Lawstreet Journal

No Interest Recovery Without Due Process For GST: Jharkhand HC

Lawstreet Journal 4 May 2020 7:21pm

Image courtesy: Lawstreet Journal Judiciary No Interest Recovery Without Due Process For GST: Jharkhand HC

Interest recoveries cannot be initiated against businesses under the GST Laws without a prior show cause notice and adjudication proceedings, Jharkhand High Court mentioned in a recent ruling.

A two-member bench of Justice HC Mishra and Justice Deepak Roshan overruled an order which was earlier issued by the GST Department for a Partnership firm for recovery of interest on unpaid taxes. The court also quashed the garnishee order for the attachment of the firm’s bank account since the authorities failed to follow the prescribed procedure and provisions as mentioned under Central Goods and Service Tax Act, 2017.

“The judgment is based on sound principles of law that no liability—whether of tax, interest or penalty—can be fastened on a taxpayer without allowing him to present his case,” Rajat Bose, partner at Shardul Amarchand Mangaldas & Co. said.

He further added, “Revenue authorities have initiated proceedings or even served notices for cancellation of goods and services tax registration,” Bose pointed out. “And taxpayers have had to cough up the amounts even without a formal hearing,”

The Tax of Interest and Penalties has been an antagonistic issue since the start of the nationwide indirect tax. In several examples, courts have stated that the authorities must use their powers to attach bank accounts economically for recovering tax.

Mahadeo Construction, a partnership firm, moved the Jharkhand High Court and challenged an order passed by the GST authorities which directed it to pay an interest of Rs 19 lakh on account of delayed filing of monthly returns in the form of GSTR-3B for February and March 2018. The firm contested the… Continue Reading...

Tagged: Jharkhand High Court  
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