Interest and penalty not leviable when there is no fault of Assessee in depositing GST

Last updated: 27 May 2024

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Quick Summary

The Allahabad High Court has ruled that interest and penalties for Goods and Services Tax (GST) are only applicable if the delay in filing returns or paying tax is due to the assessee's fault. In this case, the petitioner had initiated tax payment on time, but the revenue department received it late. The court found no fault with the assessee and ordered the adjustment of the levied interest and penalty against the tax liability.

Court :
Allahabad High Court

Brief :
The Hon'ble Allahabad High Court in the case of Bhole Baba Milk Food Industries Limited v. Union of India [Writ Tax No. 1431 of 2023 dated April 16, 2024] allowed the writ petition and held that the levy of fee and interest would arise only in case where the failure is on part of the assessee to file return and/or payment of tax due within the prescribed period of time.

Citation :
Writ Tax No. 1431 of 2023 dated April 16, 2024

The Hon'ble Allahabad High Court in the case of Bhole Baba Milk Food Industries Limited v. Union of India [Writ Tax No. 1431 of 2023 dated April 16, 2024] allowed the writ petition and held that the levy of fee and interest would arise only in case where the failure is on part of the assessee to file return and/or payment of tax due within the prescribed period of time.

Facts

Bhole Baba Milk Food Industries Limited ("the Petitioner") has filed the writ petition before the Hon'ble High Court for refund of the amount of interest and penalty for non-filing of return which has been debited from the Electronic Credit Ledger.

Issue

Whether interest and penalty leviable when there is no fault of Assessee in depositing GST?

Held

The Hon'ble Allahabad High Court in the case of Writ Tax No. 1431 of 2023 held as under:

Noted that, the Petitioner has initiated the payment of tax within the prescribed time period in the manner prescribed for which the amount is debited from the bank account. However, the Revenue Department ("the Respondent") states that the amount has been received at later stage.
Opined that, the levy of fee and interest would arise only in case where the failure is on part of the assessee to file return and/or payment of tax due within the prescribed period of time.
Held that, the writ petition is disposed of directing the Respondent to adjust the amount of interest and penalty against the tax liability

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED BELOW

FAQ :

No, the Allahabad High Court has held that interest and penalties are only leviable when the failure to file returns or pay tax is on the part of the assessee.

The case involved Bhole Baba Milk Food Industries Limited v. Union of India, heard by the Allahabad High Court.

The issue was whether interest and penalty were rightly levied when the assessee had initiated tax payment within the prescribed time, but the amount was received late by the revenue department.

The court allowed the writ petition, directing the respondent (Revenue Department) to adjust the amount of interest and penalty against the tax liability, as there was no fault on the part of the assessee.

The ruling specifically addresses situations where the assessee has taken timely steps for payment, but the delay occurs in the processing or receipt by the revenue department, indicating no fault of the assessee.

Attached File : 671907_5688_bhole_baba_milk_food_industries_limited.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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