The availability of credit does not exempt an assessee from the levy of interest under Section 50 of the TNGST Act, 2017, and the compensatory nature of interest was emphasized by the court.

JUDGMENT

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for issuance of writ of Certiorari, calling for the records on the files of the 1st respondent herein in C.No.IV/16/22/2019-GST, dated 10.04.2019, along with his C.No.IV/16/22/2019-GST-Final Reminder dated 10.05.2019, as modified by the 2nd respondent in his C.No.V/15/02/2020-Adj.Ch.Outer dated 18.01.2021 and quash the same insofar as it pertains to confirmation of interest demand of Rs.1,19,02,178/-)

1.The petitioner is an assessee under the provisions of the Tamil Nadu Goods and Service Tax Act, 2017, (‘TNGST Act’/‘Act’) and has challenged an order dated 10.04.2019 wherein the respondent calls upon it to remit interest of a sum of Rs.5,00,00,000/- (approx.) for belated remittance of Goods and Service Tax (‘GST’) for the period from July, 2017 to October, 2017.

2. When the matter had come up before me on 16.12.2020, I had passed the following order:

“Heard Mr.Prasad, learned counsel for the petitioner and Mr.Santhanaraman, learned Standing Counsel for the respondents.

2. Impugned order dated 10.04.2019 calling upon the petitioner to remit interest for the belated payment of GST has, admittedly, been passed without a pre-intimation notice/show cause notice. However, without having to set aside the impugned order, it would suffice that a direction be issued to R2, who is the jurisdictional Commissioner, to consider representation dated 28.09.2017 wherein the factual matrix of the matter has been set out in detail.

3. It appears that while seeking to file a return for the month of July, 2017, an error was discovered therein, as a result that the return was merely 'filed' and not 'submitted' and the process was aborted at that stage. According to the petitioner, the output tax liability has been remitted in full into the cash ledger even prior to the 'filing' of the return. The petitioner has been making efforts to correct the error and to obtain opening of the GST portal in order that the corrected return could be filed, to no avail. According to the petitioner, the cascading effect of the aforesaid events have led to the subsequent monthly returns being delayed well as, till such time the error in the July return is rectified, the proper determination of output tax liability for the subsequent months cannot be made.

4. The petitioner will appear before R2 on 23.12.2020 at 10.30 a.m. without expecting any further notice in this regard. The Commissioner/R2 will hear the petitioner, either over video conference or physical hearing, consider the representation of the petitioner dated 28.09.2017 along with any other material that may be supplied and pass orders thereupon within a period of four (4) weeks from today

5. List this on 25.01.2021 for production of orders.”

3. Consequent upon the direction as aforesaid, the petitioner has appeared before the respondent and advanced submissions, pursuant to which, an order has been passed on 18.01.2021 accepting one portion of the submissions made. The petitioner has sought and has been granted permission to raise additional grounds addressing what remained of the grievance under order dated 10.04.2019, as covered under order dated 18.01.2021 and the respondent has also filed an additional counter. Pleadings are thus complete.

4. What follows in the succeeding paragraphs of this order addresses the contents of order dated 18.01.2021 alone, and the prayer in this writ petition thus stands moulded, to this extent. The levy of interest u/s 50 of the Act, arises from the fact that when the petitioner filed a GSTR 3B return for the month of July, 2017, there was an inadvertent error whereby the data pertaining to its plant at Faridabad was included instead of data pertaining to the Chennai plant.

5. This swap resulted in a short disclosure of liability for the period July to October 2017 leading t