Bimal Jain
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Synopsis: The Hon'ble Madras HC in its recent decision in the case of Refex Industries Limited v. The Assistant Commissioner of CGST Central Excise [Writ Petition No. 23360 23361 of 2019 dated January 6th, 2020] has held that interest u/s 50 of CGST Act can be levied only on belated cash' c
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FAQ :
The Madras High Court ruled that interest under Section 50 of the CGST Act can only be levied on the belated 'cash' component of the tax liability, not on the Input Tax Credit (ITC) component.
The ruling primarily relied on Section 50(1) of the CGST Act, particularly the newly inserted proviso which specifies that interest is levied only on the portion of tax paid by debiting the electronic cash ledger.
Yes, the Hon'ble Madras HC opined that the proviso to Section 50(1), inserted with effect from August 1st, 2019, corrects an anomaly and should be read as clarificatory and operative retrospectively.
Previously, interest was being levied on the gross tax liability, including the ITC component, which the court found to be an anomaly that the proviso aimed to correct.
As of the article's writing, although the Finance (No. 2) Act, 2019, included an amendment to Section 50(1), it was awaiting a specific notification from the Central Government to come into effect, raising questions about its retrospective or prospective application.
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