld the demand for interest.

Judgment of the High Court

The High Court specifically noted that Article 50 contains proviso which expressly provides. According to the contention of the petitioner, there was no question of levying interest if the forms were filed late and if the amount was paid, as per the judgments which have been given to introduce a new law. Not taking it, it was decided that since the form was filled late, interest has to be paid and the amount of credit or cash ledger should not be taken into account.