Case Title: Jitendra Nath Khandual v. Principal Commissioner, CGST, Central Excise & Customs, Bhubaneswar & Others
Court: High Court of Orissa, Cuttack
Petition No.: W.P.(C) No. 4804 of 2025
Category: GST Demand under Section 74 – Interest Levy under Section 50
Date of Judgment: 18 June 2025
Relevant Sections: Sections 50, 74 of the CGST Act, 2017; Section 112 of the Finance Act, 2021
Facts (Para 2–3):
The petitioner challenged the order dated 30.01.2025 passed by the Superintendent of GST & Central Excise, Kendrapara Range, raising a demand for FY 2017–18 under Section 74 of the CGST Act. The petitioner contended that the levy of interest on delayed payment of tax under Section 50 was unsustainable after the retrospective amendment made through Section 112 of the Finance Act, 2021, giving effect to the GST Council’s decision in its 31st meeting held on 22.12.2018. The counsel relied upon the judgment in Utkal Automobile Pvt. Ltd. v. Union of India, W.P.(C) No. 10277 of 2020 (decided on 11.07.2022), where the Court had already clarified that interest under Section 50 was chargeable only on the cash portion of tax liability and not on the input tax credit portion.
Questions of Law (Para 2–4):
Whether the Department could levy and sustain demand of interest under Section 50 on the entire tax amount, including that paid through ITC, despite the retrospective amendment clarifying that interest is payable only on the cash component.
Observations (Para 4–6):
The Bench noted that the petitioner’s case was identical to Utkal Automobile Pvt. Ltd. (supra), where the Orissa High Court had already set aside a similar demand. The learned Junior Standing Counsel for the Department conceded that the impugned order dated 30.01.2025 was untenable as it ignored the effect of the retrospective amendment and the binding precedent. The Court emphasized that any demand contrary to the retrospective amendment would be inconsistent with legislative intent and liable to be quashed.
Judgment (Para 6–7):
Accepting the Department’s concession, the High Court set aside the impugned order-in-original dated 30.01.2025 and remitted the matter back to the Superintendent, GST & Central Excise, Kendrapara Range, for reconsideration in line with the judgment in Utkal Automobile Pvt. Ltd. The Court directed that any further order for FY 2017–18 must be passed strictly in accordance with the retrospective amendment and the law laid down.
Table: Summary of Referred Case
| Case Name | Court / Citation | Issue | Verdict |
|---|---|---|---|
| Utkal Automobile Pvt. Ltd. v. Union of India, W.P.(C) No.10277 of 2020 | Orissa High Court (11.07.2022) | Levy of interest on ITC portion under Section 50 | Held that interest is payable only on the cash portion of tax, not on ITC; demands contrary to this are invalid. |
Between Fine Lines:
This judgment reinforces that interest under Section 50 of the CGST Act cannot be demanded on tax liabilities discharged through input tax credit. Businesses facing similar interest demands for earlier years can rely on this precedent, especially where retrospective amendments to Section 50 apply.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
