Interest for delayed tax payments under the CGST Act applies only to cash payments, as payments from input tax credits do not incur interest liabilities.

ORDER :

S.R.KRISHNA KUMAR, J.

1. In this petition, petitioner seeks the following reliefs:-

“(a) Issue writ holding that Section 50 (1) of Central Goods and Service Tax (CGST) Act, 2017 and (1) of the Karnataka Goods and Services Tax, 2017 is unconstitutional to the extent that the burden of interest is imposed on the case component and Input Tax Credit Available to the Credit of the Petitioner;

(b) Issue a writ of certiorari quashing the impugned Order C.No.IV/16/02/2020 SD-3 Dated 18.02.2020 [Order: 04/DRC07/SD3-DIN-202002576V06004V5B13]

(Annexure-A) and consequent notice for recovery in Form GST DRC-07 under Reference No.ZA290220000978M Dated 18.02.2020 (Annexure-B) passed by Respondent No.2;

(c ) Grant such other order or direction as deemed fit by this Hon’ble Court in the facts and circumstances of the case."

2. Heard the learned Counsel for the petitioner and learned Counsel for the respondents and perused the material on record.

3. A perusal of the material on record will indicate that on 07.02.2020, the respondents having issued a notice calling upon the petitioner to pay a sum of Rs.42,68,333/- towards interest on delayed payment of tax, the petitioner submitted a detailed reply at Annexure ‘D’ dated 18.02.2020, specifically contending that the petitioner had already paid the tax on or before the due date and the same had been paid through both Electronic Cash Ledger as well as Electronic Credit Ledger and consequently, the question of demanding payment of interest on delayed tax on the ground that returns had been filed after the due date would not arise in the facts and circumstances of the case.

4. It is the grievance of the petitioner that despite the detailed reply submitted by the petitioner at Annexure ‘D’, the respondents have proceeded to pass the impugned order dated 18.02.2020 vide Annexure ‘A’ and the Notice of recovery at Annexure ‘B’ dated 18.02.2020, which deserves to be quashed, in the light of the judgement of this Court in the case of M/s.Bangalore International Airport Limited Vs. Union of Indian and Others in W.P.No.6502/2020 dated 13.11.2025.

5. A perusal of the material on record will indicate that in so far as the tax periods 2017-18 and 2018-19 are concerned, the petitioner had paid the tax through the Electronic Cash Ledger as well as by Electronic Credit Ledger on or before the due date, as can be seen from the details enumerated in the reply submitted by the petitioner at Annexure ‘B’ dated 18.02.2020.

6. Under identical circumstances, in the case of M/s.Bangalore International Airport Limited (supra), this Court held as under:

"3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior Counsel appearing for the petitioner invited my attention to the notice at Annexure ‘M’ dated 17.02.2020, issued by the respondents to the petitioner, calling upon the petitioner to pay interest in a sum of Rs.1,33,21,214/- towards delayed payment of tax, as enumerated in the table mentioned in the notice for the periods July 2017, August 2017, September 2017, and February 2018. It was submitted that in response to the said notice, the petitioner submitted a reply dated 11.03.2020, giving the details and breakup as to how the payment of the tax was made by way of cash on or before the due date i.e., 20^th of the succeeding / following month, and that the remaining portion was available in the Electronic Credit Ledger of the petitioner by way of input tax credit, and consequently, merely because the petitioner did not submit returns as on the last date for payment of tax, but subsequently, the delayed filing of returns could not have been made the basis to fasten the liability to pay the interest o