In the case of Bluestar Malleable Pvt Ltd, the Jharkhand High Court has held that the failure in following the specific procedure under sections 73 & 74 of the Central Excise Act for dispute on liability of interest will invalidate the appellate order.
The petitioner challenged the letter dated 6th November 2018 (Annexure-6) issued by the respondent no.3-Superintendent, CGST & Central Excise, Jamshedpur; whereby the petitioner has been called upon to pay interest for a sum of Rs.72,49,126/- on account of alleged irregular input tax credit taken by it on 24th August 2017 and reverted on 13th August 2018.
A declaration in form TRAN-1 as per section 140 of the JGST Act, 2017 was submitted with a claim of credit for a sum of Rs.3,11,43,255/- which was filed electronically on the common portal of the respondent department.
The accountant of the petitioner company repeated the said claim of transitional credit for the same amount in the GSTR-3B furnished in July 2017 due to human error, absence of adequate practice/familiarity in the working of the new concept of Goods and Services Tax laws, reverse the said entry to rectify the error.
The revenue issued a notice to the petitioner dated 6.11.2018 (Annexure-6 to W.P.T No.2043/20) thereafter, the petitioner duly replied in form of objection about non-payment of interest vide its reply dated 9.1.2019 (Annexure-9 to W.P.T No.2043/20). However, the respondent department repeated its earlier stand and refused to accept the petitioner’s stand and the petitioner was directed to pay the balance amount of Rs.40,71,403/- which transpires that the respondents have not followed the procedure as enshrined in Section 73 or 74 of the JGST Act.
In light of the case, Mahadeo Construction (supra) it appears that “if any assessee disputes the liability of interest under Section 50 of the JGST Act then the revenue will have to follow the specific procedure as stipulated under Section 73 or 74 of the JGST Act”.
Justice Paresh Kumar Singh and Justice Deepak Roshan quashed the appellate order and remitted back the matter to the revenue to initiate a fresh proceeding about the liability towards interest under Section 50 of the JGST Act by law as stipulated in JGST Act.
Mr Atanu Banerjee appeared for the petitioner and Mr Amit Kumar appeared for the respondent.
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