The Karnataka High Court has ruled that interest, penalties, and statutory timelines prescribed under the GST law cannot be waived through judicial directions in cases involving delayed GST return filing or late tax payments.
A Division Bench comprising Chief Justice Vibhu Bakhru and Justice K.S. Hemalekha allowed the appeal filed by the Central GST authorities and set aside the earlier order of the Single Judge, which had granted such relief to M/s Sadguru Infratech Pvt. Ltd.
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The issue has emerged after the GST department asked for the interest u/s 50 of the CGST Act for late payment of self-assessed tax and initiated recovery proceedings against the subcontractor.
The company stated that its works contract stemmed from before the rollout of GST and that the surge in tax burden because of the new tax regime was yet to be resolved in the pertinent litigation.
Previously, a single judge allowed the filing of revised GST returns without any interest or penalty and asked the authorities to abstain from coercive measures.
Although the Division Bench said that the obligation to file GST and interest for late payment is regulated by the statutory provisions of the GST laws.
The Court said that interest u/s 50 arises automatically by operation of law and cannot be exempted unless the law provides for such authority.
It stated that courts cannot allow the filing or change of GST returns in a way that is not consistent with the norms of the CGST Act.
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The HC stated that any dispute regarding reimbursement of the additional GST burden is a contractual issue between the contractor and the subcontractor and does not affect the tax authorities’ regulatory powers to charge, assess, and recover tax, interest, or penalties.
Subsequently, the GST department’s appeal was permitted, and the earlier directions issued in the taxpayer’s favour were dismissed.
| Case Title | The Commissioner of Central Tax vs. M/S Sadguru Infratech Pvt. Ltd. |
| Case No. | WRIT APPEAL NO. 1076 OF 2023 (T-RES) |
| Counsel For Appellant | Sri Neeralgi Jeevanbabu Jagadish |
| Counsel For Respondent | Sri Naveen G.S. |
| Karnataka High Court | Read Order |
