1. Title of the Case
| Case Title | Laldeo Rajak (for the Department, CGST Division–Malviya Nagar, Delhi South) v. Kanthwal Services, Proprietor (Cross Objector) |
| Case Number | Appeal No. APL/79/DEL/2026 with Cross Objection under Section 112(5); Order Reference No. ZN510071026000151H; arising out of Order-in-Appeal No. 172/JC/Central Tax/Appeal-II/Delhi/2024-25 dated 03.07.2024 |
| Court and Bench | Goods and Services Tax Appellate Tribunal (GSTAT), State Bench Delhi, Division Bench II; Coram: Sh. Arun Kumar Singal, Member (Judicial) and Sh. Sanjeev Kumar Jain, Member (Technical) |
| Date of Order | 15.10.2026 |
| Relevant Provisions | Sections 49, 50(1), 61, 73(1), 73(8), 73(9), 107(12), 112(3), 112(5) and 122(2)(a) of the CGST Act, 2017; Rules 88B, 99 and 111(3) of the CGST Rules, 2017; Form GST PMT-06; Circular No. 26/26/2017-GST dated 29.12.2017; Notification No. 02/2018-Central Tax dated 20.01.2018 |
2. Summary of the Judgment
Facts of the Case: M/s Kanthwal Services, a manpower recruitment service provider, was audited for FY 2017-18 (paras 2.0–3.2). Its GSTR-3B for September 2017, filed on 03.03.2018, reflected nil liability owing to a portal glitch, although the entire tax of ₹1,07,18,605 had been deposited through six challans between 16.01.2018 and 15.02.2018 (paras 3.1, 7.0). A Section 73 notice dated 27.09.2023 demanded short-paid tax of ₹4,58,289, interest of ₹30,38,939 and ₹43,56,622, and penalty (para 4.0). The assessee paid the tax with interest by DRC-03 on 11.12.2023, yet the order-in-original dated 18.12.2023 confirmed the full demand regardless (paras 4.1, 5.0). The first appellate authority set aside the tax demand, recomputed interest at ₹40,47,151 (balance ₹25,47,151 after ₹15,00,000 paid) and upheld penalty of ₹45,829 (para 7.0). The Department appealed on review, and the assessee filed a cross objection (paras 8.0, 9.0).
Issues for Determination: The Tribunal framed four issues (para 14.0): whether a tax demand discharged before adjudication could be restored; whether Section 50(1) interest runs to the date of credit to the Government’s account through Form GST PMT-06 or to the later ledger debit on return filing; the correct quantum of interest, including any further credit for the interest paid on 11.12.2023; and whether the penalty was sustainable.
Findings and Observations of the Court: The Tribunal held that Section 73(1) fixes what is owed and cannot recover a second time an amount already received, so confirming the demand without considering the payment could not stand (paras 15.1–15.3). Relying on Vishnu Aroma Pouching, Eicher Motors, Arya Cotton Industries, Bangalore International Airport and Symphony, and noting the Rule 88B amendment recommended by the 53rd GST Council, it held that interest ceases once tax is credited to the Government’s account, the later ledger debit being a mere accounting entry (paras 16.3–16.6). September 2017 interest was therefore ₹5,22,204 and the total of ₹40,47,151 was affirmed; the interest paid on 11.12.2023 related only to the tax shortfall and could not be credited twice (paras 17.1–17.4). As payment fell outside the thirty-day window of Section 73(8), the minimum penalty was mandatory and Hindustan Steel did not help the assessee (paras 18.1–18.4).
Verdict and Basis of the Judgment: The Tribunal confirmed the order-in-appeal, dismissed both the Department’s appeal and the cross objection, and directed payment of the balance interest of ₹25,47,151, if not already paid, with the penalty of ₹45,829 within thirty days (paras 19.0–20.0).
Analysis of the Judgment: The order carries the consistent High Court view to the Tribunal level: the PMT-06 credit date, not the return-filing date, marks payment for Section 50(1). It also obliges adjudicating authorities to account for payments made before the order is passed. Yet Section 73(8) is applied strictly, and bona fide conduct does not avert the minimum penalty.
Legal Takeaway: Taxpayers should reconcile challan credit dates with ledger debits and contest interest charged beyond the date of credit. Where a demand is accepted, tax and interest must be paid within thirty days of the notice to secure penalty immunity under Section 73(8).
3. Tabular Summary
| Sl. No. | Case Title | Case No. / Citation | Court / Bench | Date of Order | Facts & Issue | Verdict & Basis of Judgment | Key Legal Takeaway |
|---|---|---|---|---|---|---|---|
| 1 | Laldeo Rajak (for the Department) v. Kanthwal Services | APL/79/DEL/2026 with Cross Objection; Order Ref. ZN510071026000151H | GSTAT, State Bench Delhi, Division Bench II (Sh. Arun Kumar Singal, JM; Sh. Sanjeev Kumar Jain, TM) | 15.10.2026 | Department sought restoration of a ₹4,58,289 tax demand paid before adjudication and of interest of ₹73,95,561 computed to the date of return filing; assessee sought deletion of penalty and further interest relief for FY 2017-18. | Order-in-appeal confirmed; appeal and cross objection dismissed. Discharged tax cannot be re-demanded; interest runs only to the date of PMT-06 credit, fixing interest at ₹40,47,151 (balance ₹25,47,151); penalty of ₹45,829 upheld as payment fell outside the Section 73(8) window. | Interest under Section 50(1) stops when cash reaches the Government’s account, not on the later ledger debit; pay within 30 days of the SCN to avoid penalty. |
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