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Section 50 of the CGST Act violates Article 14: Gujrat HC issues Notice

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Section 50 of the CGST Act, 2017 is with regard to the interest on delayed payment of tax.

The subject matter of challenge in the present litigation is to the constitutional validity of the proviso to Section 50 of the CGST Act, 2017.

It was argued by the petitioner that while the writ applicant is required to furnish return every month as per the first proviso to Section 37 of the CGST Act, but he is not permitted to revise its returns after the month of September following the financial year in which the tax amount becomes due.

The amendment in the form of proviso is in violation of the decision taken by the GST Council in its 31st meeting held on 22.12.2018, wherein, the Council unanimoulsy decided that interest is not payable for the delayed payment of tax through electronic credit ledger i.e. interest is applicable only on the “net liability”.

It is argued that the Council thought fit to recommend the Government to levy interest only on the net cash liability irrespective of classification of the tax payers. Such mandate from the GST council could not have been overlooked or restricted by the Parliament.

It is also argued that the first proviso is manifestly arbitrary as it creates different treatment between two classes of persons

  • who self assessed payment of tax after duly filing of the tax returns pursuant to the investigation and
  • who fails to file a return in time and pays tax on account of delayed in filing of return in terms of Section 39 (1) of the CGST Act.

A notice was issued to the respondents which is returnable on the 11th of February 2021.

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