Refex Industries Ltd. v. Sherisha Technologies (P.) Ltd.
The petitioner was a registered person under CGST Act and had filed belated returns for the period 2017-18. The department had demanded the interest due to delay in filing of returns and issued demand notices to banks seeking recovery from the bank accounts of the petitioner. The department started coercive recovery of the interest and therefore, the assessee filed the writ petition.
The petitioner objected that interest could only be demanded on the cash component stating that sufficient ITC was available with the department.
The court was of the view that the interest is payable on the delayed payment and the term ‘delayed’ connotes a situation where the state has been deprived of the funds whereas the availability of the ITC runs counter to this, as it connotes the enrichment of the State. The court also highlighted the amendment brought in section 51(1), which states that interest on tax payable shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.
Therefore, the writ petition was allowed and the impugned notices were set aside.