TMI Blog2020 (10) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... of GST Council to charge interest on the net cash tax liability with effect from 01.07.2017. The central issue raised in the writ petition i.e., whether interest under section 50 of the Central Goods and Service Tax Act, 2017 is to be levied on the gross tax liability or on the next tax liability has been answered by the Board in the administrative instructions dated 18.09.2020 by categorically stating that the interest would be on the net cash tax liability for the period prior to the amendment i.e., from 01.07.2017 to 31.08.2020. Respondents to intimate the petitioner about the quantum of interest payable on account of delayed payment of GST for the period under consideration in terms of the administrative instructions dated 18.09.2020 and the same shall be paid by the petitioner, if not already paid - Petition allowed. - WRIT PETITION (L) NO.983 OF 2020 - - - Dated:- 27-10-2020 - UJJAL BHUYAN ABHAY AHUJA, JJ. Mr. Vikram Nankani, Senior Advocate with Mr. Prithwiraj Choudhary i/b. Mr. P. K. Shetty for Petitioner. Mr. J. B. Mishra a/w. Mr. Sham Walve for Respondents. P.C. : (Per Ujjal Bhuyan, J.) Heard Mr. Nankani, learned senior counsel along with Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is alleged that without following the due process, respondents issued the garnishee notices to the customers of the petitioner for recovery of interest amount. 4.5. Raising various contentions, more particularly centering around section 50 of the Central Goods and Service Tax Act, 2017, the present writ petition came to be filed with the primary contention that interest could be demanded only on the net liability and not on gross liability. 4.6. The following reliefs have been sought for by the petitioner in the writ petition:- a) That this Hon ble Court may issue a writ of declaration or any other appropriate writ or direction declaring the provisions of section 50 of CGST/MGST Act, 2017 enclosed as Exhibit-A as unconstitutional vide Articles 14/19/265 being unenforceable as the machinery provisions are not prescribed; b) That this Hon ble Court may issue a writ of declaration or any other appropriate writ or direction declaring that the provisions of section 39(7) and 75(12) of CGST/MGST Act, 2017 enclosed as Exhibit-B as unconstitutional being violative of Articles 14/19 of the Constitution; c) That this Hon ble Court may issue a writ of declaration or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified by the Government on the recommendations of the Council. (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid. (3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42, or undue or excess reduction in output tax liability under subsection (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council. 6. By Finance (No.2) Act, 2019, section 50 has been amended by insertion of a proviso in sub-section (1). The proviso reads as under:- 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 proceeding under section 73 or section 74 in respect of the said period, shall be levied on that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st July, 2017. On a query by the court he submits that the show cause notices issued as well as the garnishee notices have become ineffective. 4. To this Mr.Nankani, learned senior counsel for the petitioner submits that the garnishee notices would have to be set aside because in the absence of the same parties holding money for the petitioner would not release the amounts to the petitioner, for example, Mahindra Mahindra. 5. Submissions made have been taken due note of. 6. Order is reserved. 11. From the above we find that parties are broadly in agreement that the above administrative instructions have taken care of the grievance of the petitioner. 12. We may now examine the administrative instructions dated 18.09.2020. For ready reference, the instructions are extracted hereunder:- Based on the recommendations of the 35th meeting of the GST Council held on 21st June, 2019, the provision of section 50 was amended vide section 100 of the Finance (No. 2) Act, 2019 to provide for charging interest on the net cash tax liability. The said amendment was to be made effective from a date to be notified by the Government. Accordingly, the said provision was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the notification dated 25.08.2020, views were expressed by tax payers that the said notification is contrary to the recommendation of GST Council to charge interest on the net cash tax liability with effect from 01.07.2017. To clarify this position press release was issued on 26.08.2020. However, in order to implement the decision of the GST Council in its true spirit within the present legal framework, the above instructions were issued. Firstly, for the period 01.07.2017 to 31.08.2020, field formations have been instructed to recover interest only on the net cash tax liability i.e., that portion of the tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger. Secondly, in those cases where show cause notices have been issued on gross tax payable, to keep those show cause notices in the call book till retrospective amendment in section 50 of the Central Goods and Service Tax Act, 2017 is carried out. 14. Therefore, the central issue raised in the writ petition i.e., whether interest under section 50 of the Central Goods and Service Tax Act, 2017 is to be levied on the gross tax liability or on the next tax liability has been answered ..... 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