The liability of interest under Section 50 of the JGST Act cannot be raised without initiating adjudication proceedings under Section 73 or 74 if the taxpayer disputes the liability of interest.

JUDGMENT :

Deepak Roshan, J.

1. Since both these writ applications are interconnected as such both are heard together and being disposed of by this common order.

2. W.P. (T) No.2043 of 2020 has been preferred by the petitioner challenging the letter dated 6th November 2018 (Annexure-6) issued by the respondent no.3-Superintendent, CGST & Central Excise, Jamshedpur; whereby the petitioner has been called upon to pay interest for a sum of Rs.72,49,126/- on account of alleged irregular input tax credit taken by it on 24th August 2017 and reverted on 13th August 2018. Petitioner has also sought quashing of letter dated 28th January 2019 (Annexure-10) issued by the respondent no.3 whereby the objection of the petitioner against raising of the demand of interest under Section 50 of the Jharkhand Goods & Service Tax Act, 2017 (herein after to be referred as JGST Act) has been rejected. Petitioner has further sought declaration that it is not liable to pay interest for such mistake in filing GSTR-3B for the month of July 2017 wherein inadvertently he had included the transitional credit amount of Rs.3,11,43,255/- again though it was filed in GSTR TRAN-1 as transitional credit in terms of Section 140 of the Act. Petitioner has sought a protection from taking coercive action against it.

In W.P.(T) No.2051 of 2020, petitioner has challenged the part of refund sanction order dated 9th November 2018 (Annexure-3), so far it relates to adjustment of refund against the demand of interest made in terms of letter dated 6th November 2018 impugned in W.P.(T) No.2043/2020. Petitioner has also laid challenge to the order dated 31st January 2020 (Annexure-5) passed by the Additional Commissioner (Appeals) whereby the appeal preferred by him against part of the refund sanction order dated 9th November 2018 has been rejected.

3. Brief facts of the case is that the petitioner found itself entitled to claim transitional credit of ITC under the provisions of the JVAT Act 2005 and submitted a declaration in form TRAN-1 as per section 140 of the JGST Act, 2017 with a claim of credit for a sum of Rs.3,11,43,255/- which was filed electronically on the common portal of the respondent department. The accountant of the petitioner company repeated the said claim of transitional credit for the same amount in the GSTR-3B furnished in July, 2017. The said repetition being due to human error, absence of adequate practice/familiarity in the working of the new concept of Goods and Services Tax laws, which had been introduced in 2017 itself. Immediately, in July, 2018 petitioner took step to reverse the said entry to rectify the error. In GSTR-3B of July 2018, the sum of Rs.3,11,43,255/- has been reversed towards Input Tax Credit of SGST. It is specific case of the petitioner that the said amount of transitional credit mistakenly mentioned in form GSTR-3B for July 2017 was never utilized by the petitioner company against the output tax liabilities arising out of daily business transactions.

A clarification was sought by the department vide letter No.225 dated 22.10.2018 regarding reversal of SGST Credit amounting to Rs.3,11,43,255. A clarification was also sought as to why no interest was paid on the said reversal of ITC. Petitioner responded to the said clarification vide letter no. BSMPL/245 dated 2.11.2018. The Respondent authority vide letter No.249 dated 06.11.2018 (impugned letter) responded to the petitioner’s letter. The impugned letter pertains to direction for payment of interest for Rs.72,49,126/- in respect of irregularly taken credit of Rs.3,11,43,255/-.

In the meanwhile, the petitioner filed an application on 12.09.2018 (with an acknowledgment delivered by the system on 26.09.2018) seeking refund of excess amount lying in the electronic cash ledger of the petitioner for a sum of Rs.26,45,301/-. Pursuant thereto; the refund was sanctioned by the competent authority vide the refund sanction order dated 09.11.2018. But the said refund was allowed with an adj